Case Study Description of Goodyear Tire & Rubber Co.--1986
Goodyear's transition to radial tires from bias and bias-belted tires was difficult and expensive, but successful. Afterward, in 1983, the company embarked on a major diversification program. Three years later, after investments exceeding $1 billion in oil and gas pipelines and reserves, Goodyear was attacked by a corporate "raider" and is considering abandoning its diversification program in favor of a highly leveraged restructuring.
Swot Analysis of "Goodyear Tire & Rubber Co.--1986" written by Timothy A. Luehrman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Goodyear Tires facing as an external strategic factors. Some of the topics covered in Goodyear Tire & Rubber Co.--1986 case study are - Strategic Management Strategies, Costs, Mergers & acquisitions, Reorganization, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Goodyear Tire & Rubber Co.--1986 casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, technology disruption, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic ,
increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, etc
Introduction to SWOT Analysis of Goodyear Tire & Rubber Co.--1986
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Goodyear Tire & Rubber Co.--1986 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Goodyear Tires, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Goodyear Tires operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Goodyear Tire & Rubber Co.--1986 can be done for the following purposes –
1. Strategic planning using facts provided in Goodyear Tire & Rubber Co.--1986 case study
2. Improving business portfolio management of Goodyear Tires
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Goodyear Tires
Strengths Goodyear Tire & Rubber Co.--1986 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Goodyear Tires in Goodyear Tire & Rubber Co.--1986 Harvard Business Review case study are -
High switching costs
– The high switching costs that Goodyear Tires has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Goodyear Tire & Rubber Co.--1986 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Organizational Resilience of Goodyear Tires
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Goodyear Tires does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Finance & Accounting industry
– Goodyear Tire & Rubber Co.--1986 firm has clearly differentiated products in the market place. This has enabled Goodyear Tires to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Goodyear Tires to invest into research and development (R&D) and innovation.
Learning organization
- Goodyear Tires is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Goodyear Tires is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Goodyear Tire & Rubber Co.--1986 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Goodyear Tires is present in almost all the verticals within the industry. This has provided firm in Goodyear Tire & Rubber Co.--1986 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Goodyear Tires are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Goodyear Tires has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Goodyear Tires to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Goodyear Tires has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Goodyear Tire & Rubber Co.--1986 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Goodyear Tires has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Goodyear Tire & Rubber Co.--1986 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Goodyear Tires has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Goodyear Tire & Rubber Co.--1986 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Goodyear Tires digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Goodyear Tires has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Goodyear Tire & Rubber Co.--1986 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Goodyear Tire & Rubber Co.--1986 are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Goodyear Tire & Rubber Co.--1986, is just above the industry average. Goodyear Tires needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Goodyear Tire & Rubber Co.--1986 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Goodyear Tire & Rubber Co.--1986 can leverage the sales team experience to cultivate customer relationships as Goodyear Tires is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Goodyear Tires, firm in the HBR case study Goodyear Tire & Rubber Co.--1986 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Goodyear Tire & Rubber Co.--1986 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Goodyear Tires 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Goodyear Tires has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Goodyear Tires is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Goodyear Tires needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Goodyear Tires to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Goodyear Tires has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Goodyear Tire & Rubber Co.--1986 should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Goodyear Tire & Rubber Co.--1986, it seems that the employees of Goodyear Tires don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Goodyear Tires is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Goodyear Tire & Rubber Co.--1986 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Goodyear Tires has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Goodyear Tires even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Goodyear Tires products
– To increase the profitability and margins on the products, Goodyear Tires needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Goodyear Tire & Rubber Co.--1986 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Goodyear Tire & Rubber Co.--1986 are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Goodyear Tires can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Goodyear Tires can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Goodyear Tires can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Goodyear Tires can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Goodyear Tires can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Goodyear Tire & Rubber Co.--1986 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Goodyear Tires has opened avenues for new revenue streams for the organization in the industry. This can help Goodyear Tires to build a more holistic ecosystem as suggested in the Goodyear Tire & Rubber Co.--1986 case study. Goodyear Tires can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Goodyear Tires has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Goodyear Tires can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Goodyear Tire & Rubber Co.--1986, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Goodyear Tires is facing challenges because of the dominance of functional experts in the organization. Goodyear Tire & Rubber Co.--1986 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Goodyear Tires to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Goodyear Tires to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Goodyear Tires can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Goodyear Tires to increase its market reach. Goodyear Tires will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at Goodyear Tires can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Goodyear Tires can use these opportunities to build new business models that can help the communities that Goodyear Tires operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Goodyear Tire & Rubber Co.--1986 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Goodyear Tire & Rubber Co.--1986 are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Goodyear Tire & Rubber Co.--1986, Goodyear Tires may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Goodyear Tires high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Goodyear Tires needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Goodyear Tires in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Goodyear Tires needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Consumer confidence and its impact on Goodyear Tires demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Goodyear Tires is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Goodyear Tires
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Goodyear Tires.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Goodyear Tires.
Stagnating economy with rate increase
– Goodyear Tires can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Goodyear Tires can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Goodyear Tire & Rubber Co.--1986 .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Goodyear Tires in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Goodyear Tire & Rubber Co.--1986 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Goodyear Tire & Rubber Co.--1986 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Goodyear Tire & Rubber Co.--1986 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Goodyear Tire & Rubber Co.--1986 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Goodyear Tire & Rubber Co.--1986 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Goodyear Tires needs to make to build a sustainable competitive advantage.
