Outline:
1) Analysis of Applichem’s competitive environment.
2) What has Joe Spadaro learned from the recent study? How do you explain the large
differences in the performance of the plants making Release-ease? Why do some plants
appear to be better than others? To what extent are these differences due to structural issues
beyond management control, or are they due to the capability of management in each
location?
3) How should Joe Spadaro compare the performance between the different plants in the
network? What are the appropriate metrics of plant performance?
4) As Joe Spadaro, what would you do given the information provided in the recent study?
How can the total network performance be improved? In particular, what action would you
recommend in relation to the Gary plant? You should consider both the financial and
strategic implications of any of your recommendations.
1) Analysis of Applichem’s competitive environment.
Applichem is a US based specialize chemical manufacturing company that has been
established even before World War 2. It is an established company which supply products
with plants all around the world. Applichem’s business is divided in two to business
groups; one being the plastic business and the other one is the agricultures group.
Release-ease is one of the special chemical that Applichem has been producing since 1952.
Applichem owns the patents for Release-ease chemical and has been contributing a steady
sales and profit to the company. The company has invested very little on the research and
development of the chemical since the establishment in 1952. Release-ease biggest sales
are in North America followed by Western Europe then in Latin America and Asia and
subsequently to rest of the world as show in fig 1. The sales forecast shows that the sale of
Release-ease is quite stable and very little increase in next 5 years. This reflects that the
market is almost matured, thus effort is needed for sustainability of the demand, capturing
new demand from the competitor and also reduces in the cost.
Figure 1 Sales of Releas-ease by Region (all in millions of pound)
In terms of competition, the major player for this kind of product is Applichem itself and
their competitor is another company from US but their plant is located in Europe. Their
focus is more towards European market and some export to U.S and Latin America.
Another competitor is also based in U.S but they do not have the intention to be in this
business for a long duration. Thus, overall, Applichem is the biggest player in the market
