Bridgestone Corporation’s Strategic Report

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Executive Summary and Introduction

Introduction

Business environments are getting more competitive today due to the increasing levels of risks and uncertainties. Most markets are also getting saturated. Business strategy is a management philosophy holding that sustainable competitive advantage is attainable if all the company’s policies are enshrined in its strategic indent. Strategic management defines the direction the organization would take toward achieving its objectives. Business strategy is not a plan on a piece of paper but ideas communicated across all levels of management (Nyacanchu, Joel, & Bonuke, 2017, p. 5). Despite the business environment changes, strategy formulation is still the best way to assure long-term business stability. In formulating strategies, firms should focus on competitive and distinctive competencies and occasionally evaluate the strategies to do reviews. Strategies should never get rigid but agile when circumstances demand them (Yilmaz & Flouris, 2017, p. 153). This paper will analyze Bridgestone’s strategies before preparing a strategic report and recommendations for the organizational redesign.

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Introduction to Bridgestone Corporation

The present Bridgestone Corporation was founded in 1930 when Firestone Tire and Rubber Company merged with the initial Bridgestone Tire Company. The emergence of the Second World War was both an opportunity for the company and a threat (Bridgestone). The company could supply tires to military tracks despite the strict wartime regulations. Despite the bombings in Japan, the company’s plants were not destroyed but resumed entire operations after the war despite pressure from labor unions to improve their welfare. The end of the Second World War in 1945 marked a period of economic recovery and growth for Bridgestone Company. In 1949 the company established an SBU responsible for manufacturing bicycles which also extended to manufacture motorcycles later (Bridgestone).

In 1961, the company went public, and the company shares were listed on the stock exchange market (Bridgestone). The company was now growing and experiencing diseconomies of scale that necessitated changes in administrations, organizational structures, and growth strategies. The administration started targeting quality controls to compete in the industry, which was hitherto attracting many investors. The company also developed strategies for going international and opened manufacturing plants in Singapore, Thailand, and later in the US by 1967. The company’s strategy of going international became the norm aiming at targeting opening subsidiaries in Europe, India, and Australia. By 1978 the company had invested in technology inventions and innovations, leading to radial tires’ development, among other developments (Bridgestone).

Strategy, Stakeholder Expectations vs. Bridgestone Corporation Performance

Strategic Management

Strategic management is the management approach of outlining organizational plans, courses of action, objectives, and paradigms for generating and allocating resources that promote organizational growth and development. The aim of formulating business strategies is to provide an integrated approach to achieving organizational goals (Gürel & Tat, 2017, p. 51). Strategies define the mechanisms applied by an organization towards achieving set objectives. The idea in strategic management is that organizational competitiveness is better achieved if all the stakeholders, resources, and resources are directed in a common direction (Nyacanchu et al., 2017, p. 5). Strategic management thus entails defining, developing, and implementing set policies to achieve common long-term goals. A strategy can be a plan, pattern, or ploy to be adopted by the company in defining its growth and development.

Steps in Strategic Management

Environmental Analysis

The first step in strategy formulation is analyzing the company’s market environment. The market analysis enables the understanding of the business environment in which the business operates (Gürel & Tat, 2017, p. 51). The main market analysis tools are the SWOT, environmental scanning, and industry analysis (Nyacanchu et al., 2017, p. 5). The market analysis enables the firm to understand the market and its competitiveness against the strengths and weaknesses of the firm. Strategies keep adjusting to social, political, environmental, economic, technological, legal, and ecological changes.

Understanding Objectives

The second stage in strategy management entails defining your organization’s strategic direction. The direction should be clear for all the stakeholders of the organization and emanates from the market analysis. For example, after conducting an industry analysis using Michael’s Porter five forces that shape the industry, the company may develop distinctive competencies to promote competition. The company’s objectives are stated in a measurable, Attainable, Realistic, and timely manner (Yilmaz & Flouris, 2017, p. 156).

Organizational goals are also divided into specific actions to be taken by each Strategic Business Unit. All the levels of the organization must understand the organizational strategy to promote the achievement of organizational objectives (Gürel & Tat, 2017, p. 51). The middle-level management acts as a go-between the top-level management and the low-level management (Yilmaz & Flouris, 2017, p. 155). Since the SBUs are established at the middle-level management, each SBU has a specific activity to perform and its competitors. SBUs are allowed to develop policies for achieving their specific objective.

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Understanding Customer and Market and Strategy Development

The third step of strategy management entails evaluating customers and the market. For effective fulfillment of organizational goals, the objectives should synchronize with both internal and external customers. The objectives must support satisfaction while the employees must provide the strategy implementation (Gürel & Tat, 2017, p. 51). In determining the customers’ demands against the organization’s capability, the organization should conduct a SWOT analysis.

Stakeholder Expectation

A stakeholder is any person, organization, or group interested in the operation of an organization, either directly or indirectly. Stakeholders interested in the operation of Bridgestone Corporation include Employees, government, customers, competitors, shareholders, suppliers, community, media, civil societies, environmental organizations, and human rights activists, among others (Vevere & Svirina, 2020). Stakeholders’ expectations of different stakeholders include are as follows:

Customers

Customers are the buyers and stakeholders responsible for pulling the supplies of Bridgestone through creating demand. Bridgestone Corporation has customers from different continents, such as Europe, Africa, North America, and Asia. Customers require to be supplied with the right product at the right time and place. The customer wants quality products delivered immediately after ordering (Vevere & Svirina, 2020). Inventory optimization techniques should get employed, such as the ken ban system, Economic Order Quantity, or the ABC classification techniques get used to synchronize demand and supply.

Competitors

Competitors are organizations with similar interests to that of Bridgestone Tire Company. Typical competitors in the tire industry include Continental, Yokohama, Good year, Michellin, and Trelleborg. Competitors develop strategies to take the markets that Bridgestone Tire Company initially commanded. For example, in the year 2018, the company faced stiff competition that reduced its net income below Michelin’s.

Income of Bridgestone against that of Michelin (Bridgestone)
Figure1: Income of Bridgestone against that of Michelin (Bridgestone)

Investors

Investors are persons with financial interests in the company and include both shareholders and debt holders. The ordinary shareholders are the company owners and will want to have the company’s value increased (Ramanathan et al., 2017). The two types of investors experience conflicting interests in the success of the company. However, the two would like to have the company value increased to attract profitable investments. Although the Gross profit margin of Bridgestone Company has been decreasing in the last five years, their stock processes have shown an increase for the last twenty years.

Bridgestone revenue
Figure 2: Bridgestone revenue (Bridgestone)

Bridgestone stock price

 Bridgestone stock prices
Figure 3: Bridgestone stock prices (Bridgestone)

Employees

Employees have both safety and income interests in the organization. Employees exercise their rights through trade unions and labor laws that govern employment contracts between the employer and the employees (Ramanathan et al., 2017). In strategy formulation, the company should note that employees have goals that differ from that of the organization. The goals of employees should get incorporated into those of the organizations.

Suppliers

Suppliers are interested in revenue and safety while selling goods and services to an organization. Suppliers are essential elements in production since they provide raw materials to be used in production (Ramanathan et al., 2017). Bridgestone Company should pay the suppliers reasonable prices for their supplies. They should also pay them on time and establish interpersonal relationships that enable them to relate well. The tools for analyzing supplier relationships include the Influence-impact grid, power-interest grid, power influence grid, importance-influence grid, and salience model.

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Government

The government has interests in Tax collection and GDP contribution. The companies, employees, and all the other stakeholders pay taxes to the government. The government also spurs economic growth and development through passing laws and policies that ensure an enabling environment for doing business. Bridgestone Company must operate within the corporate law and labor laws requirements and follow economic, political, and social policies that promote economic growth that boosts the national GDP.

Communities

Communities get interested in economic development, safety, and health. An organization is a system that uses people and resources from the community to generate income. In business operations, the business leaves the surrounding polluted, resource degradation, and adverse effects on the local community’s health (Ramanathan et al., 2017). Bridgestone should develop strategies for meeting the demands of the communities to promote a positive public image.

Organizational Performance

Organizational performance is measured using key performance indicators such as growth, profitability, and shares in the stock exchange market. To promote organizational performance, an organization should align the goals the organization to that of the various stakeholders (Ramanathan et al., 2017). In the last five years, Bridgestone Company has increased its share price, meaning that more investors will want to invest n the company despite the decrease in revenues due to the loss of market share.

The impact of external factors on strategic management in the international context

Political factors

Political factors entail factors associated with global, regional, or national politics that affect the running of a business. Bridgestone has found places to do business in many parts of the world, and the business’s success in those countries depends on political stability. During the Second World War, Bridgestone operated in an environment characterized by wars. While the company’s headquarters were not directly affected by the bombing of Nagasaki and Hiroshima in Japan, the global political unrest restricted both outbound and inbound supply chains leading to low sales. During the time of the war, the company contracted the military to supply the truck tires. In making strategic decisions, the company must put into consideration government tariffs that affect sales. The strategies must also address the political stability in major company operating zones.

Economic factors

Economic factors include macroeconomic factors such as taxation policies, international trade agreements, import and export policies, and currency fluctuations that affect the general ease of doing business in an economic system. Bridgestone has survived harsh economic times, including economic depressions and global oil shortages. The current status of Covid-19 has affected the economy in almost all sectors of the economy, and Bridgestone has suffered economic downturns occasioned by restrictions of movements and lockdowns.

Social factors

Social factors affect society, such as gender issues, crimes, and changes in consumer buying behaviors. A business must monitor and respond to social issues on gender equality, child labor abolition, terrorism eradication, global warming concerns, and environmental conservation in line with the specific society’s requirements in the business. Bridgestone operates in different economic regions with different cultural and social issues to respond. Every subsidiary company should conduct independent research on their targeted market and identify the social demands of society. Their strategy formulations should align with the social demands of the environment the organization operates.

Technological factors

Technological factors entail factors that promote inventions and innovations of new products and services. Bridgestone has been a leader in the invention of the tire manufacturing industry. Bridgestone Company should also note that technology changes with time, and thus research should be an ongoing process. Since the company has strategies of going global, modern communication technology should get employed. The organizational manufacturing plants should also get integrated using modern information systems such as EDI, MRP, ERP, Decision support systems, and Group discussion systems. Applications of management information systems promote coordination of processes and sharing of data.

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A new strategy to face the challenges and meet organizational objectives

Michael Porter’s Five Forces That Shape the Industry

The analysis of the internal and external environment helps a firm to understand the environment the organization operates. A major reason for doing environmental scanning is to help to understand the competitive nature of the industry before developing competitive strategies for the firm (Yilmaz & Flouris, 2017). Porter’s Five forces model can get used by Bridgestone to evaluate the competitive strength of the organization as well as that of the industry.

The model was developed by Michael porter in the year 1979 to help firms evaluate the competitiveness of industry players against the individual firm’s competitive strengths. According to Michael Porter, industry attractiveness for investment is determined by five forces that include: Bargaining power of the buyers, bargaining power of suppliers, threats of new entrants, threats of new substitutes, and competitive rivalry. A business will be attractive for investment if either or all the five forces decline. Porter’s five forces analysis of the Tire manufacturing industry can help Bridgestone to make wise decisions with an eye to mastering industry competition.

Threats of New Entrants

Bridgestone finds industry attractiveness with strict barriers to entering the industry is good for investment and vice versa. Analysis of the threats due from new firms that may make the decision helps to decide the risks associated with trading (Ramanathan et al., 2017). Factors that may restrict entrance into the Tire industry include restricted distribution channels, high switch costs, high capital investments, and cumbersome regulatory frameworks. Bridgestone should develop solid customer relationships and long-term contractual agreements and do market research to determine customer preferences to address the threats of new entries.

Threats of Substitutes

Substitutes are alternative products that can replace Bridgestone products. They increase competition challenges in the industry. Threats of substitutes are high when there is the availability of cheaper substitutes in the market, the switching cost of switching substitutes to the Tire industry is low, or when the substitutes are superior to the products offered by Bridgestone. On the other hand, the threat of Bridgestone substitutes is low when the switch costs are high or when the substitutes cannot offer the exact purpose offered by Bridgestone products. To address threats of substitutes, Bridgestone should work on loyalties to increase switch costs and maximize value for money by decreasing prices while increasing quality with the view of maximizing value for money and increasing customer experience.

Industry rivalry

Industry rivalry is determined by the number of competitors in the industry and the level of collaboration. The competitors against Bridgestone will be intense when there are few players in the industry. The field is fast growing and thus attractive; market leadership is clear, highly differentiated products and low psychological switch costs. Factors that increase rivalry in the industry include; diverse competitors targeting the market, insufficient customer loyalty to the existing products, and competitors of equal sizes (Ramanathan et al., 2017). Bridgestone should develop strategies to focus on solving the customers’ expectations, developing long-term relationships with customers, and establishing alliances with existing firms to address industry rivalry.

Bargaining Power of the Suppliers

Suppliers supply raw materials to Bridgestone, and their bargaining power is high when the supplies they provide are scarce, when they are large, or they have established strong collaborations. Bridgestone can develop strategies for acquiring materials from several production lines, bargain for long tern contractual relationships, or produce the raw materials in-house.

Bargaining Power of Buyers

The bargaining power of the Bridgestone products can be high if the buyers are large companies, the buyers are protected by consumer protection laws, or when the consumers collaborate. Bridgestone should diversify the customer base, intensify marketing, and raise the customers’ switch costs to neutralize the buyer’s bargaining power.

Business strategy supporting innovation and change

Michael Porter’s five forces model of business strategy development provides an accurate way of screening the industry to understand its competitiveness. Bridgestone Corporation engages in international business, and many stakeholders expect a lot from their business operations (Ramanathan et al., 2017). Because of the many risks associated with the tire industry, the outcomes vary significantly from the planned. Companies should extensively examine their supply chain capabilities, conduct a SWOT analysis, and identify their core competencies and distinctive competencies to help attain their planned supply chain goals. A vibrant multipurpose distribution network that incorporates physical warehouses, production, and transport can help ensure responsive and flexible variability environments.

Bridgestone Global logistics involve long supply chains that call for more risk of potential disruptions due to natural risks and human error risks (Yilmaz & Flouris, 2017). The business strategy develops a supply chain plan that helps to mitigate disasters such as earthquakes, tsunamis, and pirates in the sea. In modern society, reverse logistics, green purchasing, and consumer involvement in supply decisions have become common. In the future, any business that will not adhere to the new demands may be thrown out of the market.

Bridgestone Global supplies involve multiple risks ranging from pirates, natural calamities, political instability, and cultural and economic problems that lead to delays in supplies. Delays can lead to serious inconvenience to the customers, extra logistic costs, damage to goods and services, and poor performance of the business. To mitigate the delivery problems, Bridgestone should employ modern cargo tracking technology to help to trace the position of goods in transit. Companies can also choose to hire third-party logistic services that are more experienced to help transport cargo and value-added logistics management (Ramanathan et al., 2017). Online transactions should be encouraged to place and manage orders and track them to reduce the lead time.

Global business has been inhibited by inadequate infrastructure facilities such as airports, seaports, and poor material handling equipment, especially in developing countries. The inadequate facilities lead to unexpected delays and expenses, which can threaten the life of the business (Kamariotou & Kitsios, 2020). Bridgestone can mitigate these problems by avoiding engaging in trade in those countries without streamlined and well-established material handling facilities. Bridgestone supplies pass through several persons, including packaging personnel, loading and offloading, transportation, revenue authority inspectors, and port authorities, before reaching the intended destination (Yilmaz & Flouris, 2017).

Michael porter’s five forces model is applicable when the matter of analysis determines the industry’s competitive nature. The firm needs to scan the market to determine the factors affecting the organization’s operations; the environmental scanning tool is the most applicable (fiore, 2017). On the other hand, SWOT analysis is used when there is a need to determine the strengths and weaknesses of the company against the competitors. However, the Porter five forces tool was the most appropriate for Bridgestone Company.

Development of an implementation plan for the strategy

A strategic implementation plan is the order of activities planned to implement a strategic management strategy. My implementation of Bridgestone’s new strategy will involve several steps.

Preliminaries

The first step in strategy implementation will be analyzing the market to determine the demands of the strategy. To analyze the market, I will conduct an environmental scanning. The second step will include defining the goals and objectives to be achieved by the implementation process (Kamariotou & Kitsios, 2020). The goals and objectives will get communicated to all the stakeholders (Fiore, 2017). Porter’s Five Forces scanning technique will get used to determine the competitive nature of the market before inviting the stakeholder’s views on the implementation process.

Organizational Planning

To effectively change the organization’s strategy, I will restructure the chain of command, organizational structure, and leadership. The leaders who support the change will be used to spearhead the new strategies (Fiore, 2017). At this stage, I will appoint a “Strategy implementation committee,” comprising members from different departments with diverse expertise.

Actual Strategic Management Process

After formulating the plan with clear objectives, I will mobilize all the stakeholders and resources toward achieving the objectives (Fiore, 2017). The strategic management will include a continuous and persistent rethinking and changing of the strategy design to fit the interest of the ultimate customer. I will also evaluate and review the implementation process based on recommendations suggested by all the stakeholders through the strategy implementation committee.

Change Management

While some stakeholders will welcome the strategy implementation process, other stakeholders may resist. The new strategy will get associated with new technology leading to the laying of some workers who cannot adapt to new technologies. The changes will also attract extra costs which will need to get solicited from the finance department. To minimize the chances of resistance, employees will get involved in the formulation and effecting of the changes.

Recommendations and Conclusion

Recommendations

Bridgestone Corporation goes for a business strategy that promotes the organization’s goals. Manufacturing plants should be located in a strategic place (Fiore, 2017). Bridgestone Corporation is a global organization that should choose to hire the most qualified staff. The strategy chosen should promote the security of goods and services. Bridgestone Corporation needs to establish relationships with suppliers; the best decision is the supplier relationship model. Quality control systems and mechanisms must get established in Bridgestone to promote quality improvements. The systems should also promote online record keeping and reporting. The communication system installed in Bridgestone should be up to date and not likely to get obsolete. In choosing the warehouse, Bridgestone Corporation should uphold high human resource management practices. They promote employees’ morale and aim toward achieving organizational goals (Fiore, 2017). Human resources will work well if the organization minds its welfare as they mobilize resources towards achieving the organizational goals.

Conclusion

Bridgestone Corporation is a professional manufacturing organization that needs growth strategies to achieve its goals. Being a global organization Bridgestone Corporation needs to adopt excellent strategic management skills. The managers should use the available strategic management tools to come up with the best strategy implementation skills. This strategy implementation project is contributing to bodies of valuable knowledge in business strategy formulation and implementation. The organization will also need to develop other components of logistics, such as procurement processes, customer service, transportation, and material handling.

References

Fiore, A., 2017. Sales and operations planning process: Bridgestone case study. Web.

Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International Social Research, 10(51). Web.

Kamariotou, M. and Kitsios, F., 2020. How Managers Use Information Systems for Strategy Implementation in Agritourism SMEs. Information, 11(6), p.331. Web.

Nyacanchu, T.O., Joel, C. and Bonuke, R., 2017. Moderating Role of Transformational Leadership Behaviour on The Relationship Between Dynamic Capabilities and Performance of Manufacturing Firms in Nairobi County Kenya. International Journal of Economics, Commerce and Management United Kingdom, 5.

Ramanathan, N., IAQ Symposium, Bled, Slovenia, October 2017 Redefining Organizational Performance. Web.

Vevere, V. and Svirina, A., 2020. Business Ethics and Corporate Social Responsibility. Web.

Yilmaz, A.K. and Flouris, T., 2017. Case Studies for Enterprise Risk Management from Leading Holdings: TAV Airports Holding and BRISA Bridgestone Sabanci Tyre Manufacturing and Trading Inc. In Corporate Risk Management for International Business (pp. 153-163). Springer, Singapore. Web.

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BusinessEssay. "Bridgestone Corporation's Strategic Report." November 29, 2022. https://business-essay.com/bridgestone-corporations-strategic-report/.