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Lear Corporation

Case Study

Sarah Bailee Lockamy

on 26 April 2011

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Transcript of Lear Corporation

Bailee Lockamy Margaret Craig Michael Henson DJ Johnston Company Background Lear started in 1917 and has since grown to 130th on the Fortune 500 in 2007 with $17.8 billion in sales.
Lear Electrical Power Management Systems Global Headquarters, Southfield, Michigan Their growth skyrocketed in the 90’s, with revenue more than doubling later in the decade.

During that time period, they owned roughly 30% of the interior systems for cars in the United States It started off manufacturing only seat systems in cars, but has started making all the major interior vehicle systems since it went public in 1994. They make systems for.... They have expanded their business to European and Asian manufacturers and are now located in 34 countries. Lear Kronach, Germany Sound Lab Lear Shanghai, China Lear Valls, Spain The “systems” are everything that make up what they are selling. A seat system includes the structure, fabric, foam, etc.

Lear provides a customer-centric sales philosophy and uses a B2B model for their sales. Customer Oriented Sales Force Lear's Recipe for Success: "The success of Lear is a result of our dedication to provide the best possible service to the world's automakers- which includes understanding their customers, the automotive consumer- by delivering increased value through the latest vehicle interior technologies and the continuous improvement of our processes and product quality. All of this is reflected in Lear's exclusive People-Vehicle-Interface Methodology. By utilizing the PVI Method, Lear employs an innovation development discipline that turns market opportunities into the products that consumers want and customers need in their vehicles." Selling is more than just a sales representative covering a small territory and convincing customers to buy their product Role of the Successful Sales Force:
1) Interpersonal Interactions
2) Serve as both seller and buyer
- represent the company to customers
- represent customers to the company
3) Highly trained to profitably take care of their customer Rated one of "America's Best Sales Forces" by Sales & Marketing Managment magazine Lear creates "Customer Success" through sales force structure Broken into separate divisions dedicated to specific customers Platform Teams - Salespeople
- Engineers
- Program Managers Work closely with specific division customer to assess and resond more efficiently 1999- GM wanted to expand commercial van business

- New prototype would have taken 2-3 years (competitors; need disappearing)
- Lear guaranteed to go from contract to product in 1 year; GM reluctant
- Lear created prototype and GM awarded them with a lucrative contract Limits customer base to a few, major accounts Often, places sales offices in Customer's location Questions for Discussion: 1) Classify Lear's sales-force structure. What role has this structure played in the company's successes and failures?

2) What role does team selling play in Lear's sales-force strategy? Should Lear make any changes to this strategy?

3) What implications does selling its interior systems division have on Lear's sales force and its ability to serve its customers? How can Lear overcome the possible problems associated with this sale?

4) Make other recommendations for how Lear can reverse the difficuties that it now faces? How would you implement each recommendation? Lear employs business-to-business marketing, in which they must understand business markets and business buyer behavior which is the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. In this case, Lear must understand the car business market as well as the business buyer behavior of the companies which buy their products like Ford, Chrysler, and General Motors. This form of marketing has led to Lear’s successful and highly satsifying customer relationships, but it has also limited them because they chose to only target a few major car brands which led to failure when the car market began to suffer heavy losses. Team selling links the customers closer to Lear. By employing team selling, Lear is able to work with its customers every step of the way because each team member works closely with their customer counterpart from salespeople to engineers, to program managers. While team selling seems to be a good way for Lear to connect with and stabilize relationships with customers, during economic downturns this method may be more expensive to employ since so many people are involved on much more intimate levels. Lear's losses are largely associated with its' customer and consumer centric nature. It could possibly amend the problem by decreasing the sales force or expand sales force focus to smaller carmakers in order to make up for the losses. Lear sold the 'poor' interior systems meant that Lear is adopting a more customer-centric sales force structure, which means the salespeople will probably specialize in selling only to certain customers or industries that use the 'higher' model interior systems. In Lear’s case, they select only a few customers to have contracts with the remaining, profitable divisions they have. Essentially, these poor performing interior systems businesses are the dogs in their business portfolio, so it will benefit the business and the brand in the long run to eliminate them from their portfolio. One of the problems associated with this elimination may be that they don't meet the individual demands of the consumer if they liked those interior systems, which will hinder thier client's business. In order to overcome this, Lear will need to be highly responsive to both consumer and client demands to meet the demands of those who like these particular interior systems.
If Lear is struggling financially because it has few customers but it diversifying its product line, a recommendation could be to adopt a few smaller customers for which they may already have products to suit those clients’ needs. If the main car companies are facing hard times, a few extra clients on a smaller scale may save Lear, especially if they are already producing products necessary to land the account. The sales force would already be well-trained to have a great working relationship with smaller companies as well, so without actually having to modify many aspects of their business, they could simply adopt a new client and bring in more revenue.
Also, Lear could change their selling structure for smaller clients. They could take on new, highly trained representatives who would care for multiple, smaller clients instead team selling. These smaller clients don't require as much of the representatives time or company expense. 18 major acquisitions

Instrument panels, cockpits, door and
trim, acoustics, etc.
Value Delivery Network The extensiveness of Lear's consumer research and trending studies positions the company to exceed market expectations by delivering unique opportunities for vehicle personalization that delight consumers; therefore, it strengthens the value chain when they keep their customer's consumer in mind when developing new products. Brand Development -Begin as manufacturer of tubular assemblies 1917

-Leading maker of seat systems for automakers for decades
-- (30% market share)

-Goes public 1994 Brand Extensions One-Stop Shopping Lear ECO™/Lear EVO™ Frames Lear EVO™ Mini Recliner SoyFoam™ Seating Interior LED Electronics High Performance Audio Amplifiers Terminals Managing Environmental Factors Macro Micro -Customer demand shrinks
~In 2005, Lear spen $586 million in part to
become the total supplier for its' limited
customer base. Although, their customer no
longer sourced all vehicle compenents to just
one company: Lear.

--Foreign competition grows
~One-stop shopping collapse

-Fragmented product line - Consumer demand shrinks

-Gas prices rise
~Death of the SUV?

-Economic crisis

-Inflation Shifting Tides in the New Millenium In 2005, Lear captured more than $17 billion, but reported a net loss of $1.3 billion

Factors leading to Lear's heavy losses? On the Horizon? Despite heavy losses, Lear continues to shine... - Net Loss of $700 million in 2006

- Fended off a buyout

- Implemented a mass restructuring plan by selling
off the poor performing interior systems business.

- Future projections of the company seem profitable
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