...Bridgestone Case Analysis 1. CM/Total Rev = WACM 3,500,000/5,000,000 = .70*100 = 70% 2. A high WACM means that a high percentage of every dollar earned is profit. This means that Bridgestone is keeping the variable costs at a relatively small proportion of the total costs. The fact that the Margin of Safety is $9,000 out of $5,000,000 in revenue might be taken as an indication that they are not doing a good job of controlling overhead, depending on how you define overhead. 3. The CVP does allow you to come up with a breakeven plan. The question is will they be able to achieve a breakeven plan since they already have such a low Margin of Safety and general economic issues, government cut-backs, Medicaid/Medicare function reductions, the overall reduction of people on insurance, and the unemployment rate causing less availability of private pay clients. 4. Breakeven sales = $4,991,000 Total Sales – Breakeven sales = .7 This number should let Dr. Russell know he has virtually no room for any increase in expenses and he cannot allow revenues to drop. He must also try to determine if he has any current expenses that can be reduced. 5. 3,493,700 – 10% = 3,144,330.00 (If you are assuming the question meant reduction of total expenses by 10% so rent and depreciation are being included in the 10% reduction. If you conclude the question means that rent and depreciation would not be included in the 10% reduction, this number would be different.) This...
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...BRIDGESTONE BEHAVIORAL HEALTH CENTER: COST-VOLUME-PROFIT ANALYSIS FOR PLANNING AND CONTROL I. INTRODUCTION Bridgestone Behavioral Health Center, a medical center for comprehensive outpatient substance abuse treatment center positioned at the Midwest United States and has been operating since 1985. Some of the services offered by Bridgestone grouped generally are counselling, crisis intervention, detoxification and methadone maintenance. Under these services they offer patient assessment, lab urinalysis, case management, group counseling, individual counseling, crisis intervention, intensive outpatient, medical somatic, methadone maintenance and ambulatory detoxification totaling to 10 services. Operations of the center are overseen by its executive director, Dr. Thomas Russel, an author in the field addictions, a former faculty of the Ohio University Department of Psychology where he also graduated from and where he took his Masters of Social Work. He also has a Ph.D. in Clinical Psychology with a specialization on Addiction Counseling from Northwestern University. With over 30 years of behavioral health addiction experience, he is more than qualified to lead his outstanding staff consisting of professionals. The staff members at Bridgestone are like family and are defined by their integrity and experience. Bridgestone aims to be a leader in healing and changing lives by providing high quality behavioral healthcare to all individuals in need as...
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...management of Bridgestone? 3. Is Bridgestone able to plan for breakeven or a modest over-recovery of expenses (or profit) for the next year? If the center achieves breakeven or a modest over-recovery and you are concerned about events that could cause a potential loss, what would you try to change? (You may consider both on- and off-campus programs.) Break-even = Fixed Cost/WACM $3,493,700/70% = $4,991,000 Profit = CM – FC $3,500,000 – 3,493,700 = $6,300 Yes, they are able to plan for break-even and even a modest profit in the next year. There are factors that could change the profitability of Bridgestone. Some factors I would try to change or manage closely in order to increase profit are: Decrease employee salary expenses Decrease discretionary fixed costs Increase and maintain the level of service volume Reduce variable costs Increase service rates Setup off-campus programs 4. A useful component of CVP analysis is the margin of safety for service revenue that can be calculated as a dollar amount or as a percentage. What is Bridgestone’s projected margin of safety for next year? Interpret your answer in terms of what it means to Dr. Russell. Margin of safety = total expected sales – break even $5,000,000 – 4,991,000 Margin of safety = $9,000 Margin of safety % = 9,000/5,000,000 = .18% Dr. Russell should focus on increasing the contribution margin and decreasing the fixed and discretionary expenses. The margin of safety for Bridgestone is very small...
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...Tire Companies & Rubber Fabian D. Benson Instructor: Sharif Muhammad BUS620: Managerial Marketing 21 May 2012 Michelin North America is the world’s number one seller in commercial and heavy truck tires. Michelin North America has been around (in America) since 1907. It was founded in 1888 by Andre and Edouard Michelin brothers from France. Throughout the years this company has been in some stiff competition; like all companies go through that produce a certain product that is vital to the needs of companies, businesses, and individual needs. The competition has been Firestone, Bridgestone, and Goodyear. Although Michelin tires are by far the better product in the tire business out of the three brands, now that the economy is at one of the worse points ever; individuals are looking for the least expensive brand and product. When you have the best product it normally means you have the best technology, equipment to make the product, masterminds behind the ideas, and best goods and services. Along with being the best there is a high cost. Over the years Michelins tire prices have gone up with the cost of rubber. There are two types of rubber that Michelin uses: 1) Natural Rubber and 2) Synthetic Rubber. Synthetic Rubber is the cheapest rubber and the natural rubber is the most expensive. Rubber is a material from latex sap trees that is vulcanized and used in various products; it is the most important piece that goes into a tire. When looking at rubber...
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...might be one of the greatest inventions ever, but what is the most important feature of the automobile that is actually in contact with the ground? The answer is simple, the tires. The tires that we think of today are pneumatic tires, meaning that air is enclosed in the void area between the inside of the tire and the wheel, thus reducing vibration and increasing traction. The first pneumatic tires were used on bicycles, not on cars, but that same technology would come to be a major part of the automotive industry. Since their early uses, there have been safety concerns for tires. This prompted many tests ensure the safety of the product. There are countless numbers of tire manufacturers. For example, alphabetically there is Avon, Bridgestone, Dunlop, Firestone, Goodyear, and Michelin, just to name a few. Two of those manufacturers, Firestone and Michelin, have both had major controversies surrounding the use of their tires. Firestones controversy was with the Ford Motor Company in the everyday world, while Michelins was in the Formula One racing world. Both of these...
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...Running header: Johnson & Johnson Johnson & Johnson: The Tylenol Crisis Renita Edwards Virginia College MGT3410 Mike Aday 3/20/2008 Outline I) Brief history of Tylenol crisis II) Recalling the product from points of view a) Economic point of view b) Legal point of view c) Moral point of view III) Benefit from the company’s credo and mission statements a) Johnson & Johnson b) Bristol- Myers Squibb c) Merck Corporation d) Bridgestone Tires IV) Conclusion Johnson & Johnson: The Tylenol Crisis Brief History During the fall of 1982, on September 30, Johnson & Johnson CEO James Burke received the horrible information that several deaths had occurred. The deaths of seven people were a result of them taking cyanide-laced capsules of Extra Strength Tylenol. This information captivated the nation’s attention. Before this happen Johnson& Johnson “had captured over 35 percent of the $ 1 billion analgesic market- over three times the market share of it’s nearest competitor.” (Boatright, 2007) Tylenol was actually dominating the analgesic market; this product was making a lot of money for Johnson & Johnson. The cyanide was placed into the capsules of the Extra Strength Tylenol, the capsules were easy to lace because they could be pulled apart and put back together again and no one not know it. James Burke and staff found out that “the tampering had...
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...The Organizational Structure of Bridgestone Corporation Deanice Delamar MGT/230 September 9, 2012 Professor Trammell The Organizational Structure of Bridgestone Corporation Bridgestone Corporation is a functional organizational, started in 1931in Japan by founder Shojiro Ishibashi, using an English translation of his surname for the name of the company. As Japan's automobile industry grew, The Bridgestone Group expanded its business to become Japan's largest tire manufacturer. The company also actively expanded overseas, particularly in Asia. In 1988, the company acquired The Firestone Tire & Rubber Company, a well respected global corporation with a venerable history of its own in America. This transformed Bridgestone into one of the world's largest tire and rubber companies, and created a global team dedicated to serving customers worldwide with the highest level of quality, service, and technology. Bridgestone Corporation is a flat divisional organization with geographic regions that only one CEO. Bridgestone has 143,124 employees and 16,019 non-consolidated employees; they have a board of directors which the CEO is a representative board member. They have plants in 25 countries worldwide. Bridgestone is dedicated to planning, manufacturing, sale, installation, lease, repair, and maintenance of the equipment and facilities related to tires, tubes for automobiles as well industrial general rubber products. Materials of natural rubber, synthetic rubber, synthetic...
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...Do you think Bridgestone should have manufacturing facilities in US? Why? Why not? Bridgestone is currently world’s 3rd largest tyre manufacturer with a market share of 10.2%. Its revenues are skewed in favour of Asia and Oceania market where its competitors Goodyear and Michelin are trying hard to make a dent to its business. Moreover Bridgestone’s market share in US (US accounts for 45%of the world tyre market) is just ~2%. 1980s is seeing a lot of consolidation in the tyre industry and three players have emerged as bellwethers of the market. They are Goodyear, Michelin and Bridgestone. Company | Capacity | Main Geographical area of business | Aims to enter | Goodyear | 40 plants in 26 countries. 4500 dealers, 2000 company operated stores | US (market leader). In the replacement market, it had a full line of tyres | Asia market | Michelin | 43 plants in 16 countries | Europe - 40%US - 11% | Asia market | Bridgestone | 15 plants in 6 countries. 2500 dealers in US | Japan – 46% | US and Europe markets | Bridgestone should have manufacturing facilities in US. We base our decision on the following analysis: 1. Bridgestone has a market share of 46% in Japan. It has acquired 4 manufacturing plants in the Asia Oceania region. It is the market leader in this geographic market. It has been able to set up strong OE relationships with automobile manufacturers as well. Almost half of the tyre shops in Japan sold Bridgestone tyres. Therefore it is well positioned to protect...
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...On August 9, 2000, Bridgestone/Firestone Inc. announced it would recall more than 6.5 million tires, most of which had been mounted as original equipment on Ford Motor Co. Explorers and other Ford light trucks. Bridgestone/Firestone had become the subject of an intense federal investigation of 46 deaths and more than 300 incidents where Firestone tires allegedly shredded on the highway. The Firestone tires affected were 15-inch Radial ATX and Radial ATX II tires produced in North America and certain Wilderness AT tires manufactured at the firm's Decatur, Illinois, plant. This tire recall was the second biggest in history, behind only Firestone's recall of 14.5 million radial tires in 1978. The 1978 tire recall financially crippled the company for years to come and the August 2000 recall threatened to do the same. Consumers, the federal government, and the press wanted to know: Why didn't Ford and Firestone recognize this problem sooner? Let us look at the series of events surrounding the tire recall and the role of information management. 1988---Financially weakened from its 1978 tire recall, Firestone agreed to be acquired by Bridgestone Tires, a Japanese firm. To increase its sales, Firestone became a supplier of tires for Ford Motors' new sport-utility vehicle (SUV), the Explorer. March 11, 1999---In response to a Ford concern about tire separations on the Explorer, Bridgestone/Firestone (Firestone) sent a confidential memo to Ford claiming that less than 0.1 percent of...
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...CAR TYRES | AN Industry Overview | This project looks at the Car Tyre industry in India and how the Distribution channel helps this industry to grow and serve the needs of the End consumer. | PROJECT DONE BY:VIKRAM FALOR : DM14157RAMYAA RAMESH : DM14266AMIT SHUKLA : DM14104 | Introduction:- The Indian Tyre Industry is a critical part of the Auto Sector and there is a huge interdependent on those of the Automobile players. The Indian tyre industry accounts for approximately 5.0% of the Global tyredemandgeneratingrevenuesofapproximately`30,000cr for FY2011. Out of which 90-95% has come from the domestic market. There are around 40 tyre manufacturers in India and the top 10 tyre player’s account for approximately 90-95% of the total tyre production in India. The growth in domestic tyre industry was negatively impacted by the global slowdown in2009.Nevertheless,the industry experienced are mark able recovery in 2010. This growth was primarily driven by strong revival in automobile demand on the back of improvement in macro economy and easing of interest rates. The Indian Tyre Industry produced 119.2 mn units of tyres (1.5mntonnes) in 2010‐11. On an average, In Indian early 60.0% of the production is for replacement market, followed by 25.0% sold to OEMs directly and the balance is exported. Globally, the OEM segment constitutes 30.0% of the tyre market, exports 10.0% and the balance from replacement market. Exports turnover for India during 2010‐11 stood at `3,600cr...
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...the same market. Their competitors could essentially fit into two distinct categories: Primary (manufacturer-level) and Secondary (retail-level) Competitors. Primary Competitors Goodyear’s primary competitors are other tire manufacturing companies, both foreign and domestic, such as Michelin, Firestone, Bridgestone, etc. (Also, “private label” tire manufacturers fit in this category?) The industry had, in the last year, experienced many acquisitions or takeovers of smaller tire companies by dominant firms with a bigger market share. The disappearance of the smaller players was indicative of a mature market, thick with price competition, yielding economic conditions that have almost completely annihilated profit margins for all players. At the same time, consumers were becoming savvy about the need for reliability and longevity in their replacement tires, which made it critical for surviving companies to adhere to the new demands. Of all the competing tire companies, Michelin and Bridgestone, in particular, posed the biggest competition to not only Goodyear as a company, but the aquatred as a superior tire. The major key points are that: i. Michelin and Bridgestone were planning to introduce a new tire in the next two years with an improved warranty of 80,000 miles. This was as a result of increasing demand for longer-wearing tires by the typical consumer. In contrast, Aquatred only had a 60,000 mile warranty and this point of product differentiation was bound to have...
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...Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F258708 CoursePack code C-589-202004-STU Michelin Fleet Solutions From selling tires to selling kilometers Case Abstract Michelin, a worldwide leader in the tire industry, launched in 2000 a comprehensive tiremanagement solution offer for large European transportation companies, called Michelin Fleet Solutions (MFS). With this new business model, the company ventured into selling kilometers – instead of selling tires. This decision moves the strongly product-driven firm into the new world of services and solutions. The shift is intuitively appealing, and it provides Michelin with an opportunity to differentiate itself in the tire business. After 3 years, however, expansion is far below expectations and profitability is terrible – despite the outside help of a strategy consulting firm. The case presents the decision point in 2003, whereby MFS’s future has to be decided. Should Michelin seek to further develop this solution offer, and try to repackage the offer yet another time? Or was it just a passing fad that should be abandoned? This case investigates the difficulties that industrial groups face when they transition from selling products to providing service. It enables participants to reflect on the following issues: What’s industrial groups’ rationale for moving towards solutions? What kind of business model reconfiguration does it imply? How does moving...
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...Their main operation: only limited to passenger car, truck, and motor tires (general product), lack of specialized product or we can say that they are underutilized their advanced and innovative technology Main competitors? Michelin they have more diversified market segment: including passenger cars, vans, trucks, farm equipment, earthmovers and handling equipment, bicycles, motorcycles and aircraft. Goodyear Goodyear also applies the same approach with Michelin. Their range of product includes the following product: Automobiles, Trucks, Buses, Aircraft, Motorcycles, Farm Implements, Earthmoving and Mining Equipment, Industrial Equipment, and Various other applications Randy search for fuckin picture like pictures above Bridgestone Bridgestone also has more variety product compared to Pirelli. The production including passenger car, commercial tire, aircraft, offroad tires, motorcycles. Continental Similar to Pirelli in market segment passenger tire, Light truck & SUV, Commercial Tires (Bus & Truck Tires) 3. Economic Slowdown in Emerging Markets which are the main contributors for Pirelli Revenue Economic Volatility (Russia) (4% contribution) Irrespective of the wider politico-economic environment, the Russian tire market is known for being something of a roller-coaster. Looking back over the last 10 years it is not unknown for tire sales volumes to swing wildly by double digit amounts in either direction, sometimes by as much as 40%. Pirelli’s Russian...
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...Evaluating Fuel Reduction Costs for Peregrine Trucking Company MGT325 Instructor: Ricky Benito September 28, 2014 The transportation system is designed to move cargo between points of embarkation to debarkation and serves the customer (requestor) and the carrier (shipper). Within the transportation system, different entities are working together to ensure a smooth reliable process is in place to benefit the customer and the company. As with any business, there are expenses related to the daily operation and with a company that operates modes of transportation, fuel is probably their biggest expense. As a transportation analyst for Peregrine Trucking Company, I will identify five areas in which the company can cut fuel costs. These five areas include optimal use of the trucks, ensuring the right equipment is being used like tires and engines, consideration of fleet commonality, the use of a third part logistics (3PL) and employee retention. Additionally, introducing new processes, equipment and calculating the cost savings will enable management to make proper fuel savings decisions for the company using all available resources we have. Looking at the costs associated within the transportation system, there are two that are calculated as expenses-- variable costs and fixed costs. Though both cost structures reflect a distinct portion of the business expense, variable costs (such as fuel, wages, maintenance and highway user fees) account for 70 to 90% of the operating...
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...of tires in the world. Sears made a proposal to carry one of the company’s popular brands of tires, the Eagle brand. Goodyear declined the proposal in 1989 but due to decline in market share and change in management, the company is giving the proposal a second thought. The company needs to decide whether to accept the proposal and have the Eagle brand sold in Sears or decline the offer and remain the status quo and have the tires sold only through company-owned service centers and franchised dealers. MARKET AND INDUSTRY ANALYSIS The tire industry is global and the tires produced in 1991 were about 850 million. Three largest tire manufacturers account for 60 percent of all tires sold worldwide. They are Group Michelin, Goodyear, and Bridgestone Corporation. The industry has two end-use market; the original equipment tire market (around 25 to 30 percent) and the replacement tire market (around 70 to 75 percent). Major tire manufacturers build their brand name with strong wholesale and retail dealer relationships. Goodyear’s sales in replacement tires is directly affected by the average mileage driven per vehicle. The more people drive, the better the sales of replacement tires. Consumers are very price sensitive and most likely do not know much about tires. The buyers usually take recommendations from the dealer and are not loyal to a brand. Adding retail outlets is giving Goodyear a chance to increase their sales by being able to be recommended by the dealer. With Sears existing...
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