Case Study Description of Goodyear Tire & Rubber Co.--1988
Set two years after a takeover attempt forced the company to restructure by leveraging up, selling assets, and repurchasing stock. The case affords an opportunity to analyze what effect the restructuring had on: 1) the cost of capital, 2) investment decisions, and 3) the competitive behavior of other firms in the industry.
Swot Analysis of "Goodyear Tire & Rubber Co.--1988" written by Timothy A. Luehrman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Repurchasing Goodyear facing as an external strategic factors. Some of the topics covered in Goodyear Tire & Rubber Co.--1988 case study are - Strategic Management Strategies, Competition, Costs, Financial analysis, Mergers & acquisitions, Reorganization and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Goodyear Tire & Rubber Co.--1988 casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing commodity prices,
technology disruption, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Goodyear Tire & Rubber Co.--1988
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Goodyear Tire & Rubber Co.--1988 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Repurchasing Goodyear, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Repurchasing Goodyear 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.--1988 can be done for the following purposes –
1. Strategic planning using facts provided in Goodyear Tire & Rubber Co.--1988 case study
2. Improving business portfolio management of Repurchasing Goodyear
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 Repurchasing Goodyear
Strengths Goodyear Tire & Rubber Co.--1988 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Repurchasing Goodyear in Goodyear Tire & Rubber Co.--1988 Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Goodyear Tire & Rubber Co.--1988 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Goodyear Tire & Rubber Co.--1988 firm has clearly differentiated products in the market place. This has enabled Repurchasing Goodyear to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Repurchasing Goodyear to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Repurchasing Goodyear 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.--1988 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Repurchasing Goodyear 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.
High brand equity
– Repurchasing Goodyear has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Repurchasing Goodyear to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Repurchasing Goodyear is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Timothy A. Luehrman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Strong track record of project management
– Repurchasing Goodyear is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Repurchasing Goodyear has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Repurchasing Goodyear has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Repurchasing Goodyear is present in almost all the verticals within the industry. This has provided firm in Goodyear Tire & Rubber Co.--1988 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.
Effective Research and Development (R&D)
– Repurchasing Goodyear 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.--1988 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Repurchasing Goodyear is one of the leading recruiters in the industry. Managers in the Goodyear Tire & Rubber Co.--1988 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Repurchasing Goodyear 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 Repurchasing Goodyear is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Goodyear Tire & Rubber Co.--1988 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Goodyear Tire & Rubber Co.--1988 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Goodyear Tire & Rubber Co.--1988 are -
Need for greater diversity
– Repurchasing Goodyear has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
No frontier risks strategy
– After analyzing the HBR case study Goodyear Tire & Rubber Co.--1988, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Repurchasing Goodyear needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Goodyear Tire & Rubber Co.--1988, in the dynamic environment Repurchasing Goodyear has struggled to respond to the nimble upstart competition. Repurchasing Goodyear has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Repurchasing Goodyear, firm in the HBR case study Goodyear Tire & Rubber Co.--1988 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Repurchasing Goodyear 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.--1988 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.--1988, it seems that the employees of Repurchasing Goodyear 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Repurchasing Goodyear supply chain. Even after few cautionary changes mentioned in the HBR case study - Goodyear Tire & Rubber Co.--1988, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Repurchasing Goodyear vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Goodyear Tire & Rubber Co.--1988, is just above the industry average. Repurchasing Goodyear 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Goodyear Tire & Rubber Co.--1988 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 Repurchasing Goodyear 's lucrative customers.
Slow to strategic competitive environment developments
– As Goodyear Tire & Rubber Co.--1988 HBR case study mentions - Repurchasing Goodyear takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Goodyear Tire & Rubber Co.--1988 | 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.--1988 are -
Buying journey improvements
– Repurchasing Goodyear can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Goodyear Tire & Rubber Co.--1988 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.
Leveraging digital technologies
– Repurchasing Goodyear 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Repurchasing Goodyear can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Repurchasing Goodyear can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Repurchasing Goodyear 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. Repurchasing Goodyear 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Repurchasing Goodyear is facing challenges because of the dominance of functional experts in the organization. Goodyear Tire & Rubber Co.--1988 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Repurchasing Goodyear to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Repurchasing Goodyear has opened avenues for new revenue streams for the organization in the industry. This can help Repurchasing Goodyear to build a more holistic ecosystem as suggested in the Goodyear Tire & Rubber Co.--1988 case study. Repurchasing Goodyear can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Repurchasing Goodyear can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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. Repurchasing Goodyear can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Repurchasing Goodyear has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Goodyear Tire & Rubber Co.--1988 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Repurchasing Goodyear to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Repurchasing Goodyear 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.
Better consumer reach
– The expansion of the 5G network will help Repurchasing Goodyear to increase its market reach. Repurchasing Goodyear 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.
Threats Goodyear Tire & Rubber Co.--1988 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.--1988 are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Repurchasing Goodyear business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Repurchasing Goodyear 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Repurchasing Goodyear will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Repurchasing Goodyear 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.
Environmental challenges
– Repurchasing Goodyear needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Repurchasing Goodyear can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Repurchasing Goodyear.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Repurchasing Goodyear can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Repurchasing Goodyear 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 Repurchasing Goodyear
– 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 Repurchasing Goodyear.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Repurchasing Goodyear 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.--1988 .
Consumer confidence and its impact on Repurchasing Goodyear 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.
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 Repurchasing Goodyear in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Goodyear Tire & Rubber Co.--1988 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.--1988 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.--1988 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.--1988 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.--1988 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 Repurchasing Goodyear needs to make to build a sustainable competitive advantage.
