Specialty chemicals

Strategic value analysis of a product

Starting Point

The starting point of the project comprised a review of the ongoing trend among the customers in the chemical product market. This was done to favor different forms of the product and the customer-specific application requirements in terms of product forms and production processes.

• Oligopoly of the suppliers,
• Concentration of the customers,
• Growth and stagnation of the product usage,
• Multi-sourcing strategies of the refrigerator manufacturers,
• High level of replacement of the supplier from the customers' point of view.
• Goal of the Project

Goal of the Project

The objectives of the project were the critical evaluation of the client's chemical product activities to derive recommendations and implications for a "new" set-up of the business.

Procedure

The data for the evaluation were drawn from the team discussions and from the company's internal information. The critical evaluation comprised a preparation of insights in terms of market structure, market trends, our client's position in the market, its organization, and its market activities. The insights led to conclusions for the current and future business of our client.

Results

Insights:

• Increase in the world-wide market for the product but with expectation of structural changes in the market within the next 10 years.
• Increase in the demand for a special form/type of the chemical product in all industries.
• Strong position of our client in the chemical product market, but weak in the special form of the chemical product.
• Product-oriented organization of our client, but existence of major industry overlaps among the product business units.
• Minor impact of our client on the market in the special form of the product.
• Low contribution in this business to the overall division profitability.

Recommendations:

• New product definition from the original product to the special form of the product.
• Product bundling in order to fully exploit the ownership of the customers.
• Change from product- to an industry-oriented organization in order to achieve a leading role within industries.
• Build-up of expertise and technology know-how in the special form of the product, optionally through acquisitions or joint ventures.

Implications:

• Implementation of Industry Marketing Centers (IMC) that are responsible for providing a variety of forms of the product and technical support systems to the target industries. The IMCs are also responsible for the market intelligence.
• Establishment of production and technology centers that are responsible for providing the product, product and process development, purchasing and product management.
• Establishment of a cross-divisional committee to organize the product bundling.

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