Date post: | 13-Apr-2017 |
Category: |
Documents |
Upload: | megan-mcdonald |
View: | 25 times |
Download: | 0 times |
Chemical IndustryAnalysis of the
Group 7 Jian J. Huang
Megan McDonald Sining Shao Thet Win
Eric Wong
• Overview of the Chemical Industry
• Top Companies
• Porter’s Five Forces
• Impacts on the Industry
• Our Prediction
Agenda
“96% of all manufactured goods are touched by the Chemical industry”
–ACC
Chemical Manufacturing
Consumer Product Manufacturers
Consumers
Chemical Manufacturers
Oil/Petroleum Companies
$4,200,000,000,000○ 23% of the United States’ Public Debt: $18,152,519,173,098○ Would be the 4th largest country by GDP, below the US, China, and
Japan
2013 Global Chemical Sales
Sales By Region
China $1,391
Rest of Asia $1,014
Europe $836
North America $701
Rest of the World $250
Total $4,192
*All numbers in billions
China $1,391
USA $618
Japan $201
Germany $199
Rest of the World $1,782
Total $4,192
Sales By Country
Top 5 Companies by Sales
Company Country Chemical Sales*
% of Total Sales
BASF Germany $78.6 80%
China Petroleum & Chemical Company (Sinopec) China $60.8 13%
Dow Chemical Company USA $57.1 100%
Saudi Basic Industries Corporation (SABIC) Saudi Arabia $43.6 87%
ExxonMobil USA $39.0 9.3%
*All numbers In billions
Buyer PowerPlayers:o Manufacturers of plastic products,
consumer chemical manufacturers, water utility companies, etc.
Strengths:o Medium to Large businesseso Commoditization of chemicals
Weaknesses:o Large number of buyerso Low threat of backward integrationo Contractual obligations
Buyer Threat is Medium
Supplier PowerPlayers:o Multinational oil and gas
companies
Strengths:o Oligopolyo Forward Integration
Weaknesses:o Reduction in oil priceso Commoditization of raw materials,
Supplier Threat is Medium
Threat of New Entrants
Weaknesses:● Economies of scale
● High start-up capitals
● Power of existing companies
Threats of New Entrants is Medium
Threat of Substitutes
Weaknesses:● Fundamental Raw Materials
● Low Cost Switching
Threat of Substitutes is Weak
Degree of Rivalry
Strengths:● Undifferentiated nature of
commoditized chemical products
Degree of Rivalry is Strong
Summary of The Five Forces
Buyer Power: Medium
Supplier Power: Medium
Threat of New Entrants: Medium
Threat of Substitutes: Weak
Degree of Rivalry: Strong
Impacts on the IndustryShale Gaso United States has 2,700 trillion
cubic feet (estimated) of natural gas
o 40% is from shale depositso Reduced the price of natural gas
from $12USD to $2.79USD/ TCF Meet
o 115 years of demand
Impacts on the IndustryTradeo TAFTA (Trans-Atlantic Free Trade
Agreement)o TPP (Trans-Pacific Partnership)o EU-China Summit
Impacts on the Industry
Capital investment• $447.3 b (2014)• $ 592 billion by 2019
R&D expenditure• $57.5 b (2014)• $ 69.8 billion by 2019
Most successful firmDOW Chemical Company
Vertical integration o US Shale gas vs Oil-based fuelo Joint ventures in middle east, Asia Pacifico Increase profit margino Increase in revenue $3 billion annually
Most successful firmGeographical reach
o Customers in 180 countrieso 201 production plants in 36 countrieso Trans Pacific Partnership
▪ Asia Pacific, Latin America & E. Europe
Diversified product portfolios o 6 business segments
DOW Chemical Company
DOW Chemical Company
Game changing product innovationso Spent $1.6 billion in R&Do Sales new products composed of 30% of revenueo R&D in agricultural chemical segment $1b
incremental revenue by 2018
Intellectual propertieso 2014 635 US patentso 23% of revenue
Financial performanceo Positive revenue growth & Profit margino Stock Price jumped 90% in 5 years
($27.04 to $51.44)
DOW : Key Financial Ratios
Ratio 2010 2011 2012 2013 2014
Profit margin 4.3% 4.6% 1.9% 8.4% 6.5%
Revenue Growth 19.6% 11.8% -5.3% 0.5% 1.9%
Debt/Asset Ratio 67.5% 66.1% 68.6% 59.8% 67.1%
Return on assets 3.4% 4.0% 1.6% 6.9% 5.5%
DOW Chemical Company
Thank you! Questions?