Case Development Report for Celanese AG
Industry Understanding – Michel Porter's five forces Model
4 Value Chain Analysis
How important is Celanese’s centralized enterprise system to its business strategy? Why? What is its business value to the company?.....................................................................9
How successful was Celanese in meeting these challenges?
What problems did it solve? How? Which problems remained unsolved?.............................12
What management, organization, and technology challenges did Celanese face as it tried to implement One SAP? Which were the most difficult?.............................................................14
Introduction to the Company
Celanese AG is a global producer of value-added industrial chemicals. They are one of the leaders in their product areas; Celanese has the leading position in producing acetyl products and engineered polymers. Their products are manufactured in North America, Europe and Asia. In 2006 Celanese net sales went up from 1,471 million USD to 1,573 million USD while their operating profit decreased by 15 percent from 172 million USD to 147 million USD which is due to an overall increase in many other charges and also a loss in sales which is related to AT Plastics Films Business.
Michel Porter’s Five Forces Model
* Bargaining Power of Suppliers
Suppliers could be a danger for the industry if they threaten the companies to increase the prices for products and services. Therefore suppliers could reduce the profitability of an industry, because the increase of the prices couldn’t be moved over to the markets. The bargaining of the supplier in the chemical industry and therefore for Celanese give the impressions to be moderate because they are concentrated. * Bargaining Power of Customers
The Customers have the power to cut the prices or request better quality or force better services which all has a loss in profitability of the industry as a result. The power of the customer base depends on the criteria of the market situation and the importance of the business in comparison to the complete situation. The bargaining power of the customers seems to be low. The movement of the industry is uneven which reduces the shared bargaining power. More capacity is coming from the Middle Eastern countries it is possible that the bargaining power of the customers might recover to a higher amount. * Threats of New entrance.
The barriers of entry for new competitors are very high as the rules and regulations that they have to fulfil are very extensive. For example: in the European Union exist a law since the end of 2006 called REACH (registration, evaluation and authorisation of chemicals). The capital requirements are high; therefore it needs a lot of investment to open a new business in the chemical industry. High barriers of entry make markets not challengeable and protect current firms from possible new entrants. Celanese has to develop new strategies to overcome new competitors in the chemical industry. The new entrants will try to battle in the areas where the barriers of entry are very low. * Threats of Substitutes
The threat of substitute products is most powerful where there are alternatives for a company product. The demand of special products can be changed by different factors, e.g. environmental, costs, licensing. The competition within this market is limited as there are not very many players with high quality products. There are important threats coming from the Middle Eastern and Pacific region which is going to amplify the rivalry. * Industry Rivalry
Celanese traditional competitors include BASF, Methanax, Lanxess and other companies in the chemical industry. All of the competitors offer a similar range of products and services in the almost identical market. The competitors mostly have an...
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