Growth offensive at ChemCorp

The interviewee should perform a back-of-envelope analysis which answers the key question - 'Whether or not the Performance Chemicals division can grow at a 10%+ per annum rate'; and recommend potential growth strategies for the business unit.

Interviewer’s answer: We have been growing at 4-5% for the last 4 years. The average growth rate of the market served is also the same.

Fluorine compounds, sodium chemicals, and conditioning solutions

All products are being threatened by competition as intellectual property protection is limited. We will have to look for new product strategies as commoditization and pricing pressures are constraining our growth. Moreover, we are exposed to trends such as outsourcing, solutions vs products, product-service bundles, etc.

We have always focused on selling products and never sought for new growth ideas. The business thinking can be described from our quote, "We make it by the ton and sell it by the carload”.

The candidate should ask questions regarding the background of the case.

It is clear that the company has to look beyond traditional product strategy to generate the demanded growth.

The company should look at

• Product enhancements or product-service bundling
• Outsource services that are non-core to the firm
• Look for new markets for the existing technological capabilities
• New distribution channels

Alternatively, the following strategies could also be considered:

• Sell a solution, not a product (Example product-service bundling)
• Become indispensable to strategic customers
• Consider developing new products in order to become a one-stop-shop for specialty chemicals
• Provide extra services to the customers such as a vendor managed inventory system

The company should look at strategies such as product enhancements or product-service bundling, outsourcing non-core activities, and new markets for the existing technological capabilities.