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Respecting
stakeholder values

Michelin

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01_Introduction
Michelin continues to be the worlds number one tyre manufacturer.
The company has a unique and famous marketing emblem, Bibendum,
more commonly known as the Michelin Man. As an international
organisation Michelin has a sales network in more than 170 countries.
These aims are incorporated in Michelins Performance
and Responsibility approach. As Managing Partner,
Edouard Michelin says, A company is not assessed
only in terms of its fiscal results. It is also measured by
its ability to develop its employees and take its place
harmoniously in the communities and society around
it. See Michelins case study in edition 10 for more on
the companys objectives.

02_What is a stakeholder?
Every business has people or groups of people who
In 2004, Europe represented

have an interest in what it does. These are called

53% of sales. North America had

stakeholders. It matters to them what happens

33% and Asia, South America

with a business and what a business does. The

and the Middle East and Africa

reasons for diverse stakes in certain businesses

Zone took 14%. Not surprisingly,

differ we shall see this in the case of Michelin.

Michelin has a turnover in

excess of 15,689 billion euros
and an operating margin of
8.3%. It employs around
127,000 people across all
continents.

Stakeholders should not be confused with

shareholders. A shareholder is a part owner of a
business, as he or she has bought a part of its
value. Shareholders can have a say in what the
business does. They share in risks as well as
successes.

Michelins group mission is to

make a sustainable contribution to progress in the
mobility of people and goods by constantly
enhancing freedom of movement, safety, efficiency
and pleasure when on the move. To achieve this
mission, it seeks long-term growth by:

remaining the leader in terms of innovation and

Shareholders are also stakeholders in Michelin, as

they are in all businesses. However, not all
stakeholders are shareholders. Considering the
various stakeholders in Michelin, there is a range of
different stakes held by people and groups:

customers (whether another business or an

differentiation in quality for tyres, suspension

systems and related services

satisfying customers needs by offering the best

quality products and services at the best price in
the markets Michelin decides to serve

providing growth and fulfilment for Michelin

individual)

Michelin employees
governments local to Michelin sites
financial institutions
communities where Michelin operates
various pressure groups (eg Friends of the Earth).

employees

targeting high value added and technologically

sophisticated segments.

We will now look at some of these and see how this

global business works to build stakeholder values.

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Michelin

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Original equipment
Sales to manufacturers
(30% of unit sales)
Replacement
Sales to distributors
(70% of unit sales)

Tyre distributors
Distribution channels
Tyre retailers
Care dealers
Auto centres
Garages
Service stations
Supermarkets

Michelin distribution networks

Travel assistance
Michelin OnWay
Michelin Fleet Solutions
Michelin Euro Assist
Via Michelin
Maps and travel guides
Range of Michelin Lifestyle accessories

Vehicle manufacturers
Passenger cars, light trucks
Trucks
Agricultural machinery
Earthmovers
Aircraft
Motorbikes, mopeds, bicycles

Sale of new vehicles

equipped with
original tyres

for automobiles and two-wheels

Sales of tyres to replace

original equipment tyres

Euromaster (Europe)
TCI (Tire Centres LLC) (North America)

Consumer Users

165 million passenger cars and light trucks

are equipped with Michelin tyres worldwide
11 million trucks
(Michelin estimates)

03_Customers and employees

These help distributors and other partners add

Customers

value to their activities. Michelin also produces

Michelin sells tyres to two markets:

guides, maps, on-line route planning (Via Michelin),

vehicle manufacturers
users, through an intermediate customer, for

breakdown services (Michelin Euro Assist) and

example distribution channels such as ATS

lifestyle products (Michelin Lifestyle) to improve

mobility for individuals throughout the world.

Euromaster.
Employees
Within the tyre markets, customers expectations fall

Few stakeholders are as vital in a business as its

into five main categories for which significance or

workers.

priority will vary from one customer to another:

improved safety
lower cost per mile or per tonne transported
ability to reach ones destination comfortably and
reliably

increasing environmental-friendly tyres

availability of product support services to
accompany and facilitate mobility.

A worldwide company has to invest a great deal to

respect all staff interests.
Staff have a big interest in the success of the
company. Every worker hopes to have a secure
future. Offering great customer service depends on
Michelins people. It therefore places respect for its
people at the heart of its values. This involves some

The fulfilment of customer needs is a on-going priority

key policies relating to staff.

for Michelin. This involves anticipation of the best

solutions for the future, remaining attentive and open-

Part of the daily task of Michelin managers is to

minded. The Company maintains a solid and honest

care for the career path of each member of staff.

relationship with its customers by providing them with

With a low turnover rate of less than 2% of

precise and reliable information. Respect for clients is

voluntary departures in 2003 and 2004, employees

one of Michelins basic and traditional values.

have real regard for these values. Throughout their

career, Michelin staff enjoy active training. In 2004,

The business has to take into account the

requirements of vehicle manufacturers. With 4,000
research engineers in three continents, Michelin

53% of the Groups employees had access to at

least one course.

uses its expertise in tyres and vehicles, working

closely with vehicle designers and engineers. It

Michelin has an Employee Stock Ownership Plan.

forms strategic partnerships to co-develop, for

This allows employees to become shareholders.

example, Tyre Pressure Monitoring Systems (TPMS)

The plan was offered to employees in 16 countries

for cars, trucks and earthmovers.

across Europe. 69% took up the chance. This plan

is unravelling all over the world. This further

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Michelin does not just deal in tyres, however. The

identifies company loyalty with the values of staff. If

company offers services along the supply chain.

Michelin succeeds, its staff succeed.

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At Michelin, the aim today is to prevent employee

injury or illness. A worker must be happy in his or
her work. Michelin has embarked on a plan of
monitoring workstations. By helping workers to

Michelin

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work more at ease, productivity improves. This

creates a win-win situation. A happier, healthier
and safer worker is a more effective worker.
Respect for the health and well-being of every
worker, wherever they are, is at the core of
Michelins values. Health screening and prevention
of illness has improved. Michelin has a group doctor
to manage the process. Where the existing medical
infrastructure is insufficient Michelin will provide the
means to improve it. For example, in 2003, the
company provided the Davydovo hospital in Russia
with equipment for blood analysis, heart checks and
respiratory testing. In some parts of Africa, Michelin
offers both screening and AIDS awareness
programmes.
Michelin is a global business.

04_Company shareholders

To enable the company to

In late December 2004, Michelin had 2,584

know its customer needs and

institutional shareholders and 188,947 individual

better understand the markets

shareholders. All were registered with the company

in which it acts, it makes sure

by name. The economic well-being of Michelin is a

all diverse talents are able to

prime concern of its shareholders. They need a

express themselves within the

return on the cash they invest. They not only seek to

company, resulting in improved

share in the success of the business, but they share

global performance for the

in the risks too.

Michelin Group. Michelin has made diversity

management a priority. A multi-cultural environment
is just one element of the companys diversity
programme and their European Finance Centre,
which opened in Manchester in 2002, successfully
demonstrates this aspect. It has a staff of 250,
including 24 European nationalities, centralising the
financial operations of currently 15 Western
European countries. Michelin also has a Diversity
Council. The aim is to steer the processes to enable
each employee to express the specific nature of his
or her individual talent. Having women at managerial

If something happened that cost Michelin money,

shareholders would pay the cost. Michelins global
management takes their interests very seriously. The
company has adopted many principles of action
that govern its shareholder relationship.
The first principle is to drive for profits. By achieving
financial success, the company can further develop.
However, Michelin knows it must also care for the
environment and for the people of the world and the
societies they live in. Michelin sees these things as
all linked.

level is also a part of this effort.

Michelin knows that shareholders need information
To encourage progress in work safety, Michelin has

from the company. Therefore, there is regular,

organised an annual Safety Challenge for all its

accurate and honest contact between it and its

industrial plants and rubber plantations since 2003.

shareholders. There is an Investors Relations

By using key indicators: frequency rate and severity

Department. This ensures the company has a

rate, objectives can be set and results measured

common approach to the range of investors. There

and compared across the world. In 2004 the UK

is also a Shareholder Consultative Committee. The

plant at Dundee succeeded in winning the award for

website www.michelin.com has a shareholders

experiencing zero accident-related lost work days

space with all the relevant documents. There is a

during the year.

CD-ROM for them too.

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05_The wider community,

society and the environment
World leaders have become very aware of the
concerns about the planet we depend upon. Pollution
is a danger to all nations. The pressure is therefore on
global businesses such as Michelin. National and
world agencies are demanding more. The whole
world is a stakeholder in the actions of Michelin.
The company takes great care to assess the
businesss environmental footprint. It produces the
worlds first green tyre. Through research and
development, Michelin has focused great efforts on
improving the impact of its tyres. By making improved
types, Michelin adds to better fuel economy. By
making longer-lasting ones, there is less drain upon
natural resources. This applies in all markets.
At the end of a tyres life span, what happens to the
waste product? Michelin has found that used tyres
are a secondary resource. They can be usefully
re-cycled. Michelin works with other firms to

These social and wider

develop sustainable recycling networks.

concerns affect us all. It is

vital that Michelin not only

At every stage in the supply chain, Michelin works to

acts, but also is hands-on in

reduce the ecological impact of its operations. For

teaching everyone. Whether

instance, 90% of the Groups production in tonnage

we are speaking of pollution

was produced in ISO-14001 certified plants in 2004.

and global warming, or safe

road use and car

For all societies, safety of pedestrians and road

performance, Michelin tries

users is a government issue. Michelin was the first

to engage with everyone.

tyre manufacturer to sign the European Charter for

Safety because it shares such concerns. Between
2004 and 2010 the mutual aim is to reduce the
number of deaths on European roads by 50%.

06_Conclusion
At the heart of all of Michelins activities lies respect for
the needs of the diverse categories of stakeholders.
The Michelin thinking is simple success is

its Fill Up With Air events held every year in at least

dependent upon meeting the wishes of stakeholders.

20 European countries. This initiative raises drivers

The company view is that these interests are inter-

awareness of the importance of regular tyre pressure

connected. By doing the right thing by stakeholders,

checks on road safety.

the company will achieve its objectives.

GLOSSARY
OF TERMS

One way Michelin contributes to this objective is with

Institutional shareholders: companies that

Sustainable: able to continue over a period of

own shares within other companies.

time.

Recycling: identifying the use of an item and

Turnover: the annual income earned by the

salvaging and reprocessing it to reduce waste.

company.

Supply chain: the process from where a

Workstation: a computer unit or terminal where

product is first sourced to where it ends up.

an employee sits and works

For more information about Michelin please browse:

www.michelin.com
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