STRATEGIC ISSUES AND PROBLEMS

- Customers are reluctant to sign contracts:- Customers understand the service but they do not understand the extra values which

can be added by MFS´s services

- Internal conflict- Same target market for different company sectors -> no clear segmentation (same

market for the tires and for the MFS)

- Service jobs are sometimes poorly performed- Variability of the services: Roll-out model is depended on third party service

performance

- inefficient for the costs and explanation of the service values for the customer

Efficiency- Out sourcing tire

policy compliance

- Optimizing

resources

Productivity- Emergency road

assistance

- Increased

production time

- Vehicle readiness

Visibility- Usage/assets

monitoring

- Safety alerts

- Scoring/reporting

Sustainability- CO2 emission

- Fuel Consumption

- Recycling

Analysis

•Long –lasting customer relationship•Differentiation from competitors

•Difficult to see extra value•Higher upfront costs•Increased

dependence on Michelin•High switching cost

•Problem of moral hazard•Complex cost structure•Difficult to monitor service provider

•Competition with traditional sales force

•Better cost control•Benefit from Michelin innovation•Reliance on Michelin reputation•Concentration only on own business

Pros Cons

Michelin

Customers

- CUSTOMER NEEDS ANALYSIS:

Efficiency

Productivity

Visibility

Sustainability

- Long-lasting profitable

relationships

RECOMMENDATIONS

1. Change of the European roll-out model into the model already existing in UK and France ->

direct contact with the customers -> control over the provided services and the chance of

building a partnering relationship

- Michelin will avoid the costs of constant monitoring the service quality provided by third

parties (also no contracts and payments to SP per intervention)

2. Eco Friendliness

- To push on the importance of the lower gas consumption

- Cost of fuel

- Lower CO2 impact

- National laws about pollution

- Good external image of the company

3. Good hiring and training procedures investment ->reduction of customers perceptions of risk

because of variability of the provided service

- Standardization of the service-performance process throughout the organization

- Monitoring customer satisfaction