the goodyear tire & rubber company
by the end of 1992 the goodyear tire & rubber company, the largest tire manufacturer in the u.s,posted a profit of over $340 million on record sales of over $11 billion.this was a far cry from the situation in 1991,when the company had a record loss.for a while it looked as if the compang,languishing under a debt of over $3.7billion, might go bankrupt.what alered its fortunes was a combination of a new CEO,who restored the company's competitive advantage,and a change in the nature of industry commpetition.
throughout the 1980s goodyear sales had fallen as the company lost market share to its two main competitors,michenlin of france and bridgestone of japan. these two companies had expanded rapidly into the u.s,launching an aggressive strategy to build market share and penetrate the market.their entry started a price war in the u.s tire market,which especially hurt goodyear because of th company's high costs.goodyear also had a poor record in product innovation and had been slow to bring out new products that would attract its customers back.after the company's huge losses in 1991,its board of directors forced out the CEO,tom barrett,and replaced him with stanley gault,who had been the CEO of bubbermaid gault immediately began to change the way goodbye operated to restore its competitive advantage.
first,he embarked on a strtegy of massively reducing operating costs.gault's predecessor,barrtett,had started this process by investing over $4billion in the 1980s in new,more efficient plant and equipment and by decreasing the size of the work force by over 20 percent.by 1991 output per manhour had climbed 51 percent.however,gault took this process much futher and began to slash costs everywhere. by example, he showed managers how to reduce costs. he began by eliminating company limousines for top executives and replacing them with family sedans.he sold off three of the five corporate jets and eliminated the goodyear blimp,based in houston,texas.he even removed most of the light bulbs from his office to demonstrate his commitment to lower costs.the other goodyear managers followed hid lead and systematically began their cost-cutting efforts,with the spetacular results noted above.
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