No.7, 563-574 (2006) A Consideration of the Goodyear Tire & Rubber Company Global Strategies and Valuation of These Strategies USHIYAMA Yukio Nihon University, Graduate School of Social and Cultural Studies Goodyear is one of the world s largest tire companies, with operations in most regions of the world. This paper discusses the global strategies of Goodyear by following the history of the management of the company, in order to unveil the features and effective measures of its global strategies. In recent years, the company has incurred financial difficulty, with the consequence that various efforts should be taken by the company immediately. This paper also intends to evaluate the recent strategies and efforts of the company based on an analysis of its financial data and details of the strategy. 2006 1898 1920 1898 Frank Seiberling 1898 1910 40% 1000 1911 1913 1916
1910 1917 1910 1916 1920 1926 2 3000 1920 1940 1927 1929 1933 1930 40 1945 1946 1935 1947 1950 1980 564
1950 60 1970 1979 1950 70 1950 60 1970 1950 1954 1958 1967 Goldsmith 1980 1980 1980 1981 1986 29 Goldsmith 1980 Cereron Corp. 1986 Sir James Goldsmith Goldsmith Goldamith 4000 565
1980 1980 South Pacific Tyres 50 Lawton Danville Topeka 1990 1990 1980 1990 Ceat Goodyear Dalian TC Debica Goodyear Polska Dackia Sime Darby Pilipinas Contred 60 Lawton Gadsden Topeka Union City Napanee 1990 1980 1997 1999 100 2003 100 75 1 75 80 20 51 49 566
2000 run-flat Pax System EMT run-flat 1998 IMPACT 1950 70 1980 1999 1970 19 20 20-21 20 20 198919 22 567
(Tire Business ) (Tire Business ) 568
1940 1950 70 1990 1990 1990 9 1989 (1997 South Asia Tyres (1998) (1998) (1999) Union City Napanee (1999) 1992 Sears 1993 1000 Penske Automobile Centers (1995) (1995) 1999 1998 1999 2001 2004 1997 569
(1997) (1998) 4200 (1999) (2000) 7200 (2001) (2002) 80% (2003) Hantsville (2003) (2004) 2000 2001 1998 2003 394 2002 1990 2005 197 2004 175 1997 17.3% 10 2004 74 0.5% 1997 2000 2001 2002 2004 11 1997 1998 1999 2000 2001 2002 2003 2004 13,065 13,081 13,355 14,417 14,163 13,856 15,102 18,353 1,163 990 506 543 257 347 247 829 559 638 242 40-254 -1,247-807 115 8.9% 7.6% 3.8% 3.8% 1.8% 2.5% 1.6% 4.5% 4.3% 4.9% 1.8% 0.3% -1.8% -9.0% -5.3% 0.6% 9,917 10,589 13,278 13,568 13,783 13,039 14,701 16,101 1,420 2,042 2,624 2,534 2,181 1,881 3,553 4,612 1,351 1,976 3,425 3,586 3,568 3,643 5,086 5,680 3,396 3,746 3,793 3,503 2,864 255-32 74 34.2% 35.4% 28.6% 25.8% 20.8% 2.0% -0.2% 0.5% 789 702 1802 468 486 540 290 651 1999 95,472 96,950 100,649 106,724 100,779 94,122 89,293 84,786 10 Tire Business 2006 828 11 Goodyear Annual report 1999 2004 8 5000 570
12 1997 1998 1999 2000 2001 2002 2003 2004 6,208 6,508 6,649 7,111 7,170 6,703 6,746 7,855 2,023 2,140 2,643 3,198 3,124 3,319 3,922 4,476 905 867 813 793 703 807 1073 1,279 1,413 1,270 948 1,048 1,014 948 1,041 1,245 667 519 593 525 495 531 582 1,312 11,215 11,304 11,646 12,675 12,506 12,309 13,363 16,167 383 314 26 261 101-58 -131 32 167 200 188 89 44 101 130 253 102 102 50 55 14 93 147 194 234 186 68 70 85 108 149 251 59 8 26 18 20 44 50 61 944 810 358 492 265 288 344 790 13 14 12 Goodyear Annual report 13 GM 14,,2006 571
1997 1998 1999 2000 2001 2002 2003 2004 1,163 990 506 543 257 347 247 829 NOPLAT 698 594 304 326 154 208 148 497 4,747 5,722 7,217 7,089 6,432 3,898 5,054 5,856 ROIC 15 () 14.7% 10.4% 4.2% 4.6% 2.4% 5.3% 2.9% 8.5% 467 506 582 630 638 605 692 629 1165 1,100 886 956 792 813 840 1,126 16 789 1,324 2,385 378 132 241 1,962 1,710 376-224 -1,499 577 660 572-1,122-583 ( ) CF ( 97) 376-216 -1348 493 537 447-841 -419-969 (1997) 8,321 (1997 ) 7,353 (2004 ) 10,226 1997 2004-969 2005 7,353 2004 10,226 NOPLAT 17 40% WACC 18 10 ROIC WACC NOPLAT 1997 2001 2004 2002 1997 ROIC 2001 2.4 2004 1997 9,447 8,321 1997 590 1997 1999 2003 2004 1999 20032004 15 Return on Invested Capital 16 17 Net Operating Profit Less Adjusted Taxes 18 Weigted Average Cost of Capital 1997 572
1997 1998 1999 2000 2001 2002 2003 2004 ROIC 14.7% 10.4% 4.2% 4.6% 2.4% 5.3% 2.9% 8.5% WACC 5.8% 4.7% 6.3% 5.2% 5.1% 4.0% 4.3% 4.2% ROICWACC() 8.9% 5.7% -2.1% -0.6% -2.7% 1.3% -1.3% 4.3% 4,747 5,722 7,217 7,089 6,432 3,898 5,054 5,856 422 328-149 -46-173 51-68 250 ( ) ( 97) 422 314-134 -39-141 40-51 180 590 (1997) 4,111 1997 ( ) 4,747 (1997 ) 9,448 (2004 ) 13,138 : 1997 2004 2001 2003 ( ) 156,225 175,377 ( : ) 60.25 11.04 9,413 1,935-913 -3,375 1,325 5,781 48.6% 9,825 4,341 2002 2004 1997 26.6% 23.7% 2005 17.3% 573
: 1997 2004 7,353 10,226 6,002 4,546 9,447 13,138 590 819 8,096 7,458 9,283 4,341 9,413 1,935 1997 2004 04 819 1997 70 94 6080 1997 94 2004 19 : Goodyear Tire and Rubber Company, Annual Report 1997-2005 (1) NOPLAT( (A) (A)= ( ) (2) (B) (B)= (3) ROIC (C)(C)=(A)/(B) (4) (D)(D)=(A) (5) (E) (E)= (6) (F) (F)=(D)(E) (7) WACC (I) (8) (G) ( DCF ) NOPLAT(A)t+1 1 RONIC (G)t WACC g (9) (H) (H)= (F) (I) (10) (J) (J) = Σ1997 2004 (H))(G) (11) (K) (K) = (B) (ROIC(C)WACC(I) D (12) (L)( ) (L)t ()t+1 WACC (13) (M) (M)= (K) (I) (14) N (N)Σ1997 2004 (M) (L) Tire Business, 2006 8 28 Bartlett, C. and S. Ghoshal (1989) (15) (P)= (16) (Q)= Bartlett, C. and S. Ghoshal (1998) (17) (R)= (P) M. E. Porter (1989) (2006) (Q) - RONIC : Return On New Invested Capital - g NOPLAT 1999 2 4 13 (Received : January 10, 2007) NOPLAT(A)t+1 RONIC WACC (WACC ) (Issued in internet Edition : February 1, 2007) RONICWACC 574