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Case Stories: Chemical

"One chemical is the same as the next yet each company is different."

Differentiation in the chemicals industry continues to be the greatest problem. Companies struggle to maintain profitability with a few industry goliaths generally having the scale advantages to dominate a market through price competitiveness. "Cookie cutter" approaches to what works and what does not, will not enable companies to develop sustainable competitive advantage. RED Consulting believes that each organisation is different, has a different set of capabilities and can develop products and services that clients will place a unique value on (the test of differentiation).

Pick up any copy of a Chemicals Industry publication and the same issues are evident:

In order to answer these questions and build sustainable competitive advantage, chemical companies need to have a detailed understanding of their competitive environment, a detailed knowledge of customer needs and the channels to those customers as well as having a clear picture of their own capabilities.

EXTERNAL INVESTIGATION

Market opportunity analysis

For a global chemicals company we determined the growth opportunity for a compound in the NAFTA market. Having assessed the market size and segmentation, RED Consulting analysed competitor strategies, distribution channels and customers “deal winning” criterion to determine the most appropriate strategy for our client to gain new business

Commercialisation of technology

A specialty chemicals manufacturer wanted to know if it should invest in production capacity for a new molecule. RED Consulting determined the future cash flow from the business based on market demand across current and potential future applications when compared with supply. Combining this analysis with an assessment of the cost of constructing and implementing a manufacturing capability, enabled the RED Consulting/ client team to accurately predict the return on investment and hence the viability of commercialising the technology.

Benchmarking

In many chemicals markets the primary mode of competition is price. RED Consulting team members worked with a major chemicals company to benchmark their cost of production against a number of competitors. The results detailed the areas that the client was at an advantage or disadvantage (e.g. indirect labour overhead) with respect to costs, suggested methods for process improvement and enabled improvement programmes to be focused on the elements of cost that would have the most impact on the bottom line

Global Strategy

For a global specialty chemicals manufacturer we conducted an analysis of the market growth rates across North America, Europe and Asia and combined this with a detailed analysis of competitors' strategies to these regions. The resultant scenario analysis demonstrated that our client would continue to loose market share in steady state and that their focus needed to shift from defending domestic markets to growing in developing markets. This subsequently led to the set up of an independent operation in China (in addition to the existing South East Asia headquarters) to provide the required focus on this market.

INTERNAL ANALYSIS

Strategic planning

For a Swiss-based chemical and pharmaceutical active ingredients trading company, RED Consulting staff worked closely with the management team to produce a 5-year strategic plan for a new business unit.

Human resources: building sales force network

RED Consulting established a network of European sales agents for a US-based chemicals manufacturer. We were responsible for selecting, profiling and assisting in the contract negotiations for country market exclusivity.

IMPLIMENTATION SUPPORT

Project management

For a US-based manufacturer, we lead a project to design, develop and build a small pilot plant for dry-form pharmaceuticals.

Sales-support technology

For an Italian chemicals/ pharmaceuticals company, we installed a sales reporting system that allowed the national sales manager to have real-time access to sales data from 100 sales representatives across the country.