Goodyear Case Study Essay
The United States experienced a remarkable growth after the World War II it consolidated their position as the richest country and a very interesting market. In the early 1970s many European companies chose to enter the American market. This led to interaction between the multinationals that had to defend their market and the companies trying to enter the foreign market. Those interactions can be represented as “global chess game”(Lassere, P. 2012). How could company A react to the move of company B? We will during this essay study how Goodyear tried to defend its market by engaging in a Price War with Michelin.
As every company, Michelin tried to expand its market in the early 1970’s. Michelin was the largest tyre manufacturer in Europe and the 3rd biggest worldwide. Given that the demand of radial tyres increased rapidly and Michelin produced the most competitive one they decided to penetrate the North American market (Karani, A.,Wernerfelt, B. 1985). In 1968 Ford decided to use Michelin radial tyres to equip the new Lincoln Continental III as well as SEARS who chose Michelin’s
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1985). Michelin anticipated that before entering the North American market but Michelin failed to anticipate that Goodyear could engage in Cross-Parry. “Cross-Parry is used when a firm that is challenged by a competitor in one area chooses to challenge this competitor in another area” (Dr. Peter Yannopoulos). Goodyear used the European market to respond to their competitor. The US giant decided to reduce the prices in Europe where Michelin had his biggest market share and Goodyear a relatively low one. This reaction was very efficient, as it forced Michelin to restore prices in Europe but also in North America. Michelin’s profits dropped critically and slowed their expansion in North America (Dr. Yannopoulos P.,
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