Cox Chemical, Inc

Introduction
▪ This case talks about Cox Chemicals that produces commodity chemicals,
chemical intermediaries and other specialities.
▪ 95% of the 700 products were sold primarily to the industrial markets both in
United Nation and other states.
▪ Cox Chemicals accounted for 40% of sales to large chemical producers such as
Puritan
▪ Cox Chemicals wants to procure muriatic acid and has to make a call from either
Puritan Chemicals or Lee Chemicals
Busuness Key Points
Cox Chemical Products produced commodity chemicals, chemical
intermediaries, and specialties. Sales were over $1.2 billion in 2014 with net
profits after taxes amounting to over $60 million. Commodity chemicals,
accounted for approximately 40% of sales in 2014.
01
Past shows that the cox chemical—puritan relationships is pretty good,
in 2010 Puritan had bought from Cox commodity chemicals amounting to
02 $8.2 million, while Cox had placed orders with Puritan totaling $4.4
million.
At the end of 2013 the company’s director of purchasing had negotiated a
contract for 2014 with Puritan for the supply of “the buyer’s requirements of
03 muriatic acid estimated at 4,000 tons and not to exceed this quantity
without the seller’s consent at $97.50 per net ton delivered to the Tulsa
plant.
04 Price ... may be revised as of the beginning of a new quarterly period
commencing on the first of January, April, July, and October ... by a written
notice from the seller not less than 15 days prior to the date on which the new
quarterly period is to commence....”
Key Challenges

Key Challenges

Nurturing New
High Price High Risk Relations & Demise of
Future Business
 Key Issue Analysis (Pros and Cons)

Relationship &
Availability Quantity
Price

Available at low Any May develop

Puritan Transportation Requirement – New Possibility
cost Basis & $97.50/ton

Lee High Any May loose

Transportation Requirement Opportunity &
cost Basis $102.50/ton
Conclusion & Recommendation
▪ Cox Chemical should go with two suppliers for their requirements in terms of
minimizing the risk in future.
▪ Cox Chemical should negotiate with Puritan for 70% of its requirement fulfilled by
Puritan and 30% by Lee. By making partial – requirement contract Cox chemical
will be able retain its oldest supplier and business along with reducing the risk of
single supplier dictatorship.
▪ Cox can also consider an option of credit policy with Lee by making a contract for
minimum 6 months.
THANK YOU!