Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 25

Strategy; Auto Tire Manufacturing Michelin, the 118-year-old French manufacturer of tires, is a worldwide leader in tire sales. But there are plenty of challenges. One is the growth of low-cost tire producers in Southeast Asia and elsewhere. Michelin knows that most tire buyers are shopping primarily for price, viewing tires primarily as a commodity. This is true even though the problems with Firestone and other tire makers in recent years have brought consumer attention to tire safety. To help differentiate his firm’s product, Edouard Michelin (Michelin’s former CEO) pushed development of technologically advanced tires that, for example, provide blowout protection and are more suited for high-performance use.

Required Is the auto tire a commodity? Would you consider Michelin to be a cost leader or a differentiator, and why?