The global tire industry continues to consolidate. Michelin buys Goodrich and Uniroyal and builds…

The global tire industry continues to consolidate. Michelin buys Goodrich and Uniroyal and builds plants throughout the world. Bridgestone buys Firestone, expands its research budget, and focuses on world markets. Goodyear spends almost 4% of its sales revenue on research. These three aggressive firms have come to dominate the world tire market, with total market share approaching 60%. And the German tire maker Continental AG has strengthened its position as fourth in the world, with a dominant presence in Germany. Against this formidable array, the old-line Italian tire company Pirelli SpA found it difficult to respond effectively. Although Pirelli still had 5% of the market, it was losing millions a year while the competition was getting stronger. Tires are a tough, competitive business that rewards companies having strong market shares and long production runs. Pirelli has some strengths: an outstanding reputation for excellent high-performance tires and an innovative manufacturing function. Use a SWOT analysis to establish a feasible strategy for Pirelli.

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