Business Admin

Topics: Gasoline, Tetra-ethyl lead, Lead Pages: 7 (1159 words) Published: March 2, 2013
Assignment #1 Case 11: Great Lakes: Great Decisions"
Professor Mike Petty
Senior Seminar Business Admin 499
July 5th, 2011

1.Perform an analysis of the Social/Demographic, Technological, Economic, Environmental

Geographic, and Political/Legal/Governmental segments to understand the general environment

facing Great Lakes. Describe how Great Lakes will be affected by each of these external


Great lakes social/ demographic is in the United States (Indian based/Michigan based) also

having a multinational presence in developing countries.

Technology - Great lake developed and produced a variety of specialty chemical products.

The company acquired Octel Associates, a tetraethyl lead (TEL) producer for its capacity to

produce bromine. Though Octel used the chemical to make the additives, Great lakes used them

in other products. The focus was on the TEL"gold mine" that Octel provided. The company

was willing, in order to get the bromine-producing capability, to take on the last years of

production of lead additives as well as an ethical and public relation challenge. This would

affect the company because of leaded chemicals being banned in most of the developed world.

Economic- Octel represented 59% or $259 million, of Great Lakes total operating profit of

$439 million. It was projected that Octels share of profits from operations would not fall below

50% for many years despite the decline in pounds of TEL sold. By 1995, Great Lakes had a $5

billion in annual revenue, with consistent and healthy 15 percent operating profit margins.

Environmental/Geographic-Great Lake had a dilemma at hand in this segment because of the

product. Though success was promising and the company flourished it was unappealing

because of the major environmental issues, large capital cost for building plants and the

merciless publicity which was not a good look for the company. The company received a lot of

ridicule and the environmental groups were putting pressure on the company to stop selling

lead. Great lakes later admit to the additives being the number one money maker but also it

being extremely harmful. The company them promise to take environmental responsibility.

Political/Legal/Governmental- There was nothing illegal in Great Lakes making and selling lead

additives. This segment did not affect the company because even though

the product was considered dangerous, distributing to developing countries was not illegal.

At the time developing countries would be unlikely to make a sophisticated decision in regards

to not use the leaded gas especially when the refineries are often in the hands of governments

whose financial incentives are to stay with the status quo.

2.Analyze the lead additives industry in the U.S. using the Five Forces of Competition Model.

Describe the impact of each of the five forces on the industry and based on this analysis,

determine if the industry is attractive or unattractive.

Threat of entrants/entry- For Great Lakes it would cause them to no longer be on top because if

another company came along to sell unleaded chemicals the environmentalist would make it

their undying mission to promote the new product to the entire world. Great lakes would have

no choice but to stop using the product because they would no longer be able to make a profit

from it. The aggressive environmentalist were already informing the public about the

consequences and pressuring the company to immediately transition to unleaded gas.

Bargaining Power of supplies- Great Lake had a lot of power being the fact they were the #1

supplier of this lead gas that was still in high demand. Even though the company was catching

a lot of heat from environmentalist developing countries was still purchasing the supply.

Bargaining power of the buyers- If the government intervened and find a way to ban making

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