Michelin as one of large tire companies has picked differentiation competitive strategy in order to dominate market. I consider two major determinations of why it has chosen this strategy that drive profit for Michelin in the rapidly changing world. Firstly, Michelin has attempted to have positive influence in customers via brand image. Michelin has worked on making brand image for long time, and the firm did it via investment in Research & development. Now Michelin has a diversified brands portfolio. Increasing competition in a globalized economy has intensified the importance of identifying the drivers of sustainable competitive advantages. Although some tangible factors can build distinctive characteristics, we should not overlook role intangible factors such as “corporate reputation”, “brand equity” and “customer-relationship management” in adding company value. Despite innovation being used to differentiate certain brands in the market, tires are close to being commodities, and competition from low-labor cost manufacturing and standardization enter a downward pressure on price. Hence, Michelin has had to a brand image to pursue earning. Otherwise, due to reasons above - standardization and access competitors to low-labor cost - it has not been able to compete through decrease in cost and prices. Secondarily, interestingly, one another of strengthens Michelin …show more content…
In addition, in order to compare Michelin with a main competitor, we chose Continental, which follow an identical accounting standard. According to our financial analysis, Michelin has not had good performance over the 5 years. We can view its performance in trend of its profitability ratios that has been decreasing. In addition, operating management ratios show how bad Michelin has had performance. Generally, over the time, Michelin has not had good performance, but its rivalry, Continental, has performed