Michelin PESTLE Analysis

Published by MBA Skool Team, Last Updated: March 07, 2021

PESTLE Analysis of Michelin analyses the brand on its business tactics. Michelin PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.

PESTLE analysis is a framework which is imperative for companies such as Michelin, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.

Let us start the Michelin PESTLE Analysis:

Political Factors:

The political factors in the Michelin PESTLE Analysis can be explained as follows:

Michelin company has its operations in more than 170 countries and has 7000plus distribution centres. The company should have good connections with the governments both in the parent and host countries which is one of the factors for the competitive advantage. Having good connections also aid for the sustainable advantage. The policies made by the governments related to the manufacturing, automobiles, trade should be observed keenly. Due to increase in the manufacturing in their own countries by some countries like India also should be taken seriously where it is an emerging market. The policies made on the automobiles and climate change also should be taken factor.

 

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Economic Factors:

Below are the economic factors in the PESTLE Analysis of Michelin:

May financial reasons define the operations of Michelin brand.

Due to pandemic, the disposable income of the people has decreased. The restrictions for the company to manufacture and mobility of the people has affected the operational cash flows of the company. The disruptions in the supply chain and trade policies also effect the economy of the world. It increases the costs of many products eventually rising the inflation. Due to second wave of the corona virus, restrictions are imposed in some nations. Due to this the economy hasn’t recovered yet which is serious factor for the company. But the vaccination process give faith for the future economic growth.


Social Factors:

Following are the social factors impacting Michelin PESTLE Analysis:

The fast pace changing lifestyles make dynamic changes in the automobile industry. Michelin is affected by social behaviour especially considering people prefer public transport like trains etc. The expectations of the consumers have increased a lot. Due to climate change and sustainable development, the consumers are going towards the electric vehicles where the tyres have to manufacture according to the requirements of those vehicles. The ban on the bs4 vehicles and consumers are keen for the bs6 model vehicles which make the company to manufacture according to the needs of the consumers.


Technological Factors:

The technological factors in the PESTLE Analysis of Michelin are mentioned below:

Michelin has 120+ research and development centres which used for the development of new tyres to suit for the rapid change in the business. It developed the tyres which is suits for the electric vehicles and also developing the tyres which is used for the driverless cars. Due to increase in safety, the company manufacturing new technological tyres where it reduces the accidents. The company should also focus on the development of new process for the efficient and differentiate its products from its rivals.

The company should also embrace technology in developing new supply chains.


Legal Factors:

Following are the legal factors in the Michelin PESTLE Analysis:

Legal factors & compliance policies are extremely important for the functioning of any global brand like Michelin. Being a tyre brand, the company is bound by laws defining the automobile industry, rubber industry and environmental policies. Laws govern the safety, longevity, quality of tyres which are being produced. If any company fails to meet the basic quality standard requirements, they can be liable to for legal scrutiny.


Environmental factors:

In the Michelin PESTLE Analysis, the environmental elements affecting its business are as below:

Michelin uses lots of energy resources to manufacture tyres which increases the carbon foot print eventually aids for the climate change. The company also consider the equilibrium in the environment. It uses rubber for making tyres and have to cut many trees.

At the same time company also taken steps to increase the afforestation. Climate change also disrupts the supply chains by causing more intense disasters. The company also should focus on the efficient use of technology which reduces the carbon foot print.

To conclude, the above Michelin PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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