The USA Tire Industry in the World Market Place

It aims at keeping its leading position and thus, Goodyear invested more than $1 billion to build automated tire-making facilities, the best in the world. Goodyear expands its tire stores to keep its leadership as the biggest producer-retailer of tires in the USA. Besides, it has invested much money in the investigation and development of tires production. The tires are at the cutting edge of world-class performance and it is a well-known fact. Goodyear maintains its leading position as a high-performance segment of the tire market.

Goodyear is based on the innovative products of high quality and high advertising expenses. It won almost 90 per cent of the market for its high-performance tires for US auto. Besides, it is well-advertised on sporty imports. Owing to its location Goodyear and other USA tire manufacturers has got a great help in the USA market. Though, one should to be critical to point out that tires are far from being cheep to sell them in Europe.

Goodyear has created several barriers to entry in order to compete in the world tire market. Its size gives it a chance to get significant economies of scale, thus, making its costs rather low as compared with the products of its rivals. Production cost cutting is promoted by investment in progressive process of technology. Automated plant equipment also makes it to answer the modern world demands rather quickly to meet present and future market conditions. Goodyear has owned its own shops in order to safe proprietary access to a significant field of distribution. However, Goodyear has made product scale and a high quality model via its deposit in R&D and niche marketing – high-performance tires. New rivals would draw on vital costs to repeat a reputation once again.

Goodyear faces severe competition all the time. For example, last racing season it prevailed in a majority of the competitive series. The continually rising prices and tire rule modifications that do not permit to transfer racing technology to street tires have greatly reduced the return on the deposit in Formula 1 racing.

Diversity is a competitive advantage for global companies, such as Goodyear. It is spreading it all over the company. A varied workforce gives the benefit of well-conducted business in multi-cultural marketplaces all over the world. Goodyear’s strategy has helped it to develop faster than its rivals to found new operations all over the world. Goodyear’s financial power and mobility reached for the last seven years has helped to meet short-term necessities while working for the future success. Goodyear has decided that it would be more profitable to settle production equipment near the final sale limits as tires are huge and not cheap to ship as compared with their profit limits. This decreases distribution prices and gives important barriers to entry. It also diminishes Goodyear's foreign exchange risk.

The tire industry is spreading worldwide. Goodyear realizes that one of its major rivals in the future is going to be Bridgestone Tire of Japan. If Goodyear settles its production equipment in Japan this will help Goodyear to cut the prices in critical home market of Bridgestone. This is because of that Bridgestone aims at gaining market share in the USA via aggressive price decreasing. Besides, Japanese car producers will have the opportunity to manufacture two million autos every year in the USA in 1992. If these vehicles will be selling, that will reach car sales by domestic vehicle organizations. Thus, all these processes would cut out the demand for Goodyear tires by Ford, Chrysler and G.M.

In this situation Goodyear most likely replaces some of this lost business with sales to Japanese producers who manufacture in the USA. If Goodyear builds a plant in Japan that will help it to organize a better supplier relationship with Japanese vehicle organizations, and thus, make easier sales to the USA plants. Goodyear is a great company with good positions in the USA and in the whole world. It supplies these Japanese companies since they have modernized their autos and thus, and they have the necessity of high-quality tires, such as of Goodyear.

Bridgestone's acquisition of Firestone will probably have a negative effect on Goodyear as it is a well-equipped and a well-financed rival who looks for the monopoly rents presently being gained by Goodyear. Nevertheless, having struggled the USA auto producers are presently working with Japanese companies. They may wish to take some of the business they are presently giving to Firestone and redistribute it to Goodyear. Goodyear can make the next step having attacked with cost reductions, product and process modernization, or bonuses. Goodyear directs its cost reduction answer to the Japanese market in order to become more effective and competitive.