clariant sm report - final.docx

7/30/2019 Clariant SM Report - Final.docx

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Strategic Management Term

Report

SUBMITTED TO

Mr. Abdul Qadir Molvi

SUBMITTED BY

Mohammad Waqar Sajid (10671)

Mohammad Asim Khan (9793)

Obaid Hassan (9428)

Naresh Kumar (10571)


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Table of Contents

COMPANY BACKGROUND AND INFORMATION .............................................................................. 1

HISTORY ....................................................................................................................................... 1

PRODUCT RANGE ......................................................................................................................... 2

TEXTILE, LEATHER AND PAPER CHEMICALS ............................................................................. 3

MISSION STATEMENT .............................................................................................................. 4

INDUSTRY STRUCTURE AND MACRO-ENVIRONMENTAL ANALYSIS ................................................ 5

PORTERS FIVE FORCES ................................................................................................................. 6

BARGAINING POWER OF SUPPLIES ......................................................................................... 6

BARGAINING POWER OF BUYERS ............................................................................................ 7

RIVALRY AMONG THE COMPETITOR ....................................................................................... 8

THREATS OF SUBSTITUTES....................................................................................................... 9

THREATS OF NEW ENTRANTS ................................................................................................ 10

INDUSTRY ATTRACTIVESNESS SUMMARY ................................................................................. 11

PEST ANALYSIS ........................................................................................................................... 11

Political .................................................................................................................................. 11

Economical ............................................................................................................................ 12

Social ...................................................................................................................................... 12

Technological ......................................................................................................................... 12

External Factor Evaluation Matrix (EFE) .................................................................................... 14

COMPANY AND COMPETITOR ANALYSIS ...................................................................................... 16

KEY SUCCESS FACTORS FOR COMPETITIVE SUCCESS: ............................................................... 17

EVALUATION OF CPM: ............................................................................................................... 17

INTERNAL COMPANY VALUE CHAIN ANALYSIS ............................................................................. 19

CORE COMPETENCY .................................................................................................................. 20

VALUE CHAIN MANAGEMENT ................................................................................................... 21

STRATEGIC COST MANAGEMENT .............................................................................................. 25

FINANCIAL RATIO ANALYSIS: ..................................................................................................... 26

INTERNAL FACTOR EVALUATION MATRIX (IFE) ......................................................................... 34

EVALUATION OF IFE ............................................................................................................... 35

GENERIC STRATEGY ................................................................................................................... 37

STRATEGIC ANALYSIS AND RECOMMENDATIONS ......................................................................... 40


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TOWS Matrix ............................................................................................................................. 41

BCG MATRIX .............................................................................................................................. 42

GRAND STRATEGY MATRIX ........................................................................................................ 43

STRATEGIC LEADERSHIP AND IMPLEMENTATION ......................................................................... 45

ERRC........................................................................................................................................... 46

STRUCTURE ................................................................................................................................ 50

RESOURCE ALLOCATION ............................................................................................................ 51

CULTURE .................................................................................................................................... 51

CLARIANT A LEARNING ORGANIZATION: .................................................................................. 52

Hurdles for strategy ............................................................................................................... 53

CLARIANTS NEW STRATEGY...................................................................................................... 53

FAIR PROCESS ............................................................................................................................ 55


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COMPANY BACKGROUND AND INFORMATION

HISTORY

Clariant was formed in 1995 as a spin off from the chemical company Sandoz, which wasestablished in Basel in 1886. Through our direct lineage, we have amassed knowledge

and experience of chemistry and

Chemicals business of Hoechst (Germany) in 1997, and the acquisitions of BTP plc (UK)

in 2000 and CIBAs Master batches division in 2006. In 2008, we acquired the leading

U.S. colorant suppliers Rite Systems and Ricon on 21 April 2011.


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PRODUCT RANGE


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Clariant's Business Unit Industrial & Consumer Specialties (ICS) is a leading provider of

specialty chemicals and application solutions for consumer care and industrial markets.

The BU combines high quality products with formulation expertise across diverse

industries to deliver solutions with compelling cost-performance ratios and

environmental benefits to customers. The focus on ecologically sustainable development

ranges from skin care formulations based on raw materials from renewable resources to

recycling concepts for aviation de-icing products, which are promoted under our

ECOTAIN label

TEXTILE, LEATHER AND PAPER CHEMICALS

TLP Division is one of the leading suppliers of specialty chemicals and dyes for the

textile, leather paper industries. Textile dyes include disperse, reactive, direct, acid and

sulfur dyes. The textile business encompasses special chemicals for pretreatment, dyeing,

printing and finishing of textile. Optical brightener and chemicals for special treatment

are also the part of the range. Moreover, textile region also include water based

application of the emulsion for the paint and the construction industry. Paper business

supplies paper dyes, optical brightener and process and pulping chemicals. Leather region

produces chemicals for finishing and complete range of wet-end chemicals.

The Consumer Care segment includes the Personal Care business which, among others,

develops and produces specialty ingredients for skin and hair care, wet wipes and

selected pharmaceutical applications. The

And customers to collaborate on safer and more effective use of our products with added

value for our customers. They supply all relevant information and advice for safer use,

handling, labeling, storage, and disposal of our products as a part of Clariants

commitment to sustainability and product stewardship to best meet customer needs.

Industrial & Home Care business helps customers gain a competitive advantage with its

product range for household cleaning fluids, disinfectants, industrial and hospital

cleaning solutions

Clariant, as a world leader in the field of specialty chemicals, is fully committed to

sustainable operation and development in all business activities. We develop and offer

products and applications that allow for use of the product during its whole life cycle

helping to avoid risk to employees, customers, the public and environment.

Clariant has signed the Global Responsible Care Charter as our commitment to

Sustainability. It is the chemical industrys voluntary initiative to continuously improve

health, safety and environmental performance, and to communicate with all stakeholders

through the supply chain. This enables us to make a strong contribution to Sustainable

Development through the Responsible Care ethic and the Global Product Strategy


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targets which promote the safer use of chemical products and enhance product

stewardship throughout the whole supply chain.

Their comprehensive product stewardship approach includes cooperation and partnership

with our suppliers

Clariant is aware that the energy issue is one of the key challenges of todays and future

society and industry. Clariant highlights energy efficiency and savings as the most cost-

effective and fastest way to reduce CO2 and other emissions and increase security of

supply.

MISSION STATEMENT

1. Our mission clearly expresses what is important to us and whatwe stand for as a brand and as a company.

2. We build leading positions in the businesses we are active inand we adopt functional excellence as p art of our culture. We

create value through appreciating the needs of:

our customers by providing competitive and innovativesolutions

our employees by adhering to our corporate values our environment by acting sustainably our shareholders by achieving above-average returns


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INDUSTRY STRUCTURE

AND MACRO-

ENVIRONMENTAL

ANALYSIS


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PORTERS FIVE FORCES

BARGAINING POWER OF SUPPLIES

The bargaining power of suppliers is medium to low. Clariant is a chemical

manufacturing firm; they make chemicals used in different sectors like textiles, oil & gas,

mining, dyeing etc.

Clariant does not have a particular supplier for its raw materials. The Company buys raw

material from different suppliers. The planning department is responsible for planning of

the units of raw material to be purchased based on the market forecast. The procurement

then takes prices from approved suppliers and then places an order to the supplier who

gives the lowest deal on the purchase. The bargaining power of suppliers is low as there

are many suppliers in the market and they cannot charge a high price otherwise they

would lose business to their competitors.

Yes (+) Moderate No (-)

1) My inputs (materials, labor, supplies, services, etc)

are standard rather than unique or differentiated.

2) I can switch between suppliers quickly and cheaply. 3) My suppliers would find it difficult to enter my

business or my customers would find it difficult to

perform my function in-house.

4) I can substitute inputs readily. 5) I have many potential suppliers. 6) My business is important to my suppliers. 7) My cost of purchases has no significant influence on

my overall costs


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BARGAINING POWER OF BUYERS

The bargaining power of buyers is high in the chemicals industry as the buyers have

many choices from where they can purchase their products from. Clariants consumer

markets include automobiles, candles, cosmetics, detergents, latex, stationery, as well as

finishers for aluminum and leather. Clariants buyers are aware of the need forinformation and Clariant helps its customers through the technical service centre. But this

does not undermine the fact that other local chemical industries are also major players in

the market so similar products are available, and buyers do not really incur a switching

cost when changing where to purchase from.

Yes (+)

No

effect No (-)

1) Are there a large number of buyers relative to the

number of firms in the business?

2) Do you have a large number of customers, each with

relatively small purchases?

3) Does the customer face any significant costs in

switching suppliers?

4) Does the buyer need a lot of important information? 5) Is the buyer aware of the need for additional

information?

6) Is there anything that prevents your customer from

taking your function in-house?

7) Your customers are not highly sensitive to price. 8) Your product is unique to some degree or has accepted

branding?

9) Your customer's businesses are profitable. 10) You provide incentives to the decision makers.


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RIVALRY AMONG THE COMPETITOR

Threat of competitors is high mainly because there are no major product differences and

the fixed costs of the business are relatively lower to the total cost. Switching costs for

buyers are insignificant and the competitors are diversified due to which rivalry is

intense.

Yes (+) No (-)

1. The industry is growing rapidly. (Not sorapidly due to Energy constraints)

2. The industry is not cyclical with intermittentovercapacity.

3. The fixed costs of the business are relativelylow portion of total costs.

4. There are significant product differences andbrand identities between the competitors.

5. The competitors are diversified rather thanspecialized.

6. It would not be hard to get out of thisbusiness because there are no specialized

skills and facilities or long-term contract

commitments etc.

7. My customers would incur significant costs inswitching to a competitor.

8. My product is complex and requires adetailed understanding on the part of my

customer.

9. My competitors are all of approximately thesame size as I am.


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THREATS OF SUBSTITUTES

Threat of substitutes is high mainly due to two reasons: there are a number of real

substitutes available for customers and they are well aware about them and secondly

there is no significant cost involved in switching from one product to another for the

customers.

Yes (+) No (-)

1. Substitutes have performance limitations that donot completely offset their lowest price. Or, their

performance is not justified by their higher price.

2. The customer will incur costs in switching to asubstitute.

3. Your customer has no real substitute. 4. Your customer is not likely to substitute.


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THREATS OF NEW ENTRANTS

The threat of new entrants is high. Although the switching cost is low, it is a capital

intensive industry and much capital and skill is required which decreases their chances to

entry. Also assessing to distribution channels and required material and supplies is

difficult which decreases the threat of new entrants.

Yes

(+)

No (-)

Do large firms have a cost or performance advantage in your

segment of the industry?

Are there any proprietary product differences in your

industry?

Are there any established brand identities in your industry?

Do your customers incur any significant costs in switching

suppliers?

Is a lot of capital needed to enter your industry?

Is serviceable used equipment expensive?

Does the newcomer to your industry face difficulty in

accessing distribution channels?

Does experience help you to continuously lower costs?

Does the newcomer have any problems in obtaining the

necessary skilled people, materials or supplies?

Does your product or service have any proprietary features

that give you lower costs?

Are there any licenses, insurance or qualifications that are

difficult to obtain?

Can the newcomer expect strong retaliation on entering the

market?


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INDUSTRY ATTRACTIVESNESS SUMMARY

COMPONENTS IMPLICATIONS

Threat of new entrants Low

Bargaining power of buyer High

Threat of substitutes High

Bargaining power of suppliers Medium to Low

Intensity of rivalry among competitors High

PEST ANALYSIS

Political

Ongoing political issues in Pakistan causes many companies to close down itsoperations in Pakistan especially multi nationals so it is crucial to the suppliers as

the decrease in firms in the industry would lead to a decline in their sales.

The political instability in Pakistan has the whole industry in problems,government laws; increase in taxes on different industries directly affects buyers

and what amount they would be willing to pay.

Political instability in Pakistan is affecting every industry in every aspect. Thereare political barriers for new comers and also the laws and regulations are not

enforced properly which allows competitors to indulge in practices of cutting

down their prices by mal practices like under invoicing.

The changes in the level of currency affect the price of products and its substitute.Political stability can also be said to be reasonable so that business survival is

highly probable. These conditions may not apply in other countries such as Chinaand Singapore where government control over businesses is high.

Despite of some of the countries presenting favorable environment for businesssurvival and growth, others present difficult conditions. Due to governance issues

at government level, new entrants are posed a threat to enter in this capital

intensive industry where the risk of survival is really high.


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Economical

rising inflation and high interest rates in Pakistan have caused the prices of rawmaterials to increase, companies do not pay the high rates for materials and

suppliers are forced to lower their profit margins

The energy crises have made things critical for Textile Industry and thus makingthe same for Clariant as the textile companies are major buyers for Clariant

chemicals.

Low investment by foreign companies in Pakistan is lowering the competitionamong multinational companies. Inflation is also adversely effecting completion

Factors such as deflation and inflation as well as government spending in differentcountries have ventured often influence business productivity and profitability.

The economic impacts caused by the current economic crisis are being felt all

over the world. Clariant has recorded decreased sales mostly due to lower lending

rates by banks. Fluctuations in interest rates, exchange rates and money value greatly affect

activities and operations and thus borrowing rate for companies is high due to

which cost of investment is raised decreasing the threat of new entrants.

Social

Industry trends keep changing, consumers are becoming more experienced andlearned they want more information about the products they are purchasing andbargain for better quality of chemicals.

Technological

Advancement in technology brings about change in better quality raw material,which the chemical companies demand from their suppliers, and hence it reduces

the bargaining power to small extent.

Rapid innovation in technology allows for better quality products to be produced,technological advancement is opted by all the competitors so this gives buyers a

chance to involve themselves with those companies using high technology as they

will have better products. Clariant believes Innovation is a key to success and

works on innovation all year round to cope with these growing phenomena.

Most of the multinational companies in this industry have only the blending plantshere in Pakistan which gives an edge to the companies that have both


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manufacturing and blending plants in Pakistan. Technical experts from outside

Pakistan are not willing to travel to Pakistan.

Technology in the modern world is advancing at an enormous pace. Innovativeproducts are always being introduced using more advanced technology each day.

Older technology is therefore getting outdated at a very high rate across all sectors

in the economy. Aimed at outdoing competitors, many companies have turned to

innovation, research and development which have brought about improved levels

of technology.

Technology in the modern world is advancing at an enormous pace. Due to thesimilar products and ways of preparing, few technological trends influence the

industry which may be a barrier to entry the rate of technology advancement

globally varies with each country that Technology has invested in as they vary in

terms of resources available


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External Factor Evaluation Matrix (EFE)

EVALUATIONOFEFE

The weighted score of the EFE matrix comes out to be 2.91 which show that Clariant can

take advantage of the profitable opportunities that the market is offering, to overcome the

threats posed by the environment.

The highest weights in the opportunities part are given to the remaining 8 business units

of Clariant Pakistan. Clariant has a total of 12 business units out of which local

manufacturing is done only in 4.Clariant has a huge plant in Jamshooro where they can

start manufacturing for other business units which could be a good opportunity for them

to enhance their business in Pakistan and gain a wider market share. In is a bonus thing as

the remaining multi-national competitors have only a blending plant; not a manufacturingplant.

Another high weighted opportunity is the adoption of Lean Sigma Process which may be

adopted by Clariant Pakistan for process improvement in order to cut cost and increase

profit margins.

There is lack of foreign investment in the country which may be taken positively as

through this, Clariant which is a multi-national company gets room to grow.

The major threat to the company is the increasing prices of raw material and competitors

having low over head cost. This mainly increases their profit margins relative to Clariant.However, Clariant Pakistan can take advantage of the fact that it is based in a raw

material rich country and increase its profit margins through exports. However, the

energy crisis may raise the companys prices.

Apart from this, the political situations and the economic slump in the country are also

causing threats to the company.


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KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED

SCORE

Opportunities

1 Adoption of Lean Sigma Process 0.15 4 0.6

2 Remaining 8 business units 0.2 4 0.8

3 Competitors only have a blending plant 0.12 3 0.36

4 Lack of foreign investment 0.08 3 0.24

5 Based in a raw-material-rich country 0.1 3 0.3Threats

1 Energy Crisis in the Country 0.05 3 0.15

2 Economical Slump 0.07 2 0.14

3 Competitors have low overhead cost 0.08 1 0.08

4 Competitors increasing their marketing share 0.06 1 0.06

5 Unstable political situation 0.09 2 0.18

TOTAL 1 2.91


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COMPANY AND

COMPETITOR

ANALYSIS


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KEY SUCCESS FACTORS FOR COMPETITIVE

SUCCESS:

50000 MT capacity plant in Jamshooro for the manufacturing of TextileAuxiliaries.

Clariant has a huge plant where they can start manufacturing for other BU whichhas proven to be a good opportunity to enhance the business in Pakistan.

For Textile business Clariant is ahead of their competitor because of range ofproduct it is offering. None of the competitor has full range of products for textile

except Clariant.

The Scientific Centre that Clariant has offer all testing facilities likeEnvironmental testing which is not offered by any other company in Pakistan.

The competitors dont have a manufacturing plant for all products; they only havea blending plant and manufacturing plant for few products. Thus cannot compete

on prices, quality and services with Clariant.

Clariant has a lab which is continuously working to make substitute productwhich can compete with the competitors product. This is a year round activity in

Clariant.

EVALUATION OF CPM:

Clariant market share for textile business is 28% while BASF is 8% and ICI isaround 4%.

Clariant has a highest market share then its two major competitive. The networkof Clariant especially in the local industry is stronger which gives them an edge in

the chemical industry locally and globally.

The higher the market share of any firm provides them with a higher factor ofconsumer loyalty. The CPM tells us that Clariant has a bigger market share then

the competitors in the market and it is constantly moving on a better pace.

Clariant has a best service sector in aspect of transport and distribution locally dueto its plant in Jamshooro, its easy and less costly for them to distribute to theircustomers nationwide as compared to other Multinational firms in Pakistan.

Clariant is better with the financial position as they have the manufacturing andblending plant both resided locally which reduces their costs as compared to

competitors such as BASF and ICI who just have the blending plant resided

locally.


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As the companies taken into consideration with Clariant are strong and direct competitors

in the firm, there is a less variation in price but Clariant has an edge by manufacturing

and blending both it is providing the products on a similar price to their competitors who

just blend the product locally not manufacture

CRITICAL

SUCCUSSFACTORS

WEIGHT RATING

TAS RATING TAS RATING TAS

CLARIANT BASF ICI

1 Market Share 0.15 4 0.6 3 0.3 2 0.3

2 Financial

Position

0.20 4 0.8 3 0.6 2 0.4

3 ConsumerLoyalty

0.06 3 0.18 2 0.12 2 0.12

4 PriceCompetitiveness

0.07 3 0.21 2 0.14 2 0.14

5 Product Quality 0.15 4 0.6 3 0.3 3 0.45

6 Advertising 0.02 2 0.04 2 0.04 2 0.04

7 Sales and

Distribution

0.1 3 0.3 2 0.2 2 0.2

8 Manufacturing 0.1 4 0.4 2 0.2 2 0.2

9 E-Commerce 0.15 2 0.3 2 0.3 2 0.3TOTAL 1 3.43 2.2 2.15


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INTERNAL

COMPANY VALUE

CHAIN ANALYSIS


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CORE COMPETENCY

Core competencies are the capabilities

that an organization possesses that are

critical for the business to achieve a

competitive advantage and cannot be

easily imitated by its competitors.

Clariant Pakistan aligns its relevant

resources with the skill it has in order to

achieve the core competency to remain

in the market successfully.

Clariant prides itself in catering to the

needs of its customers in the best

possible way. Clariant is ahead of their

competitor because of wide range of

product Clariant is offering. None of

the competitor has full range of products

for textile except Clariant which gives

them an edge over all others. The

Product Management for Business

Textile manages the product and service

portfolio throughout the whole lifecycle.

Research and development is an

integral part of product management

which ensures that its products and

services meet future demands and foster

future technologies. Clariant focuses on

ecology and innovation.

Further the State of Art Scientific

Centre that Clariant has offers all testing

facilities like Environmental testing

which is not offered by any other

company in Pakistan. The Scientific

Centre houses the testing, applications

development and & Product Safety for

Textiles, Leather, Paper and Emulsions

business. It also contains the training

centre for textile and leather industry

where University students and

technicians from the industry are

provided advance level of training. The

scientific centre is equipped with most

modern high tech and sophisticated

equipment run by highly qualified stafffocuses on what its customers demand

and expect and how that can be provided

to them in the most efficient and

effective manner.


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Human Resource Management:

1. Committed Employees thus low turnover2. Employees are offered international exposure3. Adaptive and Professional Culture

Technological Development:

1. Huge plant at Jamshooro2. State of Art Scientific Centre3. In time deliver with low cost

Procurement:

1. Approved procedures to contact suppliers2. Recording in data base of distributors of Clariant

Inbound

Logistics:

1. EfficientSystem

2. String linkwith

customers

and

suppliers

Operations:

1. Manufacturing at

Jamshooro

Distribution &

Outbound

Logistics:

1. Fullyloaded

distributor

2. Accurateand

responsive

order

processing

Sales &

Marketing:

1. Highlytrained

sales force

VALUE CHAIN MANAGEMENT

Firm Infrastructure:

1. Professional Infrastructure2. 4 Business Units3. Strong Relationship with Suppliers

Primary Activities and Cost

SupportActivities


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PRIMARYACTIVITIES&COST

INBOUND LOGISTICS:Clariant has efficient system which links the company with their distributors and

customers.

OPERATIONS:Clariant manufactures at the local plant Jamshooro and distribute it all over to

their customers minimizing their cost in the entire operation leading the firm to

profits

DISTRIBUTION AND OUTBOUND LOGISTICS:Clariant has accurate and responsive order processing procedures. The distributors

are usually fully loaded but if there is a shortage Clariant delivers their

distributors as the purchase orders are placed.

SALES AND MARKETING:Clariant has a highly trained sales force. They carry out various awareness

programs in which they visit different localities with their sales team


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SUPPORT ACTIVITIES AND COST

FIRM INFRASTRUCTURE:Clariant has a professional and a strong infrastructure. Textile business has two

business lines. Each business line has a business line manager Business line

manager reports to BU Head who is also the CEO of the company. CEO is the

person who is the head of the Clariant. The firm processes are made in such a way

that it has helped the company to reduce its cost. Employee commitment has

always been there. The culture is adaptive and professional. Clariant has a strong

relationship with its suppliers.

HUMAN RESOURCE MANAGEMENT:Clariant value their employees commitment. Thats why the employee turnover

is low. Their employees are loyal to the company. The send their relevant

employees to worldwide conferences in order to have international exposure and

bring in changes to the organization according to the changes taking place in the

world in aspect of technology, environment and the employee forces.

TECHNOLOGICAL DEVELOPMENT:Clariant has invested massively in their local plant which is located at Jamshooro,

Sindh which has tremendously helped them to reduce their transportation cost for

the local customers and have provided a competitive edge in the market.

The service facility provided by Clariant is the best amongst the competitors as

they provide the best and the on time delivery process with low costs, and usually

the overall price is a discounted price provided to their large customers usually inthe textile sector of our country.

TEPROCUREMENTClariant has systems and procedures installed through which they contact their

local and foreign suppliers who are all approved. The distributors deal with the

customers, the customers place orders to them and then distributors quote them

with prices, eventually leading to the a purchase order by the customers and

results in the delivery to customers in a given time period. This entire activity is

recorded in the data base of the distributors of the Clariant worldwide.


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STRATEGIC COST MANAGEMENT

Strategic Cost Management is essential part of Internal Audit of any organization.

Clariant has high material and process cost which they plan to overcome through

adapting the Lean Sigma Process. This would also help them improve their profit

margins.

Since its inception, it has maintained its position as the market leader due to constant

technological innovation over the time. The company focuses on providing its customers

with the latest technological developments worldwide, in the most cost-effective manner

possible. Clariant has kept up to its promise of always providing its valued customers

with more than they expect.

Clariant emphasizes on creating personalized and value driven services. As a result, it

hires the most highly paid and the most competent personnel in the Industry. Clariant has

fixed a sufficient budget for marketing management (including research and

development) which has proved to be very effective in the form of increased revenues

and a stronger customer base.

Clariant is constantly updating its processes with the aim of optimizing product

properties, minimizing environmental impact and maximizing the cost effectiveness of

production and application. They do not simply sell a single product to their customers;

whenever possible they strive to be their partner by helping them select the best package

according to their needs. This not only helps retain and enhance customer satisfaction but

also helps them to manage their selling cost. Clariant focuses strongly on its technical

expertise and global presence so that they can meet the needs of its customers and be

close to them.

The huge manufacturing plant at Jamshooro also has an independent Quality Control

Laboratory assuring standardized input & output of Raw Materials & Finished Goods.

The Site is equipped with technologically advanced and state-of-the art, specialized

testing equipment which makes sure no additional costs or expenses are incurred in the

process. However, to manage its costs strategically well, Clariant needs to manage its

high cost of production as competitors have a relatively low over head cost.


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FINANCIAL RATIO ANALYSIS:

Industry Avg. Clariant

Net Profit Margin (%) 7.02 7.66

Gross Profit Margin (%) 23.18 24.19

Debt to Equity Ratio 0.51 0.22

Return on Equity 21.71 39.78

Current Ratio 1.7 1.65

Quick Ratio 1.05 1.04

Earnings per share 18.39 21.26

2007 2008 2009 2010 2011

Net Profit Margin (%) 8.07 7.34 7.61 7.43 7.86

Gross Profit Margin (%) 23.19 25.52 23.40 24.32 24.53

Debt to Equity Ratio 0.33 0.26 0.15 0.18 0.16

Return on Equity 43.89 38.45 37.15 39.24 40.17

Current Ratio 1.51 1.61 1.66 1.72 1.74

Quick Ratio 0.92 0.95 1.09 1.12 1.13

Earnings per share 21.29 19.00 21.46 22.09 22.47

2007 2008 2009 2010 2011




Return on Equity 43.89 38.45 37.15 39.24 40.17

Current Ratio 1.51 1.61 1.66 1.72 1.74

Quick Ratio 0.92 0.95 1.09 1.12 1.13


2007 2008 2009 2010 2011




Return on Equity 43.89 38.45 37.15 39.24 40.17

Current Ratio 1.51 1.61 1.66 1.72 1.74

Quick Ratio 0.92 0.95 1.09 1.12 1.13



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Net profit margin - Clariant

Clariant Pakistan successfully maintained its profitability over the period of least 5 years

above 7.3 with an average of 7.66. Net Profit Margin is mainly the ratio of net profit after

taxes to the revenue earned and helps to indicate the companys profitability. For the

Chemical Manufacturing Industry, the average net profit margin for the last 5 years is

7.02 and thus Clariant is doing well.

6.8

7

7.2

7.4

7.6

7.8

8

8.2

Net Profit Margin (%)


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Gross Profit Margin - Clariant

Gross Profit Margin showed an increase of over 2% in FY 08 and was a result of

decreased proportion of cost of sales. However, there was a slight decrease in GrossProfit margin in the next year which can be accounted to increased cost of sales in FY 09.

Thereafter, the Gross Profit Margin is increasing and has averaged to 24.19 which it has

to improve so as to reach its optimal level.

22

22.5

23

23.5

24

24.5

25

25.5

26

Gross Profit Margin (%)


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Debt to Equity Ratio - Clariant

Debt to Equity Ratio is measure of companys financial leverage indicating the relat ive

proportion of shareholders' equity and debt used to finance a company's assets. It is

basically the companys ability to borrow or repay money. For Clariant Pakistan in thelast 5 years, debt to equity ratio has always been below 0.35 and has generally decreased

over the year which is a positive sign. Clariant Pakistan does not need to borrow much to

finance the companys assets and finances majorly through its equity. However, the

industry average has been 0.51 as compared to which Clariants is better. It should

continue to work in the same manner at least in this regard.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

Debt to Equity

Ratio


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Return on Equity - Clariant

Return on Equity (ROE) measures a corporation's profitability by revealing how much

profit a company generates with the money shareholders have invested. Return on Equity

decreased from 44% to 38% in FY 08 and this decrease can be accounted to increased

cost of sales in that particular year. The ratio further decreased to 37% in FY 09,

however this time, the decrease was due to issuance of shares. Thereafter the ROE has

been increasing at a good speed and thus the 5 year average is 39.78% which is much

higher than the industry average of 21.71%. Thus Clariant Pakistan has been performing

much better than its competitors and the industry as a whole.

32

34

36

38

40

42

44

Return on Equity


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Current RatioClariant

Since FY 07, Clariant Pakistan has shown an increasing trend in its current ratios. Current

ratio is basically a companys ability to meet its short term debt obligations. The higher

the ratio the more liquid the company is and it could respond to its short term finances in

a much better way. Throughout the 5 year period, the current ratio has remained fairly

above 1 which indicates that the liquidity position of the company is quite stable.

Clariants 5 year average is 1.65 which is in alignment with the industry average of 1.7

and thus a good sign for Clariant and its stakeholders.

1.35

1.4

1.45

1.5

1.55

1.6

1.65

1.7

1.75

Current Ratio


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Quick RatioClariant

The quick ratio measures a company's ability to meet its short-term obligations with its

most liquid assets. It can also be observed that the Quick ratio was initially low at 0. 92 in

FY 07 then increased reaching 1.09 in FY 09. It had been low due to an increase in short

term borrowings. Liquidity position of the company has almost remained stable in therecent years with quick ratio maintaining an average of 1.08 reflecting good liquidity

position. For the last 5 years, average quick ratio has been 1.04 which is just near to the

industry average on 1.05. Clariant is doing just well according to the quick ratio.

0

0.2

0.4

0.6

0.8

1

1.2

Quick Ratio


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Earnings per share - Clariant

Earnings per share serve as an indicator of a company's profitability and for Clariant

Pakistan; it has remained relatively stable in recent years. The Earnings per share made agreat jump from FY 08 to FY 09 and then kept increasing at a gradual pace which seems

fair enough. Clariant Pakistans average EPS for the past 5 years is 21.26 which are

relatively better than the industry average of 18.39. It shows that Clariants profit

allocated to each outstanding share of common stock is higher than that of the industry

average.

17

18

19

20

21

22

23

Earnings per share


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INTERNAL FACTOR EVALUATION MATRIX (IFE)

KEY INTERNAL FACTORS WEIGHT RATING

WEIGHTED

SCORE

Strengths

1 Customer Loyalty 0.08 3 0.24

2 High Return on Investment 0.07 3 0.21

3 50,000 Mt Capacity Plant in Jamshooro 0.16 4 0.64

4 State of Art Scientific Centre 0.13 4 0.52

5 Resources to offer full range of Products in

Textile

0.1 4 0.4

6 Strong marketing base nation-wide 0.09 3 0.27

7 Strong R&D centre in Frankfurt 0.07 4 0.28

8 International Exports 0.11 4 0.44

Weaknesses

1 High cost 0.08 1 0.08

2 Closed its Switzerland Plant 0.05 2 0.1

3 Need for Process Improvement 0.06 2 0.12

TOTAL 1 3.3


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EVALUATION OF IFE

Internal Factors Evaluation Matrix is mainly used as a strategic management tool for

auditing and evaluating current business conditions and to visualize and prioritize the

strengths and weaknesses in functional areas of a business. It focuses solely on the

internal factors of an organization.

The weighted score from the IFE comes out to be 3.3 which shows that the company has

enormous strengthens to overcome its weaknesses. The matrix also provides a basis for

identifying and evaluating relationships among the strengths and weaknesses of an

organization.

The highest weightage is given to the biggest strength that Clariant has, which is that is

has 50,000 Mt Capacity Plant in Jamshooro. The site comprises of independently located

Manufacturing Plants and Warehouses for Dyes, Chemicals, Binders/ Emulsion and

Pigments dispersions including infra-structural set-up for provision of utilities,

administration and Social services. This is a huge plant and an asset for Clariant. It is not

only sufficient to be used for the current 4 business units for which the manufacturing is

being done locally but also for the remaining 8 of Clariant if its manufacturing is shifted

to Pakistan.

Besides this it also has a State of Art Scientific Centre. This particular strength gives it a

competitive advantage over its rivals as through this, they can excel technologically,

bring in innovative and new products and can provide technical service to its customers.

The centre houses the testing, applications development and & Product Safety for

Textiles, Leather, Paper and Emulsions business. It also contains the training centre for

textile and leather industry where University students and technicians from the industry

are provided advance level of training. The scientific centre is equipped with most

modern high tech and sophisticated equipment run by highly qualified staff.

Another major strength of Clariant Pakistan is that only Clariant offers a wide range of

products and as for its textile segment, none of the competitors has full range of products


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for textile except Clariant. Furthermore, Clariant has a strong Research and Development

Centre in Frankfurt where chemists work on new technology. The primary emphasis of

its R&D effort is on product, application and process development, focusing on customer

requirements and recognizing that success is determined not only by the products but also

by the way they are produced. Due to these innovations they had also recently been

awarded 2012 Innovation Awards organized by ICIS.

Clariant Pakistan had a wide and strong nation-wide marketing base which helps them to

cater a large segment of the market and to retain their customers. This in turn helps to add

on to their customer loyalty and for attracting new customers.

Despite the high cost of raw materials and the overall process, Clariant has been able to

retain its customers and do well to keep pace with others. They have done this through

shifting about 40% of its production to Pakistan and then exporting to all European

countries which has increased its profit margins globally.

The major weakness of Clariant is that it needs process improvement. In this fast moving

world, with cut-throat competition it is a weakness of a company and it is working on to

improve it.


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GENERIC STRATEGY

The ability of a valuable cost-leadership competitive strategy to generate a sustainedcompetitive advantage depends on that strategy being rare and costly to imitate.

Sources of cost advantage FOR CLARIANT:

Economies of scaleEconomies of scale

One of the most cited sources of cost advantage for a firm is its SIZE. There is a

relationship between firm size measured in terms of volume of production - and costs -

measured in terms of average costs per unit of production. The optimal volume of

production is reached when the average costs per unit of production is minimum.

Sources of economies of scale:

Volume of production and specialized machines:

Clariant has an advantage of high level of production, it is able to purchase and use

specialized manufacturing tools that cannot be kept in operation in small companies.

CLARIANT


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Volume of production and cost of plant and equipment:

Clariants high volume of production allows building larger manufacturing operations.

They are able to build lower per unit cost manufacturing operations and will have lower

average costs of production.

Volume of production and employees specialization:

High volumes of production are also associated with high levels of employee

specialization. However Clariant has the wells specializes and n motivated staff.

Volume of production and overhead costs:

As Clariant having the high productivity it can spread its overhead costs to all thefunctioning departments which apportion the total expenditure of the firm.

The learning curveThe learning-curve model attempts to relate the volume of production and coats overtime. Economies of scale focus on the relationship between the volumes of production at

a given point in time and average unit costs. The learning-curve focuses on the

relationship between the cumulative volume of production and average unit costs.

Differential Low-Cost Access to Factors of ProductionDifferential low-cost access to factors of production may create cost differences

among firms producing similar products in an industry, however Clariant has the

competitive advantage of manufacturing and blending their products wholly inPakistan and proving their customers with a similar price of the products as thecompetitor, which enables Clariant to achieve differential low cost access to

factors of production.

Technological Advantages Independent of ScaleA possible source of cost advantage that Clariant has is its high-tech plant for

manufacturing and for blending. Clariant has a well organizes software which

manages their supply chain and links the firm with its distributers as all the salesare conducting by the distributers.

Policy ChoicesClariant has the growing segment of textiles for the Pakistani industry; they

provide their consumers with all they need in the textile segment at same prices asother chemical firm with on time delivery and the availability.


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Low cost strategy works best for Clariant because:

The price competition of Clariant among rival sellers (BASF, ICI)is a dominantcompetitive force

The industry's product is a standard, commodity-type item readily available froma variety of sellers

There are not many ways to achieve product differentiation that have value to thebuyer

Most buyers use the product in the same ways and have much the same needs /requirements

The buyers incur low switching costs in changing from one seller to another andare prone to shop for the best price

The buyers are large and have significant bargaining power


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STRATEGIC ANALYSIS

AND

RECOMMENDATIONS


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TOWS Matrix

INTERNAL

FACTORS

EXTERNAL

FACTORS

STRENGTHS (S)

1. Customer Loyalty2. High Return on Investment3. 50,000 Mt Capacity Plant in

Jamshooro

4. State of Art Scientific Centre5. Resources to offer full range of

Products in Textile

6. Strong marketing base nation-wide7. Strong R&D centre in Frankfurt8. International Exports

WEAKNESSES (W)

1 High cost2 Closed its Switzerland Plant3 Need for Process

Improvement

OPPORTUNITIES (O)

1. Adoption of Lean Sigma Process2. Remaining 8 business units3. Competitors only have a blending

plant4. Lack of foreign investment5. Based in a raw-material-rich country

SO STRATEGIES

1. Use its huge plant capacity toinvest in the remaining 8

business units (S2, O2)

2. Take advantage of being basedin a raw material rich country todecrease the cost of its exportsand thus increase profits (S8,O5)

3. Use its R&D and state of artscientific centre to adopt leansigma process (S4, S7, O1)

WO STRATEGIES

1. Reduce its cost through theadoption of lean sigma process

(W1, O1)

2. As the Switzerland plant hasbeen closed and there is a lackof foreign investment inPakistan, Clariant being a

multi-national company caninvest and increase its marketshare and profitability (W2O4)

THREATS(T)

1. Energy Crisis in the Country2. Economical Slump3. Competitors have low overhead cost4. Competitors increasing their

marketing share5. Unstable political situation

ST STRATEGIES

1. Use international exports wiselyand intensely to increasecompanys market share (S8, T4)

2. Use high plant capacity toproduce more so as to reduceoverhead cost per unit (S3, T3)

WT STRATEGIES

1. Cost should be reduced inorder to cope up withcompetitors (W1, T4)


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BCG MATRIX

MASTERBATCHES

TEXTILE CHEMICALS INDUSTRIAL AND CONSUMER

SPECILAIATEIS

ADDITIVES


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GRAND STRATEGY MATRIX

Grand strategy matrix helps in formulating alternative strategy for the firm. Here Clariant has

been evaluated on two evaluation dimensions: competitive position and market or industry

growth. A firm can be positioned in one of the Grand strategy matrixs four strategy quadrants.Clariant lies in to the first quadrant. The market growth is rapid and Clariant has strong

competitive position among its competitors.

The chemical industry is growing in Pakistan because chemicals are building blocks for products

that meet our most fundamental needs for food, shelter and health, as well as products vital to the

high technology world of computing, telecommunications and biotechnology. With increase in

production of different products within the country and technological advances, the demand for

different chemicals is increasing day by day, which contributes to the growth of chemical

industry. Another other reason for the growth of this industry is that Pakistan is a developing

country and is focusing on local production and manufacturing of goods locally. Chemicals alsoserve as an input for agricultural products and Pakistan is an agricultural country which also

increases the demand for chemicals and fulfillment to this demand lets to the growth of chemical

industry.

Rapid Market Growth

Strong Competitive Poseak Competitive Position

Slow Market Growth

II I

IVIII


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Clariant also has strong competitive position among its competitors because it not only produces

wide variety of chemicals for different industries but also has both manufacturing and blending

plants here in Pakistan which gives Clariant an edge over its competitors. Clariant has highest

market share as compare to its two main competitors: BASF and ICI. This high market share

provides Clariant with high customer loyalty. In addition to this Clariant has an efficientdistribution and transportation in Pakistan. Clariant lies in the first quadrant which shows that it

is in an excellent strategic position. They should concentrate on their current market and

products. Clariant can undertake strategies like market penetration, market development, product

development etc. It can also adopt backward and forward integration because it has excessive

resources. The firm is already diversified in many types of products like: Additives, Catalysis &

Energy, and Functional Materials, Master batches etc. Forward and backward diversification

could also help in decreasing the cost of raw materials.

Strategy 1(Increase Investment to gain more Market Share)

Recently Clariant has closed down its plant in Switzerland and there is a lack of foreign

investment in Pakistan. Clariant being a financially strong and a Multi-national company should

invest more in order to gain more Market share. Clariant can also use its huge capacity plant to

invest in remaining 8 of its business. All in all Clariant should invest in product development

through its strong financial position.

Strategy 2(Reduce Cost by adopting Lean Sigma Process)

Lean Sigma Process which may be adopted by Clariant Pakistan for process improvement in

order to cut cost and increase profit margins. This process seeks to improve the quality of

process outputs by identifying and removing the causes of defects and minimizing variability in

manufacturing and business processes. It uses a set of quality management methods, and creates

a special infrastructure of people within the organization who are experts in these very complex

methods. This process follows a defined sequence of steps and has quantified financial targets

which may help improve the performance of Clariant as a whole.


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STRATEGIC

LEADERSHIP AND

IMPLEMENTATION


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ERRC

A New

Value Curve


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Reduce

- Cost Eliminate- Fixed budgetingCreate- Process improvement

- Cost cutting strategiesRaise- Technological developments

- Capitalize on awareness of wide rangeof product offerings

The Reduce Tool in the ERRC framework shows the managers on how to reduce those factors

which are well below the industry standards. They should be reduced to meet with competitors,

and bring something new to the industry.

The Reduce factors should be able to increase the standards of the industry at an overall. So the

question lies with us that what we should state that would make Clariants standard rise in theface of the overall industry.

As examined before in the red ocean strategy discussion above in the report we know very well

that one of Clariants major weakness is that they have a high cost structure, overhead cost

structure for that matter because it is a multinational company they have to transport its raw

materials from their base country so the transportation is quite high which is the main reason

why the costs are high, these costs need to be reduced. This can be possible when manufacturing

and procurement of raw materials is done solely from Pakistan but keeping the standard of

quality the same as before otherwise there will be a change in customer loyalty if the product

does not remain the same quality wise.

When the overhead cost structure will decrease then Clariant will be able to compete fully

against their competitors as Clariants competitors are enjoying a greater profit margin than

Clariants margin.

To create is the tool in the ERRC framework which talks about creating those particular factors

which are needed to be created in the industry which are unique to the industry and which have

never been offered before hand by any other competitor player in the industry.

Clariant is one of the major players in the industry and has many core competencies to its name.

The uniqueness it offers is it is a multinational but it is still functioning well in the Pakistanienvironment when all other industries are leaving Pakistan due to its political instability and

economic crisis.

The major weakness of Clariant is that it needs process improvement; if it creates process

improvement then it can beat all its competitors as it is established well in the chemical industry

in Pakistan. By process improvement we mean that Process improvement is an aspect of


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organizational development (OD) in which a series of actions are taken by a process owner to

identify, analyze and improve existing business processes within an organization to meet new

goals and objectives, such as increasing profits and performance, reducing costs and accelerating

schedules.

These actions often follow a specific methodology or strategy to encourage and ultimately create

successful results. Process improvement may include the restructuring of company training

programs to increase their effectiveness.

Process improvement is also a method to introduce process changes to improve the quality of a

product or service, to better match customer and consumer needs.

Clariant has a strong Research and Development Centre in Frankfurt where chemists work on

new technology which will able the processes to be achieved efficiently that is what Clariant

needs to achieve.

Clariant has to create cost cutting strategies as well to meet the competitors pressure on the

industry profits. To gain an increased market share Clariant is well on its way as it has a

consistent customer loyalty base even though their products are a little bit on the higher side

compared to the competitors. In cutting down costs, Clariant has to focus on the high costs of

raw materials and the overall production processes.

The raise tool in the ERRC framework suggests what factors the company can use which will

raise the company standards well above the industry average.

The first factor that Clariant can use is they can capitalize and increase awareness on the wide

product offering that the company provides its customers with. Clariant has an astoundingly widevariety of products and it needs to use its marketing efforts to increase this awareness in the

industry amongst its customers to retain the customer loyalty and to rope in more customers.

Technological developments at Clariant are as it is higher than the usual industry average.

Clariant has a heads up on this because it is a multinational and they have a research and

development facility, a science centre also and they have been recognized for their major

innovations through awards from ICIS. This particular strength gives it a competitive advantage

over its rivals as through this, they can excel technologically, bring in innovative and new

products and can provide technical service to its customers. The centre houses the testing,

applications development and & Product Safety for Textiles, Leather, Paper and Emulsionsbusiness. It also contains the training centre for textile and leather industry where University

students and technicians from the industry are provided advance level of training. The scientific

centre is equipped with most modern high tech and sophisticated equipment run by highly

qualified staff.


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Clariant has to use technological development as its undue advantage so as to increase its market

share in the Pakistan chemical industry as the rest of the players in the industry do not have such

a competitive edge on Clariant as they are local companies and cannot afford to have a large

amount of their budget spent on technological development, and research.


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STRUCTURE

The Clariant organizational structure comprises 11 Business Units, as well as Business Services,

Group Technology Services, regional Service Centers, and Corporate Center, where key

functions are centralized. The Executive Committee is responsible for the management of theGroup. They have designed this structure keeping in mind the implementation of the strategy.


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RESOURCE ALLOCATION

Following are the main resources that Clariant can utilize in order to implement the evaluated

strategy.

1) They have a very strong transportation and distribution channel which enables them workmore efficiently and if they implement lean sigma process this efficient distribution will

further reduce their cost and will improve the process.

2) The value chain of Clariant is another resource that would allow them to implement leansigma process efficiently.

3) Huge capacity of 50,000 Mt in Jamshooro is will also help in implementing this strategy4) The strong R&D centre in Frankfurt will help in research about this new sigma lean

process.

CULTURE

Culture at Clariant is democratic. They believe in employing their employees with power to

implement decisions and to give their opinions in important matters of the organization. Clariant

also emphasizes on providing training to their employees.

Launched in 2006, the Clariant Academy is a dedicated center for training current and future

Clariant leaders. The Academy plays a key role in fostering a sustainable culture of excellence,

capability building, leadership development and best-practice sharing. The Academy consists ofthree 'schools' with courses and workshops aimed at developing skills for employees at different

levels:

Leadership School: Develops strategic and 'soft' skills such as effectivecommunications.

Functional School: Develops know-how and behaviors to reach operational excellencein Clariant core processes, such as Value Based Selling.

Change School: Implements strategic initiatives and provides an infrastructure forchange management and continuous improvement. Lean Sigma is an example of these

change processes.

With emerging new markets and customer base at international level Clariant foster a

collaborative, culturally-sensitive worldwide production network. Their ability to succeed on

a global scale hinges on nurturing a blend of local competence and international business


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experience.

They are like a cosmopolitan family with employees drawn from more than 90 nations. They

aim to provide their managers with international experience to better equip them for

leadership roles. High-level managers are required to work in at least two different regions in

order to progress

CLARIANT A LEARNING ORGANIZATION:

TASK#1: INTELLIGENCE GATHERING

TASK#2: LEARNING FROM OTHER COMPANIES

TASK#3: LEARNING FROM PAST EXPERIENCES

TASK 4# EXPERIMENTATION

TASK 5# SYSTEMATIC PROBLEM SOLVING

TASK 6# TRANSFERREING KNOWLEDGE

Clariants research and development department carries out a research regarding the monetary

benefits and salaries provided to the employees of other multinational firms in the chemical

industry in order to keep their employees motivated to work and provide them with the best

possible benefits and environment within the organization to keep up their morale to work and to

be loyal to the firm in every possible way.

The major learning from past experiences that has taken place by Clariant is the shifting of its

manufacturing plant to Pakistan instead of being in Switzerland. They worked out the cost before

the decision was made giving minimized results which influenced them to make this decision as

the cost ratio was very high before then their revenues. This decision has put Clariant in a better

place then where and how it was before. Clariant has achieved higher market share and is

growing instantly because of this particular decision. Clariant has been able to make great

acquisitions due to its success which came from taking such decisions.


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Clarianthadundergone an acquisition with a German firm known as SUD-CHEMIE. It is one of

the best catalysts making firm worldwide. By acquiring leading positions in the fields of process

catalysts and adsorbent agents, Clariant is expanding its portfolio with two fast-growing

business-units. Sd-Chemie also has a strong research and development organization focusing on

market segments with significant growth potential.

The Business Unit Catalysis & Energy is a leading provider of catalysts for chemical,

petrochemical, polymer, refinery and automotive industries as well as materials for

environmental markets and solutions for energy efficiency and energy storage. The merger has

been implemented globally including Pakistan but the process of experimentation in Pakistan has

recently began to find whether it should be implemented or not in the Pakistani chemical

industry.

Hurdles for strategy

LIMITED RESOURCES. The greater the shift in strategy, the greater it is assumed arethe resources needed to execute it. But many companies find resources in notoriously short

supply

MOTIVATION. How do you motivate key players to move fast and tenaciously to carryout a break from the status quo?

POLITICS.As one manager put it, In our organization you get shot down before youstand up.

CLARIANTS NEW STRATEGY

Clariant has gone thru a long strategic change in the company globally. The strategic change is

still ongoing. The broader objective was to increase the EBIT of the company to 17% in 2015

which was approx. 12% in 2010. To move the company from lower quartile to the top quartile,

globally.

HURDLES:

The strategy was created by the Executive Committee after having long consultation and home

work with different research and strategy formulating company. The strategy in reality work

when employee believes on same.

1. One of the major hurdles is reluctant to change2. Fear of losing jobs3. Vulnerability on future of company


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4. Reluctance to change the style of doing business.Usually these hurdles are minimized with passage of time. The company has communicated the

strategy openly to all employees, so that they should know what is going on. Also what each

individual has to do to achieve the same. Normally in these circumstances only those people can

continue with the company who can accept the strategically change, else they leave the company

or go in to downstream.

LIMITED RESOURCES:

When you need to implement strategy you need resources. The resources are usually

1. Human Resources2. Financial Resources

Human resources means you should have people in the top management in all countries who

should have strong believe in the strategy shift. Else you can never achieve the same.

Financial resources are generated thru a specific process. This is also a part of strategy. Different

means of financial resource generation could sell different plant which is not profitable, selling

different businesses.

MOTIVATION:

There are people in every organization who can be motivated once you show them what

companies need to do. Once they are convinced you can use them to motivate others. Also there

are people who dont want change; they are the one who usually have to leave the organization.

Motivation depends on the people who are leading the organization. Motivation results when you

communicate with people openly and let them know the need to strategic change. This might

vary in same company from countries to countries.

POLITICS:

This happens when organizations weak and powers are not equally distributed and if the people

are not accountable to someone. Further if the top management is convinced on the strategy then

these are usually minimized. However still there might be few problem maker lower level

managers who will de motivate people.


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FAIR PROCESS

ENGAGEMENT:

DISCUSS RESOURCE DEPLOYMENTS EARLY. Challenge business unitsabout when theyll need new resources to execute their strategy. By asking questions

such as, How fast can you deploy the new sales force? and How quickly will

competitors respond? And then they create more feasible forecasts and plans.

IDENTIFY PRIORITIES. Delivering planned performance requires a few keyactions taken at the right time, in the right way. They make strategic priorities

explicit, so everyone knows what to focus on.

CONTINUOUSLY MONITOR PERFORMANCE. They Track real-time resultsagainst their plan, resetting planning assumptions and reallocating resources as

needed.

EXPLANATION:

KEEP IT SIMPLE. Clariant avoids drawing-out descriptions of lofty goals. Instead,clearly describe what their company will and wont do.

CHALLENGE ASSUMPTIONS. It ensures that the assumptions underlying their long-term strategic plans reflect real market economics and organizations actual performance

relative to rivals.

SPEAK THE SAME LANGUAGE. Unit leaders and corporate strategy, marketing, andfinance teams agree on a common framework for assessing performance.

EXECUTION:

DEVELOP EXECUTION ABILITY. No strategy can be better than the people whomust implement it. They make selection and development of managers a priority. Fair

process builds execution into strategy by creating people's buy-in up front. When fair

process is exercised in the strategy making process, people trust that a level playing field

exists. This inspires them to cooperate voluntarily in executing the resulting strategic

decisions.

Clariant uses the 7 strategies to transfer knowledge to their employees in order to achievetheir challenges and goal set before implementing the strategies.

clariant sm report - final.docx

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