29-05-2012, 01:29 PM
chemical industry
Chemical_Industry.pdf (Size: 4.37 MB / Downloads: 58)
The Chemical Industry’s 3 Main Business Models
The chemical industry is one of the largest and most diversified industries in the world. In Western Europe
alone it provides employment to about 1.26 million people. It consists of several small industries that cover
hundreds of segments. The industry applies three main business models to create value for its customers:
• Asset-driven players: They explore or buy oil/gas and refine
it into petrochemicals and other basic chemicals. Access to
the raw materials is the critical success factor.
• Integrated players: Besides refining oil and providing basic
chemicals, they go one step further “downstream” in the
value chain into the production of polymers. Some of them
might also have “specialty” divisions.
• Specialties players: These players buy intermediate products
(i.e., basic chemicals or polymers) and process them into
specialty products related to specific functionalities. Some
of them are focused on a niche market. Others are more
broad-based.
Natural Resources and the
Environment
The portion of the world’s population suffering from water
scarcity is increasing dramatically. The chemical industry is one
of the significant users of water. It will need to re-design its
processes to reduce their water usage.
Globalization
Cash rich government funds and companies from the ME and
Asia are investing in Western companies to acquire knowledge
and brands. Result: The chemical industry is increasingly taking
place globally. This means longer supply chains and more foreign
competitors threatening local markets.
Major Shifts in Consumption Patterns
Geographic Shift. Today about 70% of consumer spending is
concentrated in North America, Europe and Japan. But 10 years
from now, about 80% of the middle-income consumers will live
outside of these economies.
Shift in End-User Choices. There is also a clear polarization of
consumption in the chemical industry. For example, consumers
can now choose between a basic, cheap wall paint or a premium
one with special properties such as water resistance.
Demographics
Population shifts will have major consequences. In developed
countries, chemical industry workers are retiring, leaving
companies without experienced managers to take over
leadership roles. Developing countries have a high percentage
of young people, but many of them need development to work
in the chemical industry.
The advantage of asset-ownership
In petro-chemicals, many of the largest asset-driven players
are in the Middle East. These resource-owners are using their
financial and natural resources to become global petrochemical
producers. They have access to significantly discounted oil and
gas reserves. This gives them a competitive advantage.
They are also closer to Asia than Western producers of
chemicals are. Middle Eastern producers will increase their
capacity to produce petrochemicals and basic chemicals. Their
activities will also create local employment. These realities will
compound the weak asset position of major players in the oil
and gas industry.
Chemical_Industry.pdf (Size: 4.37 MB / Downloads: 58)
The Chemical Industry’s 3 Main Business Models
The chemical industry is one of the largest and most diversified industries in the world. In Western Europe
alone it provides employment to about 1.26 million people. It consists of several small industries that cover
hundreds of segments. The industry applies three main business models to create value for its customers:
• Asset-driven players: They explore or buy oil/gas and refine
it into petrochemicals and other basic chemicals. Access to
the raw materials is the critical success factor.
• Integrated players: Besides refining oil and providing basic
chemicals, they go one step further “downstream” in the
value chain into the production of polymers. Some of them
might also have “specialty” divisions.
• Specialties players: These players buy intermediate products
(i.e., basic chemicals or polymers) and process them into
specialty products related to specific functionalities. Some
of them are focused on a niche market. Others are more
broad-based.
Natural Resources and the
Environment
The portion of the world’s population suffering from water
scarcity is increasing dramatically. The chemical industry is one
of the significant users of water. It will need to re-design its
processes to reduce their water usage.
Globalization
Cash rich government funds and companies from the ME and
Asia are investing in Western companies to acquire knowledge
and brands. Result: The chemical industry is increasingly taking
place globally. This means longer supply chains and more foreign
competitors threatening local markets.
Major Shifts in Consumption Patterns
Geographic Shift. Today about 70% of consumer spending is
concentrated in North America, Europe and Japan. But 10 years
from now, about 80% of the middle-income consumers will live
outside of these economies.
Shift in End-User Choices. There is also a clear polarization of
consumption in the chemical industry. For example, consumers
can now choose between a basic, cheap wall paint or a premium
one with special properties such as water resistance.
Demographics
Population shifts will have major consequences. In developed
countries, chemical industry workers are retiring, leaving
companies without experienced managers to take over
leadership roles. Developing countries have a high percentage
of young people, but many of them need development to work
in the chemical industry.
The advantage of asset-ownership
In petro-chemicals, many of the largest asset-driven players
are in the Middle East. These resource-owners are using their
financial and natural resources to become global petrochemical
producers. They have access to significantly discounted oil and
gas reserves. This gives them a competitive advantage.
They are also closer to Asia than Western producers of
chemicals are. Middle Eastern producers will increase their
capacity to produce petrochemicals and basic chemicals. Their
activities will also create local employment. These realities will
compound the weak asset position of major players in the oil
and gas industry.