Reference no: EM133776857

Michelin Bibendum Michelin is a leading French brand and manufacturer of tires and rubber products.The company was founded in 1888 by two Michelin brothers and grew to one of the largest tyre manufacturers in the world, with a market share of 14.8% in 2023. Oddly enough, the company also sells popular travel guides and road maps. They can make or break chefs by the number of Michelin stars they award to their restaurants. Michelin stars are a rating system used by the red Michelin Guide to grade restaurants on their quality and excellence. Restaurants can be awarded one, two or three stars, based on various criteria, such as quality of their ingredients used, the harmony of flavours in their dishes, the mastery of various techniques, the personality of the chef, and the consistency of the menu. The Michelin Man (Bibendum) is known word wide. The history of the Michelin Guide The Michelin Guide is considered by many to be the hallmark of global fine dining and quality cuisine. It has immense power over chefs, restaurateurs, and foodies world wide. It may divide opinions across the food service industry, but its influence is undeniable. French chef Paul Bocuse, a pioneer of nouvelle cuisine (a modern French style of preparing dishes that avoids rich, heavy foods, rather emphasizing the freshness of the ingriedients used in prepring the dishes and the presentation thereof), once said, "Michelin is the only guide that counts." The birth of the famous little red book is a very interesting story. When the Michelin tire company was established in 1888 by brothers André and Édouard Michelin, it was a time when driving was perceived as a novelty to most. There were less than 3 000 cars in France at the time. However, the brothers were quick to recognize driving and mobility as a lasting trend. To encourage more road travel, and hence boost tire sales, they decided to create a comprehensive guidebook for motorists which catalogued hotels, restaurants, mechanics, and gas stations. In 1900, the very first edition of the Michelin Guide was published, and 35 000 copies were given out for free. As the tire company grew, so did the Michelin Guide. Country-specific editions were published throughout Europe, starting with Belgium in 1904. A charge was introduced for the first time in 1920 when André Michelin walked into a garage and saw copies of the guidebook being used to support a workbench. Realising that "Man only truly respects what he pays for," the company started charging 7 francs for the guides. By that time, the restaurant section of the Michelin Guide had become so popular that the company started to recruit anonymous inspectors to visit and review restaurants. Six years later in 1926, the Michelin star system was born. There were other notable changes as well, namely listing restaurants by specific categories, the debut of hotel listings and the abandonment of paid-for advertisements. The single-star restaurant review system also expanded to the present a three-star system in 1931: "A very good restaurant in its category." "Excellent cooking, worth a detour." "Exceptional cuisine, worth a special journey." In 1957, the Michelin Guide began awarding accolades to restaurants that provided "good meals at moderate prices," a feature now called Bib Gourmand. The Bib Gourmand symbol-the image of Bibendum or the Michelin Man licking his lips-debuted in the Michelin Guide in 1997. What began as a promotional device for the Michelin brothers' tire business at the turn of the 20th century has grown into an authority on global fine dining. Since its first publication in 1900, more than 30 million copies of the Michelin Guide have been sold across the globe. It presently rates over 40,000 establishments in over 25 countries across four continents. Performance, strategy, and structure Michelin has a rich history of a company that started by manufacturing tires for bicycles and horse-drawn carriages. Then, they introduced pneumatic tires (rubber tires inflated with air) for automobiles in the 1980s. Michelin was reorganised as a holding company in 1951, with interests in tires, other rubber products and synthetic rubber. Over the years, Michelin's worldwide revenue increased, despite frequent fluctuations in the market. The lowest point for the company occurred in 2009, which coud be attributed to workers and managers in the tyre factories having different points of view regarding better use of technology with new projects which was not going according to plan. The world was changing, but Michelin was stuck with a pyramidal management structure better suited for a company operating during the first industrial revolution than operating in the digital age. It was imperative for the company to create a new organisational structure. In May 2012, Michelin appointed Jean-Dominique Senard, a French industrialist in the automobile industry as chief executive officer. Senard was the first non-family member ever in this position. In 2015, he embarked on a restructuring process and transformed the company's culture by focusing on empowerment, responsibility and accountability. The focus was to create more autonomy for employees, allowing them to perform managerial responsibilities without waiting for managers to tell them what to do. Before this initiative, employees viewed themselves as order takers from the bureaucrats above them, who made all the decisions. In this environment, managers were expected to know everything, and they had complete control over operations and performance. Communication was often seen as the start of disciplinary action. This led to lower productivity, declining safety records, more wasted time and wasted materials. The changes CEO Senard affected to the organisational culture made a huge difference to how work was scheduled and performed at the company. Workers could plan production schedules a week in advance, decide on the targets they had to meet, divide responsibilities for jobs among themselves, and manage employee absenteeism more effectively. Some of the immediate benefits of this change in culture were improved safety records and reduced waste. Employees were now responsible for meeting their own targets. With managers and employees striving to attain the same targets, the image of managers changed subtly from being bosses to coaches. Shop floor managers were seen as guiding their teams through unpredictable order cycles, qualifying the decisions the teams took and developing the potential of each team member. Employees with stronger potential than others to become team leaders were identified in this new environment. Eventually, teams were given the freedom to make their own decisions. The structure of the company changed from a bureaucracy and pyramidal structure to a flat and lean company. The company's old model of command and control was abandoned and replaced by a collaborative model based on trust and confidence. Michelin's annual gross profit increased with approximately 38% from 2009 to 2021, demonstrating the company's financial growth and stability in the tire industry. Corporate governance The Michelin Group's parent company, Compagnie Générale des Établissements Michelin (CGEM), has been organised as a partnership limited by shares (SCA). Within this legal framework, Michelin has armed itself with a governance structure that is robust, flexible, and balanced. The Michelin partnership limited by shares therefore deploys a long-term strategy that is fully aligned with shareholder interests. The establishment of a direct relationship with each shareholder is promoted by the fact that only registered shares are held. It is also focused on driving continuous improvement in the Group's governance system and practices, in compliance with the recommendations of the Afep-MEDEF Code, which is the corporate governance code of reference for publicly trade companies. Michelin's governance comprises three bodies that guarantee a clear separation between the supervisory and management powers: the Managers, the Supervisory Board and the Société Auxiliaire de Gestion (SAGES = Auxiliary Management Company). The supervisory board is responsible for assessing the quality of the Group's management and presents a report on its findings to shareholders at each Annual Meeting. It also issues opinions on the Group's strategy, capital expenditure, acquisitions and disposals, Michelin's social responsibility policies, and the election or dismissal of Managers and their compensation. The future Through its strategic plan for 2030, "Michelin in Motion", the Group will continue its targeted growth in tires, while also relying on its distinctive capabilities by setting ambitious goals in the fields of connected solutions and high-tech materials. These developments should represent between 20% and 30% of Michelin's turnover in 2030.

Question 1

'Over the years, Michelin's worldwide revenue increased, despite frequent fluctuations in the market. The lowest point for the company occurred in 2009'. During 2009, Michelin needed to make various changes. Draw a strategic map by specifying strategic objectives for each element of the Balanced Scorecarsd (as explained in this module) that could be formulated for the company during 2009 to 2021. (

Question 2

1. Identify the type of strategic change implemented in the Michelin company commencing in 2015 by their CEO. Substantiate your answer. 

2. Use the steps in the best practice model of planned change covered in this module, to the strategic changes implemented by the CEO in 2015. In the answer, you need to identify each step of the model and apply it correcty to the Michelin company.