CLARIANT CORPORATION CASE

SUBMITTED BY: HUNNY GOYAL

PARTH SHAH
NILAY THAKKAR

Introduction

Clariant international limited was formed in 1995. It formed with the spun off of three acquisitions. These divisions are Sandoz with sales of approximately 1.5 billion. Hoechst-Celanese added to mix in 1997 with sales of 5.5 billion. NAFTA region accounts for 1.1 billion.

Clariant 6 Global Divisions

TLP( textile, leather, paper) chemicals for process P&A( Pigments and Additives) makes colorants and functional additives FUN( functional chemicals) produces a plethora and magic molecules LSE ( life sciences and electronics) its serves the need of electronics and pharmaceuticals industries MB ( master batches) custom blends pigments and other additives for color plastics CEP( cellulose ethers and polymeriser) provides special feed-stock chemicals plastics processing

Chemical Industry Background

Two type of chemicals are available1.Commodity chemical 2.Specialty chemical Commodity chemical stand as a daily utilized kind of product including chemical which holds for 83% of total market share. Mature Commodity market are primarily driven by price, service, technical support, company relationship. Specialty chemical are often willing in invest in research and development of performance and cost to meet the immediate need.

Specialty Chemicals

This is the field in which the Clariant corporation are doing business Specialty chemicals are used in many products we encounter every day. like,1.Pigments in paint 2.Plastic

3.Leather in cars and in Cosmetics

4.Photo-resists in video Displays 5.Agro Chemicals for food etc.

Problem Finding

In Sep 2000, when VP Vincent Thompson of Clariant Corporation gone through the Sales growth & Contribution growth margin of the NAFTA arm of Clariant he was frowned by seeing the continued volatility in their most promising business area. He ended his review with the question of how Clariant could fully develop their potential in meeting their goals of Sales & Contribution margin. Vincent Thompson wanted to redefine the Marketing & Sales to tackle such issue by Redesigning their sales force into cross-divisional account teams that could be assigned to companys most profitable customers which going to cost their time & money heavily. Their employees also suggested him other alternatives like Training, Financial incentives which Vincent is going to consider.

Cont..

Beside this President of Clariant Corporation, David Lawrence outlined three pronged strategies to achieve both Sales & Profit performances: A. Sales growth through strategic acquisitions to achieve targeted growth in high- margin segments B. Sales growth generated by cross-divisional sales of multiple Clariant lines to key, high-potential customers C. Improving margins by emphasizing sales of higher-margin specialty products over the more established "semi-specialty" products (those nearing commodity status).

Structure of Specialty Chemical Industry

Tier 1

Tier 2

Tier 3

Annual Sales between more than 10 billions. Specializing in Specific Segments or User segments.

Annual Sales between 3-5 billions. Focusing on Particular portfolio of specialty chemicals.

Annual Sales between 1-2 billions. They are having narrower range of products offerings than Tier 2.

Cont..

Clariant Corporation fall under Tier 2 Class of industries. They are in the Precarious situation because they compete fiercely on price when a major account is up for grabs. One of our managers characterized our position as being caught "between a herd of elephants and a pool of sharks."

Strategies Implementation

In implementing these strategies, especially the cross-divisional sales strategy. Clariant had invested significant time, energy, and money into the creation of cross- divisional product understanding among the various business units. Significant training investments were already being made .in the various sales forces. Technologies were being implemented, including central databases of product information, product con- tact information, and "center of excellence teams."

To capture these potential cross-divisional opportunities, which often arose from a customer's pressing needs for new approaches to product development, a fledgling national accounts system was under development and had resulted in several promising contacts with high-potential customers.

Marketing & Sales

Sales department is provided as a annual sales objectives that make sense to the production department to be manufacturing of the products.

And also it make increase the profitability.

GlobalizationThey having global business unit, each one having own sales force. each of that separated with product line, user line , industry line etc. All unit are divided as further geographically.

Cont..

They having national accounts of the major customer They dont take the customer like they own customer as a local business unit because there is many competitor with various kind of product available. Salesman of Clariant spent less time to Identifying prospects for new business for Clariant beyond product line. And they spent most time in Generating new business for product line.

Salesman incentives- Seventy-five percent of our upper-management bonuses are tied to North American divisional sales, earnings, return on sales' and net working capital performance. - Twenty-five percent of our bonuses relate to the same performance metrics for global division

Cont..

They having national accounts of the major customer They dont take the customer like they own customer as a local business unit.

Because there is many competitor with various kind of product available

Customers Expectation

In 2000, Survey of 26 Clariant Customers are revealed the following things: 22 of 26 described closer relationships with the chemical suppliers. Most of them laid importance on Quality and then on Service and last on Pricing. Most of also said they are willing to pay more price for the quality & service. 20 of 26 are prefer to work with the current chemical suppliers.

24 of 26 want new & additional product opportunities to come from the supplier representatives.
On the view of technology advancement, Half replied that they would purchase commodity chemicals from e-commerce market and they also told that technology should facilitate the relationship not to replace it.

Cont..

Large Clients also want to integrate the supplier into the productdevelopment process to shorten timetables and to streamline problem solving.

Thank You