Abstract
The company has successfully established its business abroad, achieving its strategic aim of increasing its market share within the US market.
It is one of the top 10 worldwide companies in its industry. However, each sector had reached a massive proportions. To deal with this each sector was split according to product and geographic region, which led to a break down in communication among managers and employees.
Rhone-Poulenc has to rethink its overall organization in order to achieve global synergy within its business by:
1)An unique headquarter with 2 subsidiaries in relation to the countries
2)A better attention to products line
Extract
[...] The few firm that are in the market are independent of others: Firms consider competitors reactions when changing prices / introducing new products Competition is high Organisations preferring non price competition Products are branded and differentiated from each other There are many acquisitions in the market Collusion may occur leading to cartels being formed A market or industry is dominated by a small number of large players. High barriers to entry due to specific legislation Start up firms get acquired due to dominance of large firms Financial Trends Financial Trends 1. Scale The largest single market for chemicals To achieve global economies of scale 2. Strategic Balance - Being represented in each major world market reducing dependence on any single market Proximity to market Leader - Important agrochemicals, specialty chemicals, pharmaceuticals, R&D. [...]
[...] This means that they can compete with Rhône-Poulenc for mergers or acquisitions. Rhône-Poulenc's competitors include; Bayer, BASF and Du Pont. Government regulations Practices for chemical companies are starting to become increasingly stringent. If a government decides to make a new law relating to chemical plants, e.g. New emission laws Rhône-Poulenc may face new & excessive costs Petrol & Oil prices Due to trouble in the Persian Gulf oil prices are high, leading to higher operating costs Although the Gulf War ended in 1991 there is still tension in the Middle East & another war would have a detrimental affect on business Trade restrictions and tariffs Environmental regulations Employment laws Health and Safety Political Stability Trading agreements- EU Interest rates Economic stability and growth Exchange rates Inflation Age distribution Health consciousness Emphasis on safety Environmental concerns Research and Development activity Rate of technological change Automation This can determine a barrier to entry Threat of Substitutes High Threat of Entry from New Competitors Intensity of Rivalry Low Power of Customers Low Supplier Power Low Medium Low Threat of entry There are high barriers to entry mainly due to: Technology Legislation Economies of scale Credibility of existing dominating competitors Medium Threat There are a few large dominating companies in the market, such as BASF and Shell However, Rhône-Poulenc is the 7th largest pharmaceutical company in the world so is able to hold its own within the market. [...]
[...] Fibres and Polymers USA HQ Speciality Chemicals Health AgroChemical s Organic & Inorganic Fibres & Polymers Speciality Chemicals Health AgroChemicals The company has successfully established its business abroad, achieving its strategic aim of increasing its market share within the US market. It is one of the top 10 worldwide companies in its industry. However, each sector had reached a massive proportions. To deal with this each sector was split according to product and geographic region, which led to a break down in communication among managers and employees. [...]
[...] Perhaps fixed their attention too firmly and narrowly on the United States, when their attention should have been focused in other areas. More attention should have been paid to the Asian markets. Japan – chemical consumption $36,198m (OECD, 1977). The second highest consumption rate of chemicals after the USA. Currently Rhône-Poulenc have no presence in Japan As this is such a large and potentially profitable market it may be possible for Rhône-Poulenc to enter it. Although there may be high barriers to entry The Rest of Asia As the case study pointed out Asian companies are threatening Rhône-Poulenc's business with cheaper alternative chemicals Rhône-Poulenc could potentially buy these companies out Competitors - Rhône-Poulenc's competitors have massive experience and capital. [...]
[...] Sales from of total revenues to at least 20%. The tension of the international context, namely the debate of globalisation and localisation is one the many issue in strategic management The first of these tension is the definition Involves operation with relative consistency in number of markets as if the world and major regions in it were one single entity. (Levitt, 1983) This will involve selling the same product across these markets Localisation, the opposite of globalisation, is epitomised by decreasing international scope similarity and integration (DeWit and Meyer, 2005) Involves operating in a number of countries and adjusting practice and product in each country Many argue successful development of international products and marketing strategies rest in ‘being global and acting local' (Willis, Samli and Jocab, 1991) Glocal company – standardises certain core elements and localises other elements Globalisation Agro- chemicals such as insecticides and fungisides These products would be able to be globally produced under the same circumstance The company has subsidiaries on four continents –Europe, North America, South America and South East Asia France, USA, Brazil, Britain and Germany Localisation When acquiring the US companies, Rhône-Poulenc did not change the general structure of those acquisitions Peter .J. [...]
