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Lyondell Chemical Company 2 Harvard Case Study Analysis

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Lyondell Chemical Company 2 Case Study Solution & Analysis


Intro

Lyondell Chemical Company 2 Case Study Solution is a popular global brand name in technology industry, established in 1938 by Lee Byung Chul, in South Korea. Lyondell Chemical Company 2 deals in large number of product categories consisting of Semiconductors, Telecom, Digital Media, Digital Appliances and much more other electronic products. Historically, the business's core clients include the Original Devices Manufacturers (OEMs), which used to offer Org products withtheir own trademark name. Till early 1990s, the core competency of Org depend on its low price offerings than its competitors by manufacturing existing items at economies of scale. Its consumer circle includes Original Devices Manufacturers (OEMs), who used to sell Lyondell Chemical Company 2 Case Study Solution products with their own brand name. Organization was not simply understood outside Korea. There were likewise no or little interest in building the trademark name internationally. Marketing budget was controlled by production department with a prime focus on providing cheap products.During the 1997 Asian Financial Crisis the business practically got bankrupt, however with the Vision of Chairman Lee it completely turn its fortune around and in 2002 was noted the leading 25 most important business in the world. When Kim was worked with as a Chief Marketing Officer in 2000 the business was not even listed. He repositioned Corp as a worldwide brand and educated his divisional managers to understand marketing and its significance. Now their objective is to arrive 10 by 2005.

Problem Declaration

Corporation's transition from an item based to a marketing business is not going as efficiently as planned.Overcoming the unwillingness of divisional supervisors to include marketing effectively is still a major difficulty. Creating a consistent brand identity throughout the entire world and employing marketing methods that finest fits the regional culture is no easy job. The M-net program analysis have been actually valuable in determining the high and less potential growth locations, but allowance of resources accordingly is not well gotten amongst the managers. There is no consensus amongst the hierarchy relating to the best suited future technique.
Executive Summary
Situational Analysis

Lyondell Chemical Company 2 Case Study Help efforts for building its brand throughout the world was started after introducing the "brand-new management initiative" by Chairman Lee in 1993. The goal was to transform Corp from a cheap OEM to a high value-added item provider. To make the vision of Company a reality, Chairman Lee designated Yun as a vice chairman in 1997. Yun had a rather clear photo in his mind about how Corp can change from a low end to a luxury item supplier. He knew that change can only be done through positioning Enterprise as a business using high-end products and this could only be done through high level of marketing.

In spite of having a clear vision about how to construct Enterprise brand name, with a potential assistance of its executives, Yun dealt with several marketing difficulties in early years of its efforts.

Among the marketing challenges for Yun was the perceptions of executives about the worth of marketing. They thought about marketing and selling as very same tools and thought that quality products do not required marketing for increasing sales. As their focus towards marketing was quite low in their previous company practices, and the present marketing requirement was too much high, the space was too broader and to fill this space with wrong perceptions about marketing was rather tough for Yun.

Along with it the item range of the company was increasing with the ripening of brand-new product concepts by the R&D sector of Enterprise. Yun had an obstacle to perform marketing planning and to develop marketing budget plans for existing as well as for brand-new products from the very start, and this would take a big time.

A huge shift would be required in current marketing expenditures to construct the Venture brand. This would result in increased marketing expenses for Org and could disrupt the administration concerning increased expenditures, as they were reluctant to marketing expenditures previously and an unexpected huge shiftwould make them interrupt.

Internal Analysis
SWOT Analysis
Strengths


Organization strengths lie in its huge product portfolio. Organization has largest number of patents in the industry with overall number of 15499 patents approved in United States( USP). Big amount of R&D spending has allowed the business to grow its item portfolio at a higher rate than its rivals. Lyondell Chemical Company 2 Case Study Help spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its overall profits.

Another strength of Lyondell Chemical Company 2 Case Study Analysis is its ability to develop innovative items at a continuous rate. It significant shows for the innovation and product developing of Enterprise is that the company has gotten so many awards for its innovation and product style.

Unlike Apple and other rivals, Enterprise is concentrated on producing devices which can be quickly incorporated with any type of open source Operating System (OS) and software application. This offers Business an edge over Apple devices.
Porter's 5 Forces Analysis
Company's capability to produce high end products at low expense of production is also among the major strength of Enterprise as it enables the company to capture more market by offering quality items with cost control.

Weak points

Lyondell Chemical Company 2 Case Study Help weaknesses are concealed in the company's reliance on outsourcing software application for its devices due to company's inability in developing software application, unlike Sony. Organization also has low profit margins as compare to Apple due to big difference in the costs of Apple and Company with a much lower distinction in quality. The diverse focus of the business due to large number of products in its portfolio, lead to the less effective production and make the company not able to charge greater costs like Apple. The business is likewise inefficient in managing its patents and regularly deals with the issue of patent offense.

Opportunities

Opportunities for Org lie in the growing Smartphone market and the business's performance in the market. It can increase its market share and earnings from cellular phone as the company is rather effective in cell phone market. Corp presently runs in about 80 nations and the company has a chance to increase its geographical expansion by moving towards more emerging markets outside Asia. Organization can move towards acquisitions to obtain patents. It would make it possible for the business to increase its product portfolio with a boost in its wealth.

Dangers

The vibrant industry environment of innovation market pose an extreme hazard on Organization's survival and force the business to invest much of its profits share on R&D in order to survive in the long run. The market saturation in developed nations i.e. saturation of mobile business is also a huge danger for the business's growth in the existence of strong rivals like Apple.

4 P's of Marketing
Swot Analysis
Product

Org offers quality products and has a rather abundant portfolio which caters to different sections. LCD and mobile phones are the most significant items of Enterprise, whereas DRAM is also not far behind in contrast of them.

• LCD/ TELEVISION
• Laptops.
• Smart phone.
• A/c.
• Personal computers.
• Hard disk drives.
• Washing machines.
• Refrigerators.
• Cameras.
• Microwaves.
• Flash memory.
• DRAM.

Cost.

Lyondell Chemical Company 2 Case Study Help utilizes both market competitive and market skimming rates methods for its wide range of items. In competitive pricing it changes the rate according to the competitors in order to get benefit, whereas, it utilizes market skimming strategy where the product has an added worth and by offering a few products it can reach break-even.

Place.

It has one of the very best supply chain networks, with retail suppliers, their own sole distributors, E commerce channels like Amazon etc. All its products are timely supplied to the selling location/ delivered to the clients directly in case of online order.

Promotion.
Vrio Analysis
It utilizes both offline & online channels of promo to market their items. Paid item advertisements, social promotion and digital ads are uses to produce awareness about Corp products.

Worth Chain Analysis.

It's an analytical structure for determining business activities that add value or competitive advantage for the business.

Inbound Logistics.

It has among the most effective and effective supply chain network and has more than 2700 providers across different industries worldwide. Almost 80% of which is based in Asia and the remaining all over the world. For its inbound logistics it owns various logistics companies as it subsidiaries. It cares for its providers and develops an unified relationship with them and even lowered their payment cycles to increase this relationship even more which adds worth to their chain network.

Operations.

Corp's core proficiency is its mass producing it produces 90% of its products internal. Divided into 3 different departments its operations are particularly IT & Mobile Communications, Device Solutions and Consumer Electronic Devices. It is preserving operation hubs worldwide to even more include worth to its worth chain network.

Outbound Logistics.

Its outgoing logistics system performance is one of the main reasons Lyondell Chemical Company 2 Case Study Analysis has the ability to take on Apple. Venture's own Electronic Logitec system plays a significant function in the outgoing logistics operations. It even carries out the tasks of collection of payment, settling insurance coverage claims, etc. on behalf of Organization.

Marketing and Sales.

Drawing in target customer attention towards the item is done through marketing and sales to interact with them the value and competitive benefit the product offers. Lyondell Chemical Company 2 Case Study Analysis marketing spending plan is continuously on the rise because they began their rearranging worldwide and will continue to do so as they are continually wanting to broaden and invest in high prospective development markets. The spending plan is invested in events, print and media advertisements, public relations and so on.

Org Service. Corp put their consumers on top and continually aim to provide unmatchable customer support standards. As after sales service is becoming very essential to keep customers pleased and engaged, they even carry out studies through 3rd parties to discover their consumer's feedback and implement it in the positive method to reduce or if possible totally eliminate their consumer problems. By adding a direct assistance line to call them 24 hours they have further increased the added worth of Lyondell Chemical Company 2 Case Study Analysis service.

Division.

Lyondell Chemical Company 2 Case Study Analysis has actually diversified market segmentation, based upon its provision of wide variety of items to large number of customers. Venture target consumer segments can be divided into 3 categories i.e. Lyondell Chemical Company 2 Case Study Solution IT and Mobile Communications, Corp Consumer Electronic Devices and Enterprise Gadget solutions.

Geographic.

Lyondell Chemical Company 2 Case Study Solution geographical division is based upon two criteria i.e. region and density. Enterprise serves about 80 countries worldwide with its products offered to Urban in addition to Rural areas of the nation. The Venture is also growing its global presence and the business's versatility in locating its plants encourages global growth of Company.

Market.

Organization produces items that can be used by both males and females. The target clients for Company IT and mobile communication items have an age variety of 18-65 with majority at a young or recently wed life cycle phase. Apart from it, Organization Customer Electronics are targeted to a customer segment with an age variety of 25-65.

Psychographic.

The psychographic division of Lyondell Chemical Company 2 Case Study Analysis s based upon the social class and the lifestyle of the consumer. Enterprise target clients on the basis of social class are primarily upper middle, middle and working class consumers, as Corp offer products like cellular phone not much more affordable i.e. Motorola as well as very little expensive i.e. Apple. It supplies quality products to middle level customers at a slightly high cost than others targeting the very same section.

Behavioural.

Lyondell Chemical Company 2 Case Study Help majority target clients have unique behavioural qualities. They are attracted towards Corporation since of its moderate costs with a level of quality.

Quantitative analysis.

Sales of Lyondell Chemical Company 2 Case Study Analysis has actually increased remarkably from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net profit of.48 billion $ to 5.9 billion $. Digital media is the biggest selling classification of Corporation with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales.

Qualitative analysis.

Whereas, the core strength of the company is presently making but long gone are those days when excellent products were offering themselves. Kim has currently begun to enhance the marketing activities of Business and really quickly it will end up being one of its core strength like making if not much better.

VRIO.

Value.

Organization runs styles, produces and sell a huge portfolio of consumer electronics. It runs in an exceptionally competitive environment and has successfully placed itself as the maker of quality products. So, the answer is yes.

Rarity.

As, stated previously that Lyondell Chemical Company 2 Case Study Help runs in an extremely competitive environment, which means all the business have comparable items. So, the response for rarity is no.

Imitability.

Due to the nature of the market, it is really easy for rivals to comprehend the performance of the items and quickly make their own models. Yes, Enterprise is just behind IBM in signing up brand-new patents each year, but the benefit is very short-term in this market.

Organization.

Chairman Lee has entirely turn-around Venture, from going nearly insolvent throughout the Asian financial crisis of 1997 to the leading 25 business in the world. Certainly yes there appertains organization in the company and the results speak for themselves.

External Environmental Analysis

PESTLE Analysis

Political

Being a multinational brand spread almost in every nation worldwide, bulk of the environments like U.S.A., Europe, China etc., are very conductive for its operations. It deals with some political pressures in less developed countries where law and order circumstance is not good. Latin American, African and some Asian nations fall in this classification, where political instability do have a result on Lyondell Chemical Company 2 Case Study Analysis operations.

Economic

Buying power of consumers is vital for companies like Business to be successful and grow. Emerging markets like India, middle-eastern nations and so on offer growth opportunities, whereas, due to recession even the consumers of developed countries suffer severely. It is extremely essential for the company to keep an eye on the ongoing economic circumstance of the nation before going into the market.

Socio-Cultural

International business have to face numerous social and cultural issues during its operations in a foreign country. Corporation has likewise dealt with numerous problems however have actually embraced to the regional environments of the majority of the nations incredibly well. It has tailored its items, practices, policies etc. appropriately in order to succeed.

Technological

With a yearly expense of 2.4 billion dollars in Research study & Advancement, and with continuous ingenious item launches, Lyondell Chemical Company 2 Case Study Analysis is one of the top ingenious companies of the world. With a clear mission to be ahead of the rest when it concerns technological advancements, Corporation has actually increased to the no 25 of the top effective companies of the world.

Legal

Each nation has their own laws and policies, being an international company Business need to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal repercussions. It has to study or work with a local law specialist before beginning its operations in a particular nation.

Environmental

With the increasing awareness amongst consumers about the ethical & environmental infractions of companies, Corporation needs to guarantee that it follows all the safety standards. Ecological damages, ethical misbehaviors are not acceptable and in some nations the effects can be really extreme. On the other hand it has to do some Business Social Responsibility practices to reveal the locals that it appreciates their environment and people.

Porter's 5 Forces

Hazard of Alternative

Risk of alternative for Corp's each product category is rather considerable. Running in an incredibly dynamic industry lead the business to deal with a high hazard of substitution. Aspects for high danger of replacement for Lyondell Chemical Company 2 Case Study Help Smartphone include the existence of high number of providers and Market saturation in developed countries, which make the expense of switching for consumers practically absolutely no. Alternative threats for Enterprise visual screen depend on the altering lifestyle of customers. Consumers can change to watching visuals in the house towards outdoor activities. Together with it, Corporation printing services items are threatened by the increasing destination of customers towards cloud storage.

Competition Among Existing Companies:

The rivaly among Organization and its close competitors is intense. The significant reason behind this is the technique of market saturation in numerous number of item categories, forcing Corp to introduce more ingenious functions in existing products and new ingenious products to preserve its development. Other aspect for the intense competition amongst the competitors is the little item distinction among the products. The popular players in the innovation industry are quite familiar with the significance of R&D spending for their survival and are encountering a race of marketing and R&D costs, to capture the marketplace. The significant competitors for Lyondell Chemical Company 2 Case Study Analysis samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO and so on. High competitors rivalry results in the varying market shares which can be seen in Exhibition F.

Bargaining Power of Suppliers:

( Org Sustainability Report, 2016) Supplier's bargaining power for Corporation is low as Corp runs economies of scale and its orders are of prospective size and worth. Due to incapability of Lyondell Chemical Company 2 Case Study Analysis to build its own software, it has to outsource its software application development to Google, which ends up being a prospective supplier of software for Venture, resulting in high bargaining power of Google.

Bargaining Power of Buyers:

Market saturation in many of the product categories likewise make the bargaining power of buyers more extreme in for Corp. In spite of igh bargaining power Corporation is quite capable of offering its products at a greater rate than much of its rivals, due to high end quality product and a reasonable brand image.

Risk of New Entrants:

Risk of brand-new entrants for Lyondell Chemical Company 2 Case Study Analysis is rather low. Along with it, requirement of huge know-how and research and advancement expenses for survival in the market likewise make new entrants hesitant to go into in the market. Market saturation is likewise one of the barrier of entry in technology market.

Competitive Analysis

Org's high item diversification supplies it differentiation from its competitors. It is one of the 3 top brands by market share. Unlikely to its close rivals consisting of Sony, Intel and Nokia, who focus bulk on a single product classification with Sony concentrating on consumer electronic devices, Nokia on cellular phone and Intel on chips, Org had a big R&D spending on all of its item categories which enable the company to make potential revenue from sales of nearly all of its items. (See Display) However, due to the broad item range the company deals with high number of competitors.

The company ranks first in 4 product classifications i.e. DRAM Chips, LCD Displays, Big Screen Televisions and Microwave ovens, in terms of international market share, among 8 various product classifications. Business was the global leader in producing DRAM, SRAM and NAND flash chips. Org revenues from chips was less than Intel but its revenues from chips was growing faster than Intel and has actually grown close to the income levels of Intel, as given in the case Exhibition 2.

In addition to the chips Corporation mobile market was also flourishing at a high rate than its rivals i.e. Motorola and Nokia. Enterprise's mobile phone's sales growth was 51% as compare to Motorola with just 4% and Nokia with no sales growth. The significant reson behind Business's high development despite of greater costs than Nokia and Motorola was the business's high-end quality cell phones.

Org was also profiting from increasing market share of high end LCDs as given up case Exhibit 3. The significant factor, making the business enable to get the chance is its mass production at low expense. Sony was the biggest competitor for Lyondell Chemical Company 2 Case Study Analysis in LCD market, however, it had also begun joint venture with Venture in 2003 for LCD making, lessening the competitors for Enterprise.

Porter's Competitive Strategy

Low Expense Management technique of porter is totally implemented by Venture the way they achieve economies of scale by reinforcing their core competencies of manufacturing. Even to the point that their competitor SONY chose to form an alliance with them to manufacture for them, since they were not able to take on them on low expense. Distinction is another strategy well implemented by Org by continuous investment in the R&D and staying ahead of the competition. They constantly bring something brand-new and ingenious whether it's an item or a service.

Alternatives

Alternative Solution 1

The Chief Marketing Officer (CMO) of Lyondell Chemical Company 2 Case Study Solution would create a brand-new brand image by targeting the younger generation of the specific nation. As, particularly cellphones of Company are very popular among the younger group.

Pros

1. It is the very best technique to develop Customer Lifetime Value (CLV) by creating a long-lasting relationship with consumers. Develop loyalty through providing value and reap the benefits for long-term, as research study has showed it is more affordable to retain existing clients than to attract new ones.
2. Another pro of this alternative is that word of mouth spread quicker among younger individuals and which in turn will generate brand-new consumers for my items.

Cons

1. Old consumers who were associated with Venture before may not like this new image the business is trying to represent.
2 It will incur further costs to rearrange some products and it may not even bring success as the trends alter really quickly among the younger group.

Alternative service 2.

It would be done by setting up training workshops throughout which significance of marketing will be taught and numbers will be offered. Marketing environment should be produced internally first as real marketing starts inside the corporation.

Pros

1. Its pro will be that all the marketing technique advocates will come out and also the opposite ones.

Cons

2. Its con can produce an extremely unhealthy environment in the workplace, as people typically resist change due to the fact that they fear it.

Recognize the best alternative

Option is the finest as it plainly has more pros due to the fact that when a Consumer Life time Value is built the company will profit from it till that consumer is alive and has purchasing power. Plus, our target clients are the younger generation which are bound to live longer than the current aging people. However, Company's main goal is to create loyalty among its customers and make them redeemed it from them and even buy their different products too.

Implementation Strategy

• Targeting younger generation through social marketing, producing a relate to them like Pepsi do with music. And set the expectations attainable and practical.
• A team including best marketing and sales experts need to be assemble, and both views must be taken into consideration before securing the resources required to execute the plan.
• Thorough interaction of the strategy need to be done as it is really crucial for everyone to be on the exact same page to make it work.
• Jobs and timelines must be develop and interacted appropriately to each individual responsible.
• The manager ought to use a control panel which reveals the development of all the tasks which have been done or about to be done and by whom.
• The manager must monitor and keep a constant check on the specific and overall efficiency.
• Everybody should be willing to adjust midway because any new pattern or policy may can be found in due to which all the things currently prepared have to be changed. It's better to have contingency plans already prepared.
• At the end of the campaign the manager should communicate the results and if effective need to commemorate with the team.

Spending plan

This modification the budget plan allowance of different countries and lots of supervisors were unhappy and argued but the analysis done by the program was precise and showed figures like North America and Russia development prospective warranted a 35% allocation while they were receiving 45%. It really assisted to relatively distribute the resources and capture more clients by spending more on advertisements on the high growth potential regions of the world.
Recommendations
Conclusion

Lyondell Chemical Company 2 Case Study Analysis is a leading 25 business worldwide now and prepares to get ahead of Sony who sits currently at no. 20. Its consistent investment in R&D and innovative practices have propelled them to brand-new heights but for them its' only the start and they want to be amongst the top 3 brand names worldwide. They completely turn-around from almost declaring bankruptcy during the Asian Financial Crisis to a world renowned brand name, known for quality and development. Their value chain and their core competency their production ability, along-with global brand image building have actually seen their sales go from 16 to 44.6 billion $ from 1997-- 2002. With further expansion in China and other emerging markets those numbers will only increase further in the future. Their marketing efforts need to be directed towards more youthful demographic amidst the internal arguments about marketing and must create Consumer Life time Worth as it will not just provide advantages now however will continue to enjoy it till the consumer lifetime. As the expense of keeping the consumer is more affordable than drawing in a new one.