An Exploration of Interdependent Systems

The provided content is a collection of articles, reports, and patent applications related to Celanese Corporation, a chemical manufacturing company. The materials cover various topics such as the company's financial performance, market trends, industry analysis, and stakeholder management. Additionally, there are some general business and accounting concepts discussed throughout the content.

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FINAL REPORT
By: Kayelyn Korenek, Matthew Center, Samantha Penland, & Trevor Belcik
Celanese
Corporation

Table of Contents
2. Company History.............................................................................................................4
2.1 Background................................................................................................................5
2.2 Purpose of Study........................................................................................................5
3. External Analysis.............................................................................................................6
3.1. General Environment Analysis.................................................................................6
3.1.1. Demographic Segment.......................................................................................7
3.1.2. Economic Segment.............................................................................................8
3.1.3. Political/Legal Segment...................................................................................10
3.1.4. Socio-Cultural Segment....................................................................................11
3.1.5. Technological Segment.....................................................................................13
3.1.6. Physical Segment..............................................................................................14
3.1.7. Driving Forces.................................................................................................14
3.2. Industry Analysis.....................................................................................................15
3.2.1. Description of the Industry...............................................................................16
3.2.2. Industry Dominant Economic Features...........................................................17
3.2.3. Market Size and Growth...................................................................................17
3.2.4. Industry Trends.................................................................................................19
3.2.5. Five Forces Analysis........................................................................................20
3.2.5.1. Threat of New Entrants..............................................................................20
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3.2.5.2. Power of Substitute Products.....................................................................21
3.2.5.3. Power of Buyers.........................................................................................21
3.2.5.4. Power of Suppliers.....................................................................................22
3.2.5.5. Intensity of Rivalry.....................................................................................23
3.3. Competition Analysis..............................................................................................24
3.3.1. Industry Competitors........................................................................................25
3.3.2. Rivals Anticipated Strategic Moves..................................................................27
3.3.3. Key Success Factors.........................................................................................29
3.4. Summary of Opportunities and Threats..................................................................30
4. Internal Analysis............................................................................................................31
4.1. Organizational Analysis..........................................................................................32
4.1.1. Corporate Mission............................................................................................33
4.1.2. Products and Services......................................................................................34
4.1.3. Leadership........................................................................................................40
4.1.4. Organizational Culture....................................................................................41
4.1.5. Structure...........................................................................................................42
4.2. Analysis of Firm Resources and Capabilities.........................................................43
4.2.1. Tangible Resources..........................................................................................44
4.2.2. Intangible Resources........................................................................................44
4.2.3. Core Competencies and Sustainable Advantages............................................45
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4.3. Value Chain Analysis..............................................................................................45
4.3.1. Primary Activities.............................................................................................46
4.3.2. Support Activities.............................................................................................46
4.4. Financial Analysis...................................................................................................47
4.4.1. Valuation Analysis............................................................................................48
4.4.3. Profitability Analysis........................................................................................54
4.4.4. Financial Strength Analysis.............................................................................57
4.4.5. Management Efficiency Analysis......................................................................60
4.5 Summary of Strength and Weaknesses.....................................................................62
5. SWOT Analysis..............................................................................................................63
5.1 Methodology.............................................................................................................63
5.2 SWOT Matrix...........................................................................................................65
5.3 Recommendations....................................................................................................68
5.4 Recommended Strategies.........................................................................................70
6. Implementation..............................................................................................................71
6.1 Action Plans.............................................................................................................72
6.2 Goals and Objectives...............................................................................................74
6.3 Time for Completion and Milestones.......................................................................75
6.4 Resources Needed....................................................................................................75
6.5 Risk Assessment........................................................................................................76
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6.6 Contingency Plan.....................................................................................................76
References..........................................................................................................................77
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2. Company History
The American Cellulose & Chemical Manufacturing Company was founded in New
York City by Camille Dreyfus, United States of America. The company was set up during World
War I to produce more affordable fabric for airplanes manufacturing. Production started in 1924
with a series of acetate commercial fabrics and yarns that were proposed as substitutes to silk. In
1927, the plant then changed its name to Celanese Corporation of America. Later, the plant was
closed down in 1983, and was then later torn down to build a prison on where it once was. In
1987, the Celanese Corporation was acquired by Hoechst and merged with its American
subsidiary, American Hoechst, to form Hoechst Celanese Corporation. By then in 1989, Hoechst
then combined most of its industrial chemical operations in a new company known as, Celanese
AG.
2.1 Background
Today, Celanese Corporation is a fortune 500 global technology and specialty materials
company with its headquarters in Irving, Texas. This company is the primary producer of acetyl
products, which are intermediate chemicals for almost all major industries and it is the world’s
biggest producer of vinyl acetate monomer. The company’s operations are primarily located in
North America, Europe, and Asia. The biggest plant is located near the Clear Lake area of
Pasadena, Texas, United States which is the home base to the world’s largest acetic acid plant.
Celanese’s headquarters are located in Dallas, Texas. They have roughly 7,500 employees
working to serve our customers throughout the world. It ranges from Dallas to Amsterdam to
Shanghai; they administer a global network of technical centers, commercial offices, twenty-
seven facilities, and further strategies production facilities.
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2.2 Purpose of Study
The reason for this study is to break down both the outer and inward situations that
Celanese works inside keeping in mind the end goal to set the phase for key proposals. By
assessing the strengths following up on the chemical manufacturing industry combined with an
evaluation of focused moves attempted by industry peers, members, for example, Celanese is
enabled to create skills fit for exploiting market open doors. The environmental analysis will
likewise analyze main impetuses and potential dangers with an end goal to guarantee
consciousness of such analyzes is represented endorsed hierarchical system and to maintain a
strategic distance from unexpected pitfalls. The second fifty percent of our report channels the
outside examination into an appraisal of Celanese’s vital "fit" in the business, an investigation of
the inside working environment and business sector position, and finishes up with key proposals
in view of our discoveries.
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3. External Analysis
The external analysis is considered a process of measuring the external and outside
surroundings of the organization. Through conducting the external analysis, the organization is
able to measure their potential business aspects upon which the success of the organization is
based. These identifying business aspects are influencing the operations of the organization to a
larger extent. The marketing department of the organization is able to identify the external
elements up to a certain limit, but the elements which are of complex nature require immediate
settlement from the organization. Conducting an external analysis helps the organization in
identifying the business strategies of their closest competitors. Through this the organization is
able to prepare itself for actions of their competitors. The external analysis will disclose all the
threats and opportunities of a company that exists around Celanese
3.1. General Environment Analysis
The chemical products developed within the United States can be broken down into four
general categories; basic and intermediate chemicals, specialty chemicals, life science chemicals,
and science and technology chemicals. For the purpose of this analysis from here forward
Chemical industry will be referred to as the specialty industry, as using just “chemicals” is too
broad. Operations performed by the industry is general when you look at the international, local,
national, state and other laws and policies formulated by the government for governing the
specialty chemical business. In today’s environment, the trend of the specialty chemical market
is changing now. In years to come, most of the specialty chemical consumption demands will be
fulfilled by the locally produced specialty chemical products or import of drugs. Because of
technological advancement, the specialty chemical industry operations will completely change in
the future. Technological advancement in this sector makes it very competitive which requires
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innovations from the organization to survive in the market. It is observing that the specialty
chemical industry is continuously growing day by day. The Celanese Company will enhance its
profitability with a compounded annual growth rate of more than 20% till 2020.
The main motive behind studying the analysis of the general environment is to
understand the recent tendencies of the specialty chemical market so that the company can
produce goods to meet the requirements of the industry, which helps the company survive in the
market for a long period of time. Conducting the environmental analysis also helps the company
in understanding the policies and regulations fixed by the government. All these policies and
procedures help the organization meet the governments structured standards.
3.1.1. Demographic Segment
The demographic segment is known as the study of the human population living in
various different areas, their spending habits, age, jobs, gender, ethnicity, and their income.
Through the demographic study, the organization is able to segment its market which enables the
organization in identifying their potential customers. Chemical Industry segmented its whole
market on the basis of country, region, and state. This will help the organization in focusing on a
particular market. Chemical Industry known as self-regulating industry, and due to the
increasing awareness of health and environmental issues, it produce products which are suitable
and consistent for the selected market. The following demographic segment influences the
performance of chemical industry:
 Population Growth Rate
 Sex Distribution
 Immigration and emigration rates
 Social Classes
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 Family size and structure
 Spending habits
 Average Disposable income level
Spending habits and income of the individuals are considered important
demographic factors of the organization. Chemical products usually imparted to some specific
income groups like high income peoples. Chemical industries can fulfill all the demands of their
target consumers in an effective way because the management of these industries are fully aware
of the requirements and tastes of their customers.
The awareness about the aspects of the demographic stabilizes the business process for a long
time through which the organization can generate more profit in its future time period. There are
many possibilities that can come from this including possibly enhancing the demand of
consumers for specialty chemical products as well as growing an aging market in western
countries. By taking this chance you have to be careful because it could also enhance the level of
struggle from existing customers.
3.1.2. Economic Segment
The economic environment is the combination of various external factors of the business
market which can influence a business in a significant way. For example, the financial crisis of
2008 has impacted the industry to a larger extent. The specialty chemical industry suffered a lot
due to the global downturn and profits plummeted to an all-time low in August 2008, and
because of this the manufacturing cost of the products will increase. Due to the increasing costs,
the organization shut down its 600 unprofitable stores. There are various economic factors which
act as significant external constraints for the specialty chemical industry. All these economic
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factors affect the entire economy and its participants either indirectly or directly. These factors
include:
 Inflation
 Taxes
 Interest Rate
 Currency Exchange Rates
 Saving Rates
 Confidence Levels of Consumers
 Unemployment rate
 Consumer Discretionary Income
 Credit Availability
 Price Fluctuations
 Stages of Business Cycle
The economic atmosphere of business will play a significant role in shaping the failure and
success of this business. Interest rates and unemployment are considered the most influential
factors for the industry, because if interest rates are too high than the borrowing cost of the
organization increases due to the organization not being able to expand the size of its business.
On the other hand, if the rate of unemployment is greater than the organization then they are not
able to hire labor at a cheaper cost which ultimately enhances the production cost of the
organization. Study of the economic segment helps the organization in achieving national and
state economic growth, through which the organization can easily expand its business and can
gain more funds for their future activities.
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Overall it can be said that the economic segment enhances the economic growth of the
opportunities for the organization such as the organization can expand its market in various
countries because this enables consumers to enjoy more goods and services which also improves
their way of life. The organization can also expand the size of its plant by hiring more
employees and be able to lower unemployment. There are some threats that the economic
segment could cause such as rate of unemployment could continue increasing, due to which
people have less disposable income and changes in government policies and regulations on
specialty chemical products may influence prices.
3.1.3. Political/Legal Segment
Government and politics play an important role in the success of a business organization.
The political segment is the combination of various political factors and government activities in
a foreign market that can either hinder a business’s ability or can facilitate in conducting the
various business activities. The political influence in the specialty chemical industry is generally
not as pronounced as it is with other industries. The Chinese government plays an important role
in promoting specialty chemical products in their country. When the specialty chemical industry
conducted business overseas, it faced various complicated legal affairs. Through conducting
worldwide business, the organization is able to become more familiarized with other countries,
which will help the organization in performing their functions under the specified rules and
regulations of the country. There are various legal and political factors which can negatively or
positively affect the decision of management. Some of them include:
 Export and import restrictions
 Individual income tax and corporate income tax
 Monetary policy
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 Trade policy
 Unfair competition laws and antitrust laws
 Anti-Discrimination laws
 Economic System
 Market economy
 Mixed economies
 Data Protection law
 Consumer protection and e-commerce
 Environmental Laws
Monetary policy and the trade policy are considered the most influential legal factors of the
organization. The monetary policy helps Celanese in the management of interest rates and money
supply, and the trade policy helps the organization in conducting their business operations
effectively. The political environment could open up the doors for the development of markets in
various countries, for example Korea, but the industry needs to be careful to not cause conflict
and war in the developing countries because then it will not be so easy to develop a new market.
3.1.4. Socio-Cultural Segment
The specialty chemical industry is a business that is in a society that changes over time,
so this industry needs to pay attention and be aware of the societal changes that occur over time,
to make sure that the industry does not fall behind. The social environment is a combination of
society's beliefs, behaviors, practices and customs. The social environment is different in
different societies. Some of the beliefs, customs and behaviors are similar to other cultures, and
some are not. The cultural segment consists of various specified learned norms which are based
on attitudes, morals & philosophies all of which occur in each society. The value system related
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to the specialty chemical industry is primarily set at very early stage of the life which is very
difficult for someone to change. There are various social and cultural factors which influence the
functioning of the specialty chemical industry in a significant manner. Some of them include:
 Lifestyles
 Buying Habits
 Education level
 Attitude
 Customer values
 Religion and beliefs
 Language
 Aesthetics
 Perception
Buying habits and lifestyle factors of the social environment influence the specialty chemical
industry greatly, because the sale of specialty chemical products depends mostly on the buying
habits and requirements of the people in the environment. For example, if the organization is
producing a product which is not in high demand, the people in that specific environment are
unlikely to purchase the product. So, it is the responsibility of the organization to consider all the
social and cultural factors while engaging in any business activity. The specialty chemical
industry needs to be able to adapt to the external social environment, than it will not be able to
survive in the market for the long haul.
Following the social and cultural environment proves very beneficial for the organization and
also brings some chances for the organization to establish itself in the market, such as high
growth rates within the market itself as well as emerging markets like China and India.
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3.1.5. Technological Segment
The surrounding environment of the specialty chemical industry has changed over the
years. In the old days, specialty chemical products were considered dangerous. Now, specialty
chemical products are in high demand. Due to the technological innovation the specialty
chemical industry has grown immensely. This change in the technological environment has
promoted the specialty chemical industry to move up in the chemical sector because it has seen
various symptoms of growth within the industry. Due to the latest technology advancements, the
industry has become one of the most successful and most demanding industries in the world.
This creates the brand image of the industry in the market. The following technological factors
impact the performance of the organization in a significant manner:
 Emergence of innovative technological fields
 Growth of different process technologies
 Development of new products
 Creation of new materials
The invention of new materials is considered one of the most important influential
technological factors because new materials can enables the industry to change the current
technology of existing products. Through doing this, the industry can extend its maturity period
and can survive for a long time in the market. Using the latest technology helps the industry to be
able to help grow the interest in new specialty chemical products and lower the concern for
possible health problems.
3.1.6. Physical Segment
The physical segment is known as the tangible, or material, objects and conditions that
surround a business. The physical segment has a significant effect on the performance of the
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organization. If the physical environment of the organization is not suitable for working
conditions the organization cannot perform in an efficient manner which ultimately reduces its
brand image in the industry. The physical environment is the combination of various natural and
man-made factors which are the following:
 Atmosphere
 Land
 Water
 Pollution rates of land, air and water
 Availability and level of natural resources
The land is considered the most influential factor in the physical segment. Inappropriate
selection of the land influences various factors of the industry like shipping facilities, population
density and distance to a specified market. This will influence the exposure of the specialty
chemical industry to weather patterns, hours of daylights and utility cost. Using physical factors
in an appropriate manner helps the industry utilize brands and dissemination to be able to grow
in other countries, but they need to be careful and make sure they are using effective business
resources.
3.1.7. Driving Forces
The table below shows the various factors which have a significant impact on the
industry:
Factors Explanation
Fast growth and globalization
Fast growth in new markets and
regions through acquisition and mergers is an
important success factor.
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Sustainable product innovation and
integrity
High demands and increasing global
competition requires the speed of innovation
with various integrated processes.
Obligation
The firm’s wishing to preserve long-
lasting working relationships.
Excel at managing volatile and
complex supply chains globally
Major global shifts in supply and
demand required gas revolution rapidly which
added uncertainty, complexity, volatility, and
ambiguity to chemical supply chains.
3.2. Industry Analysis
Conducting an industry analysis consists of breaking down and reviewing market factors
that shape a particular industry. Within each factor there are many sub categories to be explored;
geographic area, industry trends, consumer demand, regulatory environment, and the product
being produced. An industry analysis is typically completed in order to assess the current
business environment. It can be conducted by a business owner or even a potential investor
looking to invest in a particular industry. Conducting this analysis helps one understand the
different economic pieces of the market and how they may be used to gain a competitive
advantage in the future.
3.2.1. Description of the Industry
The specialty chemical industry is one of the biggest industries in our country. The
specialty chemical industry produces products that are needed to manufacture other goods in the
market. Specialty chemical companies convert raw materials such as oil, natural gas, air, water,
and certain metals and minerals, into more than seventy thousand different products. In effect the
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specialty chemicals industry is responsible for nearly six million jobs in America. According to
the American Chemistry Council, this one industry contributes nearly 26 percent of our nations
GDP with about $93 billion in research and development just in 2015 alone. The future of the
American economy is highly dependent on the business of American specialty chemicals. There
are thousands of different chemical companies within the United States. The four main
companies are Dow Chemical, Lyondell Basell, Dupont, and Proviron. This list will soon shrink
to three once the merger between Dow and Dupont is completed. Between just these four
companies their value is over $50 billion and it is growing.
The specialty chemicals industry is the largest sub-section of the chemicals industry
accounting for 32.8% of total market capitalization according to S&P Capital I.Q. Most
companies in the specialty chemicals industry are smaller scale with the largest being Ecolab.
Specialty chemicals are produced by a complex interlinked industry. Specialty chemicals are
typically sold on the basis of their end use or performance, rather than their consumption. For
instance, a specialty chemical can be single-chemical products or formulations that sharply
influence the performance and processing of the customer’s product.
3.2.2. Industry Dominant Economic Features
Despite the rapid technological changes in the world and society, the specialty chemicals
industry still has room for innovation. Specialty chemicals are a mature industry, and some
companies within the industry are affected by the swings in the macroeconomic cycle. For
example, many company’s sales and earnings performance will increase and decrease with the
track of the housing, construction, and industrial sectors. A surplus in capacity when there is less
housing being constructed, railcars being loaded, etc., can be an indicator of a slowdown
resulting in price pressure and earnings weakness. There is also an increase in competition within
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the specialty chemicals industry. There has been an increase in specialty chemical manufacturers
in the United States as well as low-cost moderately regulated areas such as the Middle East,
Asia, and South America. However, macroeconomic activity in the United States has been
trending upward which is a good sign for specialty chemicals.
3.2.3. Market Size and Growth
Specialty chemicals have grown slowly and have had lower overall profitability within a
growing competitive environment over the last 10 years. The recession in late 2007-2008 had a
large negative effect on consumer disposable income; which, in turn, had a negative effect on the
specialty chemicals industry. With less disposable income on hand consumers had less money to
spend on appliances, furniture, automobiles, and personal care items which are all major markets
for the specialty chemicals industry. However, the economy has rebounded and so has the
specialty chemicals industry.
The specialty chemicals industry is the largest sub-section of the chemicals industry
accounting for 32.8% of total market capitalization according to S&P Capital I.Q. Specialty
chemicals are produced by a complex interlinked industry. Since the recession global
consumption of specialty chemicals has grown. From 2008-2009 value of specialty chemicals
industry fell 10%. The next year consumption grew 16%, and then fell again in 2011. 2012
brought growth of less than 1% however the years following up to 2016 has seen a rebound and
overall growth is on track to increase over 4% in the next coming years.
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In 2015 the specialty chemicals industry as a whole expanded 3.6%. This expansion
happened despite there being weakness in several major global markets. Brazil, Russia, Japan,
and China are major importers of chemicals produced within the United States, and they all had
struggling markets in 2015. China was not as weak as the others but their expansion slowed
down compared to years leading up to 2015. The growth of the specialty chemicals industry is
currently on track to outpace the growth of the U.S economy which in turn, means significant
growth for the specialty chemicals industry as well. Kevin Swift, a chief economist of the
American Chemistry Council stated that, “The U.S. chemicals industry renaissance is just getting
started”.
3.2.4. Industry Trends
Key domestic markets have expanded right along with an increase in consumer spending.
As well has lower energy costs resulting in extra savings for households, in turn, producing more
disposable income for families. With more disposable income, two main end-use markets for
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specialty chemicals expanded in 2015. First being vehicle sales, up 5% in 2015. Second being
housing startup sales up nearly 12% in 2015. For every one vehicle there is on average, $3,500
worth of chemicals and for every one housing start up, on average, there is $15,000 worth of
chemicals. Specialty chemicals are widely used, and with changes to industrial and consumer
product life cycles increasing with technological changes, it can create a demand for variations in
the development of specialty chemicals. For example, growing concern about the environment
has led to many eco-friendly government restrictions that may not have existed a decade ago.
The different restrictions and policies that have been enacted have resulted in specialty chemical
companies experimenting. This experimenting has created unique chemical applications such as
biodegradable electronic components, water-based plastics and paints, low-impact food
packaging, rechargeable batteries, wind and solar power, the list can go on and on.
On a global basis specialty chemicals are trending upwards. The consumption of
specialty chemicals from 2015-2020 is expected to increase at an average rate of almost 3.5%
annually. Historically, North American, Western European and Japanese companies dominated
the specialty chemicals industry, but that is no longer the case. With the increase in trade
liberalization, spread of technology, rapid growth in industrialized Asian economies and rising
standards of living in many developing countries, the industry is beginning to trend toward the
Middle East.
3.2.5. Five Forces Analysis
The five forces model is a key tool used internally and externally to evaluate the market
of a particular business. The model consists of five main economic forces that determine the
competitiveness and attractiveness of a particular industry. The five forces are; competition
within the industry, potential threat of new entrants, power of suppliers, power of customers, and
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the threat of substitutes. Internally this is a valuable model to use in order to determine a proper,
and successful, corporate strategy.
3.2.5.1. Threat of New Entrants
It is considered one of the important forces in Michael Porter’s Five Forces model. It
influences the profitability of the industry in a significant manner. It contains the following
factors that influence the profitability of industry:
 Extensive Rules and Regulations
 High Investment
 Economies of Scale
 Access to distribution channels
The barriers of entry for a new company are very high as the regulations and rules that have
to be fulfilled are very extensive. Opening a new business in the specialty chemical industry
requires a lot of investment which makes it hard for new companies to come in. In addition,
inability to gain access to required distribution channel can also be a major barrier for new
entrants. With high barriers of entry makes markets not challengeable and protect current firms
from possible new entries. New companies will try to battle in the areas where barriers of entry
are lower. Chemical Industry has to develop new strategies to overcome new entrants,. The new
technological developments and political and environmental differences open up and are a threat
to the industry and make it instable.
3.2.5.2. Power of Substitute Products
There are threats coming from different regions that amplify the rivalry for Chemical
industry. With different substitutes around the regions the industry has to adjust their prices to
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still be able to sell which makes it hard for the company to make a good profit. The demand of
specific product can change by different factors, costs and licensing.
3.2.5.3. Power of Buyers
Power of buyers is the impact that customers have on a producing industry. When the
buyer’s power is strong the relationship to the producing industry is a monopsony, with such
conditions the buyer sets the price. Few monopsony’s exist, but there are a few that come up
between industries and buyers. The products of chemical industry mainly purchases by the
cosmetics industries, homecare products industries and different customers for performing their
day to day activities. Customers have the majority of the power; they can request better quality,
cut prices or even force better services which all have a loss in profitability of the industry as a
result. In the specialty chemical industry the bargaining power of the customer looks to be low. It
is possible that the bargaining power could recover to a higher amount with the movement the
industry is facing. The following factors influencing the buying power of customers:
 Profitability of Buyer
 Importance of the product
 Brand Loyalty and Product Differentiation
Profitability of buyer influences the buying power of customers in a large extent.
Mostly buyers are looking for profitability. Is the product offered by industry profitable for the
customer or not? Secondly, the importance of product for customers also changes the mind of
consumers. If customers have demand, they would like to purchase more. Brand loyalty is the
most important buying factor which forces customers to buy the same product. If chemical
industry have regular brand loyal customers than they would like to purchase more products of
same industry. Strength of buying power of customers are following:
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 Buyers are more concentrated than sellers.
 Threat of backward integration is high.
 Products are undifferentiated
 Buyers are price sensitive
3.2.5.4. Power of Suppliers
Producing industries require raw materials such as labor, components and other supplies.
This leads to the buyer supplier relationships between the industry and firms to provide the raw
materials used to create products. If suppliers are powerful they can exert an influence on the
producing industry, for example selling raw materials at a high price to capture some of the
industry’s profits. Suppliers can threaten the industry if they threaten to increase the price of
products and/or services. This can cause a company to raise their prices and loss customers. If
the company were to not raise prices they could start losing money which in the long run will
cause the company to go out of business. The bargaining the supplier in the specialty chemical
industry and therefore for Celanese give the impressions to be moderate because they are
concentrated. There are the following factors that influence the supplying power:
 Switching cost
 Number of suppliers
 Cost of supplies relative to selling price of product.
Switching cost is considered as a high influencing factor. If it is likely to cost
customers to switch suppliers, then the power of suppliers will be higher. Secondly, the number
of supplier’s also influences the bargaining power of suppliers. Power of suppliers will be higher
if there are a smaller number of suppliers for buyers to choose from.
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3.2.5.5. Intensity of Rivalry
The intensity of rivalry among firms varies between industries. The specialty chemical
industry is considered to be disciplined if the rivalry among the firms in the industry is low. The
intensity of rivalry between firms is also referred to as being cutthroat, intense, moderate, or
weak depending on how aggressive the firms are attempting to gain advantages. A firm can
choose from different competitive methods to gain advantages over other firms. They can change
prices, improve a product differentiation, creatively use channels of distribution or exploit
relationships with suppliers. The major factors related to intensity of rivalry are following:
 Rate of Industry Growth
 Diversity of Competitors
 Number of competitors and the balance between them
 Brand Equity
Intensity of rivalry mostly depends on the life stage of industry; Secondly,
profitability of chemical industry largely influencing by diversity of competitors. The intensity of
rivalry can also be larger when the industry is dominated by a few large firms. Brand equity also
influences the profitability because some brands in the market may have high value than others.
All the companies offer similar range of products and services. The older competitors for
the most part have an excellent intuition for the market and have a good customer base. .
Normally once a company gets a good customer base the customers will not go to another
company unless they start to have a bad experience.
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3.3. Competition Analysis
Understanding the competitive scene in an industry is significant to building up a precise
key baseline. The competition analysis is a main factor when defining the market and where we
stand as a company against our peers within the chemical manufacturing part. There are
numerous different companies within the specialty chemical industry that create various products
that make countless consumer goods. The reason for this study is to better determine what the
major competitor’s solid points are and what their disadvantages against our strengths and
weaknesses. It would then give us a wide view that can help us develop a plan to better produce
specialty chemicals that may be needed and produced at a greater rate. We have broken down
our competitive analysis centered on the major producers within our acetyl segment. In the
producing segment of acetyl segment, we compete with different firms that produce products that
come from chemicals such as Acetaldehyde, Acetic Acids Butoxyl.
Celanese is a vertically integrated corporation. Therefore, we would look at the procedure
we use to discover our major participants. We will determine who dominated the marketplace
within our own firm with our major components. The second was determine how close we are in
the overall market and what strategies most align with ours that could best keep us from moving
up in the worldwide market. Determining the best participants starts with the chemicals that we
manufacture within the firm. This is a competitive corporation and has challenges each day to be
innovative. The determination is that Dow Chemicals is the leader within the chemical division
and produces many different consumer goods with having over approximate 53,000 workers
within the United States. The next would be ExxonMobil who produces the 2nd largest amount
of chemical consumer goods in the U.S which has approximately 38,000 workers working for
them, and the third major company in the United States is Air Products & Chemicals.
25

3.3.1. Industry Competitors
The three Celanese’s major competitors that we decided are Dow Chemical, Aemetis,
Inc, and Air Products and Chemicals. As we know now that Celanese is a major distributor of
Acetaldehyde, Acetic Acids Butoxyl. The major company that creates these products is Dow.
Dow’s strengths within our industry segment are that they are biologically structured to hit the
market in a very quick manner. Dow has the capability to be diverse in diverse segments within
the business. They also have placed themselves with planned partners around the globe to be
varied in many diverse production segments, and not just on the chemical side. The
disadvantages to their industry ventures are that they are very profoundly involved in their
providers. They depend on them to bring in exact imports to advance their result. The second one
that is an enormous competitor against Celanese is Aemetis, Inc which has a supply chain which
is vertically combined and seems to make progresses each year that is next to none. The largest
asset that they own is a very stable stability sheet. Confident stockholders do not worry because
they know that they have enough funds to survive a recession in case it every happens in the near
future and will be able to continue investing for the future
The third competitor that competes against Celanese is Formosa Plastics which has a lot
of strength that rivals Celanese such as a much wider customer base. They have dissimilar
separations within their industry that allows them to have a varied selection. They have their
hands in engineering, and a variety of chemicals. This would then allow them to move up and
down in the financial aspects when one industry entity. They can find a place in the marketplace
and shine in fewer opportunities.
26

Major Chemical Producers in the United States
Company Name Products Geographically focus
Dow Chemical Nonionic,and Anionic Asia Pacific Region
Aemetis, Inc
Renewable Fuels,
Food and Feed,
Biochemical, Ethanol,
and Edible oils
Europe and Asia
Air Products and
Chemicals
Gases,Chemicals,
Equipment’s, Services
and Solutions
Europe and Asia
All these organizations are the toughest competitor of Celanese. This is because the main
motive of Celanese is to cover the whole market of US, Asia, and Europe, on the other hand
these industries also develop their own strategy to cover the market of Asia, and Europe. This
will brings competition between their quality and prices of products.
3.3.2. Rivals Anticipated Strategic Moves
Our competitors will resume looking to the future as most corporations do. They would
all like to be worldwide associates and be visible worldwide. They have previously begun
developing into the Asian marketplaces and remain to look elsewhere where they can find good
worldwide associates. Each company is financing for the upcoming and looking for more cost
effect ways to pull the regular gases and other essentials out of the ground. Staying separate and
becoming more separate seems to be the trend within the market, and that way being separate,
they won’t have to be doing what others are doing. Not placing all their capitals in one place will
also help improve them. Celanese should look to participate in other choices as well so that it
27

does not bind us to the marketplace. The marketplace is becoming flooded with many low level
plastic designers especially in low income nations where it is lower to produce such goods.
Dow has continuously built on their weaknesses such as growing its products and
capacity. It would like to have stock in its suppliers so that way it can help keep the supply chain
growing and can make it simpler to approach on a demand basis. Economically they will look to
invest in other chances so that they can continue to grow their assets for the products to the
consumer marketplaces. These types of events will affect us in the long run because it will give
them a larger board marketplace to finance in. They will become a worldwide product which can
lead to bigger marketplace sections because they will have the ability to expand.
Aemetis, Inc needs to shed the negative marking set by the customers because of the few
noteworthy spills, which were destructive to the earth. They have endeavored to give back and
demonstrate they are a backbone in all viewpoints that they have a place to. This additionally
takes into consideration keeping cheerful financial specialist relations, which in turns gives them
more access to reserves. The specialty chemical industry will keep on expanding their vitality
and gas markets, which could remove them from creating the same chemicals we accomplish for
our plastic portion of the business. That will be beneficial for us so that we can gain market
shares against them and other in the plastic making production. The largest threat to Aemetis, Inc
is that the oil market, which is their biggest piece of the pie, and they fluctuate at a continuous
pace. They need to keep searching for approaches to keep their obligation to pay high with the
goal that they can keep getting the subsidizing expected to burrow for oil. This is a bravo as they
do watch us develop and hope to take their pieces of the pie in plastics and vinyl products.
Aemetis purchased out XTO, which produces characteristic gasses starting from the earliest
stage. While it is low, they can haul as much out as needed now and offer when the gas costs rise
28

once more. That will guarantee they have the benefits to keep procuring an awesome measure of
income. Another venture that Aemetis is working with is the improvement of biofuels. This will
bring regular assets and reused items together and permitting us another choice for fuel.
It is critical for smaller chemical companies to not try to compare head-to-head with the
superior vertically integrated companies; somewhat they should focus on their main capabilities
driving their own achievements. Air products and chemicals, which are a competitor against
Celanese, announced that its board of directors has agreed to the purpose to completely
unattached its material technologies business which would be a tax free spin off to its
shareholders. This kind of strategic decision will allow the companies businesses to influence
their respective serious abilities and enhance their competitive situations. The company trusts
that this result of the spin-off will be two best-in-class community businesses with distinct
commercial models, investment requirements and growth profiles.
3.3.3. Key Success Factors
Chemical industry states that their value created by the corporation's Technology &
Innovation Association. Through advanced process technology, application resolutions and
pipeline growth, this company has been an important provider to the company’s growth strategy.
The first key success factor for the industry is that it has the capacity to utilize its assets in an
appropriate manner. Through this the industry is able to utilize the functioning data collection
and analysis efficiently. The physical achievement of applications made by fiber and other
production is furthered by technological advancement through new approaches and methods. The
specialty chemical industry has a strong dependence on third-party benefactors of such
technologies, and as such their thorough selection of and efficient training and use of these
vendor products is analytically appropriate.
29

The second success key factor for the specialty chemical industry is that they are capable
to deal with rapid development and globalization. The leading specialty chemical corporations
understand that fast growth in new areas and markets via unions and possessions is a key serious
success factor. In order to achieve this such as this, they would need to enter into these markets
with preconfigured, field-proven finest practices and adaptive industry procedures for core
purposes that can be deployed and ramped up rapidly, and they are removing factually grown
complexity as they match processes and operations on a worldwide foundation to establish a
corporate model that is poised for maintainable growth and development.
The third success key factor for the specialty chemical industry is that they are capable to
participate in the global market competition. Due to this they are able to give a toughest
competition to their competitors and able to enhance their brand image in the existing market.
This requires that the industry should quickening the speed of innovation with integrated
procedures that drive rapid time to market while confirming product safety and stewardship
throughout the whole product life cycle, and they are accepting holistic concepts, such as Cradle
to Cradle, which focus zero productions and 100% reusing of waste.
3.4. Summary of Opportunities and Threats
The following bullet points are the opportunities and threats on the specialty chemical
industry.
Opportunities
 Development of market in various untapped countries like South East and Korea.
 Developing affluent market
 High growth potential of chemical market
 High growth rates in the emerging market of China, India, and Brazil
30

Threats
 Enhancing level of struggle from existing customers
 Rate of unemployment keeps increasing, due to which people have less disposable
income
 Changes in government policies and regulations on chemical products may influence
prices and can cause an uprising of raw materials
 Conflicts and Wars in developing countries which raises the difficulty for the
organization in working these markets.
 Various trade rules and regulations of the government.
4. Internal Analysis
Internal analysis is the study of an organization's competency, competitive position in the
marketplace and the cost. In this section the basic description defines the business segments of
the industry along with the type of products and services the industry provides to its customers.
31

The internal analysis provides necessary information about the strengths, weaknesses, threats and
opportunities (SWOT) of the organization. The collected data through internal analysis is
considered very useful. With the help of this data, the management of the organization can build
their strategic objectives to grow and sustain their business. Internal analysis is conducted for the
following purpose:
 Recognize Competency and Strength: The main important purpose behind conducting
internal analysis is to determine the strength and competency of Celanese. This will give
the information about the strength which can be utilized further in gripping the available
opportunities. With the measurement of the strength of the organization, one can easily
quantify whether the organization is using latest technology or not.
 Identify Opportunities and Cost Position: Internal analysis helps the management of the
organization to determine the available opportunities for their organization and it also
determine the cost position of the organization in the market (Cabral, 2014). On the basis
of the cost, the organization is able to gain a competitive advantage over their available
competitors.
 Measuring Competitive Viability: Conducting internal analysis by the management of the
organization helps in determining its competitiveness. A competitively viable
organization challenges its competitors to match the product or service offers to it, mainly
if it is utilizing cutting-edge proprietary technology.
4.1. Organizational Analysis
This section provides an analysis of the organization by measuring Celanese
Corporation’s mission, vision, leadership, products and services, culture, and structure. All
relative aspects of the organization are analyzed for doing strategic planning which helps the
32

organization in conduct all their functions as per the predetermined standards. Strategic planning
of the organization determines where it is moving over the next years, how it is going to reach
there, and how it will know if it reached there or not. Strategic Planning is done on the basis of
outcomes generated from the internal analysis. The efficiency of the strategic plan mostly
depends on the quality of data collected by internal analysis or on the experience of strategic plan
developers. In addition to it, the organization aspects also examined for knowing the market
position of it which helps the organization further in the preparation of expansion plan for
covering large market. So, it can be said that strategic planning is highly related to the mission,
Leadership, Products and Services, organization structure and its culture. This is because
strategic planning is considered the base of all these functions (Goetsch, 2014). On the basis of
the strategic planning report, they perform their functions further. Strategic planning works as an
input for these functions which helps them in avoiding hurdles arises in fulfillment of their task.
The main important thing performed under strategic planning is that it enforces effective control
on all activities of the business so that predetermined objectives can be fulfilled in an efficient
manner. Thus, we can say the organizational analysis is the main part of the internal analysis as it
helps evaluate the state and current strategy of the organization to identify strengths and
weaknesses.
4.1.1. Corporate Mission
Vision of Celanese is “Be the First Choice chemistry solution source for our customer (
https://celanese.com/About-Us/Vision-Mission.aspx)
The vision of the company means it wants to be the first choice of the customers
by providing efficient and brilliant solutions to chemistry tasks to them. This will help the
organization in creating its brand image in the eyes of customers. Through its mission, it wants to
33

indicate that chemistry solutions provided by the organization cannot be provided by any other
organization.
Mission of Celanese is shown in the following figure:
(https://celanese.com/About-Us/Vision-Mission.aspx)
 Collaboration: It means that the organization wants to collaborate with its customers to
build fresh solutions and discover uses for a mature product which satisfy critical
demands of customers.
 Creating Customer Value: It means that Celanese wants to utilize the overall concept of
chemistry, universal business expertise or technology to build value for its customers and
for itself also.
 Improving the World: It means that Celanese wants to be committed, innovative and
collaborative to develop a healthy world environment to stay (Grant, 2016).
 Being Sustainable: It means that the organization operates its business efficiently which
helps further in influencing the communities.
 Employee Growth: It means that the organization wants to build itself as a rewarding
place which works according to different growth opportunities and permits employees to
utilize their overall potential.
 Shareholder Value: It means that Celanese wants to develop wealth for its shareholders
and employees through growth and profits.
34

4.1.2. Products and Services
After focusing on the above-mentioned chart, it can be said that the organization is
dealing in various products (Ganan, 2012). During the production of its products, it utilizes high
technology so that it can enhance the quality of their products which makes their products
different from its competitors. The below mentioned table represents the revenue of the
organization which it earned through selling its high quality products:
35
Products of
Celanese
Business units
intermediate
Chemistery
Cellulose
Derivatives
Emulsion
Polymers
EVA Polymers
Food Ingrediants
Engineered
materials
Brands Emulsion Product
Group
Apparel Dyeing
and Finishing
Emulsions
Carpet Backing
Adhesive
Exxterior Paints
Glass Fiber CSM
Polymers
Glass Former
Secondary Binders
Glass Fiber Sizing
Polymers

After looking at the figure, it can be concluded that Chemical products of Celanese
demanded more by the customers (Annual Report, 2015). This was because the organization is
considered the best industry of chemical products.
Products of Celanese:
1. Polyoxymethylene (POM): This is sold by the engineered business materials which
mostly utilize the trademarks Hostaform and Clecon. POM is mostly utilized by the
diverse end-use applications in the industrial, consumer, automotive and medical
industries.
2. Ultra-high molecular weight polyethylene (UHMW-PE): Celanese is considered the
leader of these products which are sold under the trademark GUR. Priority applications
used in manufacturing the products are heavy machine, battery separators, and noise and
vibration dampening tapes, etc.
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3. Polybutylene terephthalate (PBT): This product has a exceptional thermal/chemical
resistance, toughness and rigidity.
4. Long fiber reinforced thermoplastics (LFRT): These products are produced with extra
stiffness and strength. Due to this, it will be beneficial for larger parts in comparison of
thermoplastics. The raw material utilized for manufacturing LFRT includes a different
range of fibers, carbon, stainless steel and polypropylene.
5. Liquid Crystal Polymers (LCP): Brands of LCP mainly utilized for electronics or
electrical applications. These products are also used for high heat cookware applications
6. Celestran continuous fiber reinforced thermoplastic (CFR-TP): This product
reinforced polymer components which make metal no longer an option.
7. Cool poly D-Series: This product has electrical isolation along with thermal
conductivity.
8. Cool poly elastomers: This product has a thermal conductivity with a soft to the touch
type of material.
9. Cool Poly E Series: This product has electrical conductivity along with thermal
conductivity, and is in the shape of a pellet and can be used for thermoplastic injection
molding and other practices.
10. Fortron PPS: This product is able to withstand high temperatures and has high
resistance.
11. Impet polyethylene terephthalate (PET): Exceptional physical properties with very
high chemical resistance.
12. Riteflex thermoplastic polyester elastomer (TPC-ET): This product has good
resistance with elasticity of rubber with no softening.
37

13. Thermx polycyclohexylene-dimethylene terephthalate (PCT): This product has short
term temperature resistance with low moisture engagement.
14. Vandar polybutylene terephthalate (PBT): One of the better products that has
wonderful chemical and thermal resistance along with high heat deflection.
In 2015, the organization is able to earn $304 million due to its wide range of products
(Annual Report, 2015). As indicated by billow figure, the advanced acetyl intermediaries is
responsible for the majority of organization sale, and the other products of the organization
making up almost 50% of all sale in 2015. This will enable the organization to gain a competitive
advantage in the market.
38

BCG Matrix
From the above figures you should conclude that:
From the above figures following can understand: Chemical products are considered star because they are more demanded by the customers
and have high market growth in future.
 Acetate Products: These products are considered less popular but have high market
growth in future.
 Performance products: These are the products which generated less profit for the
organization, and these become unpopular in the market. So, they were kept in Dog
Category.
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 Technical Polymers Ticona: These are the products which generated effective profit for
the organization and had the potential to grow in the market, so they are kept in Cash
Cows Category.
4.1.3. Leadership
The top Executives of Celanese are following:
 Mark Rohr: He is a Chairman of the Board, President, and Chief Executive officer of
Celanese. He is chairman of the Celanese since April 2012 and a member of the company
board of director since 2007. Before joining Celanese, he worked for 11 years at
Albemarle Corporation at the profile of director and executive chairman. He has done his
Bachelor of Science in chemical engineering and chemistry from Mississippi State
University. After passing his degree, he serves on the advisory board for the universities
of Sciences and Arts.
 Christopher Jensen: He is a Chief Financial Officer, and Senior Vice President Finance
of Celanese (Fasting, 2012). He has served at the position of CFO for Celanese since
2015. He spent 14 years of his career in PricewaterhouseCoopers LLP. He has done
Bachelor’s and Master’s degrees in accounting from Brigham Young University.
 Patrick Quarles: He has been appointed for the profile of Executive Vice President for
Acetyls and Integrated Supply Chain of the organization. He was appointed in June 2015.
Before joining Celanese, he held various leadership profiles at LyondellBasell Industries.
The career of Mr. Patrick began in 1990 from ARCO Chemical. In this organization, he
worked on the positions of Marketing, Sales, and business management. He has done
Bachelor of Science in Mechanical engineering from Clemson University and had his
40

Masters of management from the Kellogg School of Management at Northwestern
University.
4.1.4. Organizational Culture
Celanese culture is a flat culture; it means that all employees are treated equally without
considering their title. It is necessary for every employee to fulfill the goals of the organization
and also maintain the safety of its operation. Due to the flat organization structure, there is no
any hierarchy. Every employee knows who their seniors are, but they all keep them on a
pedestal. The management of the organization focuses more on changing the culture of the plant
as per the requirement of their employees. The environment of Celanese is Family-friendly. It
also focuses more on changing the safety culture which gives the employees relief from different
health problems. Values, Norms, and Rituals of Celanese are following:
 Values: Celanese values are collaboration, being sustainable, creating customer value,
employee growth, improving the world and shareholder value (Schneider, 2013). On the
basis of these values, the organization is able to create its image in the market and also
able to attract a large number of customers towards their product.
 Rituals: These help the organization in creating team unity, and offer an enjoyable
environment to employees. Rituals of the organization are organizing award ceremony,
team-building exercises, sales rewards and birthday parties. All these helps the
organization in creating a friendly relationship with its employees.
 Norms: Celanese norms are performing standardized work, follow rules and guidelines,
and respect for each other. On the basis of these norms, it is one of the most popular
chemical organization of US.
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Thus, from all this it can be said that safety, compliance and ethics are the foundation of
Celanese Corporation’s culture, which is achieved by the organization through its norms, rituals,
values, discipline, and service. This will become the organization more competitive and efficient
in perform its functioning.
4.1.5. Structure
The structure of Celanese is flat, means that the organization treats all its employees
equally to each other. Duties and obligations of human resources flow in three levels which are
known as the top level, medium level, and lower level.
Top level: The CEO, CFO, and VP's are on the top level. They take the decision
regarding the future of the organization. They formulate policies and making a decision
regarding the important matters like investment decisions. These persons are considered the base
of the organization. In the absence of these persons, the organization becomes directionless, and
it will be very difficult for the organization to survive in future.
Medium Level: The department and store managers exist on this level. These are the
managers who manage the functions of their specialized departments (Heller, 2013). They are
responsible for making department-level decisions and providing guidelines to their
subordinates. This will facilitate proper management of all concerned functions which ultimately
helps the organization in fulfillment of its goals.
Lower Level: This level contains the supervisors and employees who are responsible for
performing assigned duties and tasks. These persons follow the tasks and guidelines of their
seniors and works towards the goals of the organization.
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4.2. Analysis of Firm Resources and Capabilities
A firm’s resources consist of the competitive assets that are either owned or controlled by
the company. Resources can be broken down into two categories; tangible and intangible.
Tangible resources consist of physical resources, financial resources, technological assets, and
organizational resources. For example, plants, distribution centers, manufacturing equipment,
patents, information systems, etc., are all considered tangible resources. Intangible resources
consist of human assets and intellectual capital, brand, image, and reputational assets,
relationships, and company culture. Capability on the other hand is the capacity of a firm to
competently perform some sort of internal activity. Capabilities vary in form, quality, and
competitive importance. The strength of an organizations capabilities depend on the management
of resources within the company. Some capabilities rely more so on tangible resources, while
others rely more on intangible resources.
4.2.1. Tangible Resources
Tangible resources are broken down into four main categories; physical resources,
financial resources, technological assets, and organizational resources. Physical resources consist
43
Mark Rohr
(President&CEO)
Chris Jensen
(Chief Financial
Officer)
Finance Depatment
Managers
Lori Johnston
(Senior Vice President,
Human Resources)
Human Resoruce
Managers
Gjon N. Nivica Jr.
(Senior Vice President
and General Counsel)

of manufacturing equipment, plants, real estate locations, and ownership of valuable natural
resource deposits. Financial resources are cash and cash equivalents, marketable securities, and
other financial assets. Technological resources consist of patents, copyrights, and production
technologies. Finally, organizational resources consist of information and communication
systems, quality control systems, and network of distributors.
4.2.2. Intangible Resources
Intangible resources are broken down into three categories: human resources, innovative
resources, and reputation resources. Human resources is a strong resource that they have in the
company. Celanese Corporation goes through a process when hiring and putting a new person
out on a job. They are good about who they hire and they make sure that they are well trained
before sending them out on their own.
With Celanese innovative resources they have been able to keep their customers happy
and coming back. Innovative resources are often an idea or invention that is translated into a
good or service that creates value for the company.
Reputation resource is a big factor that all companies want to have. Celanese has a well
know reputation out there for them. When you look online or other places you do not see many
bad reviews on them which is good for business.
4.2.3. Core Competencies and Sustainable Advantages
Celanese is good about keeping up with their technology. To be able to make life easier
for their customers now days they have to be good with technology. They offer solutions to
customers to help them succeed. They are continuously improving themselves to be able to help
others in what they need. They emphasize on continuous innovation and process refinement.
44

Celanese prides themselves on creating value for their customers with the solutions that they
offer and in improving the world through the actions of their colleagues.
4.3. Value Chain Analysis
A company’s value chain is a series of activities that create and build value to the
company with every step. Michael Porter defines the value chain of a company to be made of
primary activities and support activities. The value chain model below shows the bases of the
value chain analysis (PrepLounge, n.d.).
Primary activities include but are not limited to: inbound logistic, production and
operations, outbound logistic, marketing sales and service. The supporting activities help back up
the primary actives, these include: human resources, technology, strategy and research and
development.
4.3.1. Primary Activities
A big primary activity is production and operations, which are all activities transform
inputs into outputs. Celanese Corporation is one of the world’s largest producers of acetyl
products for just about all major industries. Their products are leading global positions due to
45

their differentiated business models, large global production capacity, operating efficiencies,
proprietary technology and competitive cost structures (Form 10-K, 2015). Celanese Corporation
provides are large service for their consumers. The focuses their initiatives to improve the
fundamental living conditions for people.
Marketing and sales is a big key primary activity. Being able to market the company’s
products to the right targeted people is key to having good sales. Marketing is the main way that
a company is able to get most of their sales. With marketing to the right group of people and in
the right locations people are more likely to buy the product.
4.3.2. Support Activities
Supporting activities help enhance the primary activities so that a company can reach its
goals and increase profit margin. The supporting activities are mainly: human resources,
technology, strategy and research and development. Technology is a big tool that helps the
company market their products and keeps in contact with different locations and customers.
Strategy and research and development help the company keep up with what their
customers need. If the company does not change their products for what their customers want
and need than they will stop buying from them which will then hurt the company and put them
out of business.
Human resources is another big key in supporting activities. Human resources hire
employees and train them. With roughly 7,500 employees having good human resources is a key
to having a well-functioning company. With good human resource management a company is
able to run smoothly majority of the time.
4.4. Financial Analysis
The financial condition of a company as well as its short-term and long-term financial
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position is vital in the process of developing the organizational strategy. The management of the
firm must be very decisive of the policies that are rendered and how they affect the profit and
loss of the company. Major business functions such as the process of capital budgeting,
determination of capital structure, as well as the determination of working capital of short-term
assets and the leading managers of the company control liabilities. Thriving firms ensure that the
senior executives are aware and actively involved in aligning their functional duties to the
financial position of the enterprise.
Financial analysis refers to the process of assessing and appraising a business, its
investment projects, as well as its budget and other organizational operations to determine their
efficiency and performance. The financial analysis establishes therefore if the organization is
stable, liquid, solvent or sufficiently profitable to be invested on. It is often conducted through
analyzing income statements, the cash flow statements, and the balance sheet. In the Celanese
Corporation, various financial tools were used in analysing the group’s performance. This
economic analysis will focus on evaluating five critical aspects of the financial health of the
Celanese organization, which include valuation, growth, profitability, financial strength, and the
management efficiency analysis of Celanese Chemical Corporation.
However, it is critical to note that Celanese Corporation may find it hard to benchmark
their financial position against their stated industrial competitors. This is mainly because of the
abstract variance in the functions within a firm. For instance, making direct comparisons
between the balance sheet of Celanese Corporation with the balance sheet from Dow Chemicals
or East man chemical corporations and financial statements of the same nature will proof to be a
futile exercise. It may not be feasible because the activities that are performed by these
organizations include the total supply chain processes. Therefore, for purposes of statistical
47

reporting, the American industrial classification system originally developed by the United States
government will be used. Celanese corporation’s SEC 10-k filings for the fiscal years 2011,
2012,2013, 2014 and 2015 were examined along with the historical share prices from several
sources.
4.4.1. Valuation Analysis
Various investors majorly conduct the cost analysis of several firms for comparative
studies for the possible purchase of shares. They are fundamentally used to measure the financial
worth of a company. The primary determinants that are employed when measuring the value of a
firm include the total sales, the market capital, the gross margin, depreciation, non-GAAP
earnings before interest as well as the amortization. Other aspects also include the price-earnings
ratio, operating margin, the net income, earnings per share, and the price-sales ratio.
The recent figures of comparative valuation analysis of Celanese Corporation peers in the
industry are provided as seen in the table below.
Relative valuation models of Celanese and its peers in USD
Company
Celanese
Corporation
Dow
chemicals
Air
products &
and
chemicals
Eastman
chemicals
Weight 25% 25% 20%
Recent 17.59 10.94 60.08 31.02
48

price
Beta
Shares
outstanding
143,510 924,350 209,650 72,460
Market cap 2,524,341 10,112,389 12,595,772 22,47,709
Long-term
debt
3,300,000 8,042,000 3,595,200 1,442,000
Enterprise
value
5,824,341 18,154,389
16,190,
972
3,689,709
Revenue 6, 823,000 57,514,000 10,202,400 6,726,000
Grossprofit 1,256,000 5,495,000 2,633,200 1,126,000
EBIT 440,000 1,833,000 1,299,500 519,000
Operating
cash flow
883,000 3,452,000 1,812,200 685,000
When comparing the results of Celanese Corporation to its competitors, the firm reported
a decrease in the total revenue in the past three-quarters, which was quicker compared to the
entire decrease of Celanese competitors that were similar in the same period. The net margin of
the corporation was reported to be low in profitability than its peers. The company has gross
profit of 1256000USD while the revenues of the business were 6823000USD. The gross margins
of the firm will reduce from 25.19 percent to 24.87 percent when compared to the peers in a
similar fiscal year. The operating margins of the corporation are better compared to other
49

companies even though the operating (EBITDA) was low compared to its peers such as Dow
chemical’s, east man chemicals and air products and chemicals. The annual change in the
operating cash flows was 23.32 percent that was the same deviation in the earnings of the
company and no significant shift in the reserves and accruals of the enterprise. There were
earnings per share growth from the various operation margin enhancements on several previous
items.
CE- Celanese EMN- East man chemicals APD- air products and chemicals DOW- Dow
chemicals
4.4.2. Growth Analysis
Celanese Corporation performance, when compared to its peers, has an essential
performance of 50 as well as an overvalued relative valuation. The firm’s class A presently is
traded at a higher price per book ratio, which is at 5.44 compared to its peers. However, the
market forecasts Celanese Corporation in the United States to grow at the same rate as its
competitors and to maintain the median revenue it presently creates. The corporation’s net profit
50

margins, as well as its asset efficiency, are at the median level. Deviations in the firm’s earnings,
as well as the yearly revenue, are around the average among its competitors.
Company Price
EPS
2015E
EPS
2016E
P/E 15 P/E 16 Est.5yr
EPS.gr
PEG15 PEG16
Dow
chemicals
51.48 3.26 3.58 15.8 14.4 10.0 1.58 1.44
Eastman
chemicals
68.6 7.33 7.69 9.4 8.9 9.0 1.04 0.99
Air
products
and
chemicals
67.05 2.85 3.24 23.5 20.7 11.0 2.14 1.88
Celanese
corporatio
n
70.2 5.44 5.99 12.9 11.7 10.0 1.3 1.2
51

52

Celanese united states recent growth, as well as its profit per expenditure ratio, are
approximately around the peer medians signifying that its past performance and its long-term
growth expectations are considerably aligned. The company’s capital investment program shows
that it is not efficiently investing in ventures that are generating peer median returns and it has an
extra capacity of debt.
4.4.3. Profitability Analysis
The profitability analysis is utilized in order to assess the capacity that is within the firm
to satisfactorily make wages that are from revenue income which in the meantime being able to
control the expenses through effective resource use and utilize value and in addition ventures
(Archibald 25). Productivity proportions can show an exact assessment that is of the enterprise
when it’s held versus its rivals in the business for the total amount income and also for the net
income that is frequently connected with the specific operations within the organization.
53

Comparative profitability analysis of Celanese and its peers
Company
Debt/Enterprise
Value (%)
Current ratio
Interest
coverage
Cash flow to
Total debt
Dow chemicals 23.48 2 5.43 26.02
Eastman
chemicals
40.14 1.55 5.72 24.64
Air
products and
chemicals
16.06 1.99 6.9 42.4
Celanese
corporation 21.75 2.29 5.69 31.12
Peer median 22.62 2 5.71 28.57
The profitability statistics for Celanese Corporation are given in the table that takes after
when contrasted with its companions. Even though that the costs of items could undermine,
hazard the success of the organization and its companions in the business, the Corporation has
kept up a momentous net revenue proportion in the current years (Archibald 25). Celanese works
in a broad chemical industry that obliges a few consumer showcases that could be isolated into
segments that are more precise (Archibald 25). The United States branch of energy estimates that
there are more than 70,000 chemicals that are created in this industry from crude materials, for
example, water, oil, gas, minerals and metals. The leading peers of Celanese Corporation in the
chemical industry in the United States are, DOW Chemicals, Eastman Chemicals, and Air
54

Products and Chemicals. Chemical sales in the United States industry were estimated at 890
billion USD in the year 2008. The industry is incredibly disjointed. Chemical products are
extremely influenced by economic swings. Deteriorating economic conditions can result in
consumers destocking their levels of inventory with decreasing global demand. In the year, 2008,
the industrial production of chemicals dropped. From the months of November, December and
January production declined by 3.3 percent, 3.9 percent as well as 0.9 percent respectively.
55

4.4.4. Financial Strength Analysis
The financial force of a firm can be measured through gathering a progression of
proportions that can mirror the fleeting and in addition the long haul dissolubility of the
organization. In the financial force, that can be calculated incorporate the fast proportions is the
short term proportion, current proportion and the money proportions. The following proportions
demonstrate the capacity that is within the corporation in order to meet its short term related
commitments. Present proportion which utilizes to think about the partnership among the current
resources and current accountabilities and exhibit the capacity from the organization to
reimburse back its present obligations through utilizing the current resources.
56

Company %
margin of sales
Celanese
corporation
Dow chemicals
East man
chemicals
Air products
and chemicals
Revenue 100 100 100 100
COGS 81.6 79.03 76.24 76.77
Gross margin 23.23 18.48 20.97 19.94
SG&A 12.93 4.78 11.14 8.92
R&D 1.62 1.31 1.26 2.10
Other 1.12 -8.28 0.21 6.47
Operating
Margin
23.16 11.14 5.75 8.78
EBIT margin 25.00 18.83 11.16 8.46
Profitability
Tax rate % 7.31 31.57 33.37 41.19
Net margin % 16.74 9.43 9.14 8.17
Asset turnover 0.76 0.73 0.72 0.71
Return on assets 12.22 7.00 3.00 5.00
Financial
leverage
5.2 3.34 3.61 3.13
Return on equity
49.72 39.4 22.62 9.27
Return on
invested capital
23.00 15.15 6.86 12.74
Interest coverage 10.35 7.4 5.1 5.87
57

For the following the last financial, then the, financial year, then n the present proportion
of Celanese Corporation which was the rate of 1.92 means that for each one dollar in the current
liabilities of the company, the firm would have 1.92 USD in present resources. Likewise, the
firm may infer to the organization that it has its present liabilities secured more than 1.92. In the
fast proportion it is utilized to show the company's transient liquidity. It gauges it’s capacity of
the business to meet its short term commitments utilizing its fluid resources. The fast proportion
is to present the proportion without stock. In the fast proportion of the Celanese Corporation is to
inclining downhill, and this would be bad for the organization as it influences the liquidity of the
firm for the future. In the fixed resource’s turnover, the proportion is utilized to gauge an
organization's working execution. It looks at the net deals to the capital. The fixed resource
turnover proportion especially measures the capacity of an organization to produce deals from
altered resource ventures, for example, plant and gear, property, and the express depreciation.
Higher turnover proportion as demonstrated by the Celanese group implies a more effective
investment in settled resources and their capacity to produce income.
These proportions are utilized to assess how productively a firm uses its advantages and
additionally accountabilities in its inside operations. It is utilized to figure the income of their
receivables, reimbursement of their liabilities, then the value and then finally the amount
utilization and exhaustive stock and equipment use. The days payable extraordinary alludes to
normal payable’s time of the organization. It makes sure that it clarifies the measures the time
that it takes an organization to pay its solicitations which can be from different exchange banks,
for instance, the providers. when evaluating on the return on the value of the firm and the
different effects of execution measures against this association. The Celanese Corporation had a
little profit for value proportion, and this was not attractive result to the speculators. In this
58

manner, the issue was the low profit of the margin acknowledged which prompted to the poor
budgetary favourable position of the organization.
4.4.5. Management Efficiency Analysis
The management effectiveness analysis measures the capacity that is from the
organization administration is to direct its procedures in a gainful way. A few perceptions were
made concerning the Celanese Corporation and its modern companions. They incorporated the
arrival on the equity, then the return on capital employed, then it would be the asset turnover,
then it's the total asset turnover and in addition is the fixed asset turnover. As prior seen Celanese
performed flawlessly contrasted with its associates as its arrival on capital utilized was more
contrasted with its companions. This means that the capacity of the association's administration
to settle on compelling choices.
Management efficiency analysis of Celanese and its peers
Peers Prev close currency 52 wk Range
East man
chemical corporation
66.87 USD 565.03-78.79
Dow
chemical company
54.1 USD 40.26-57.10
Air products
and chemicals
70.09 USD 39.48-63.58
Celanese
corporation
86.62 USD 71.55-95.55
59

The Celanese Corporation doesn’t seem to increase more obligation rapidly. The
Celanese company's obligation subsisted at 26.98 percent of its entire worth against its general
standard at of the 25 percent (Cussler 22). At which the companion middle obligation is in the
blink of an eye at the 26.4 percentage with an interest reporting at the level of 3.44. This implies
that it’s difficult to make huge new loans. Be that as it may, every one of the associates of the
organization have had an exceptional obligation adjust consequently keeping up a generally
excessive liquidity outline in the last monetary year (Cussler 27). The next is the intrigue scope
of the firm is drifting downhill, and it is not exactly at the 5-year normal intrigue scope. Even
though the intrigue scope was decreased in 2014, the organization kept up its noble median,
which is its moderately steady in the period. The obligation venture estimation of the
organization had enhanced its rate to 2.82 from its last economic year despite the fact that It’s
quiet not as much as its five-year normal obligation venture valuation. Likewise, the
enhancement of the home loan business esteem by an edge of about 2.82 in the 2014 budgetary
year which was joined by a companion middle increment in the phase from the 24.05 percent to
the 26.48 percent.
4.5 Summary of Strength and Weaknesses
After studying all this, it can be concluded that conducting the internal analysis proves
very beneficial for the company. Through conducting the internal analysis, the management is
able to know the competitiveness of the company. This competitiveness can be utilized by the
company by gripping available market opportunities (Fasting, 2012). Celanese has a composite
structure with a varied range of brands. Celanese can enhance its profitability level by analyzing
all available internal factors. This will give broad information about its strength, and weaknesses
which the company can use further in expanding the size of the company.
60

61

5. SWOT Analysis
The main motive of the Strengths, Weakness, Opportunities, and Threats analysis is to
recognize Celanese’s current capabilities and resources that are available, and to what extent and
how these resources are utilized by the organization to compete with its nearest competitors in
the chemical industry. This section also concludes that how future trends in the external
environment can create different market opportunities and competitive threats for Celanese
Corporation. On the basis of its strengths, and weaknesses the company can effectively decide
which of the opportunities in the market to consider while avoiding or managing the evident
threats.
5.1 Methodology
For conducting the SWOT analysis, we utilized the convert and match matrix method.
With the help of this method, we are able to determine strategic recommendations for Celanese
Corporation to move further. The SWOT analysis will help in formulating recommended future
strategies for Celanese Corporation so that it can gain competitive advantages in the market. The
strengths, weaknesses, opportunities, and threats mentioned in the following table enables the
organization to formulate its business strategies as per the competitor’s initiatives. The convert
and match method is an easier way to apply the SWOT matrix to formulate business strategies.
There are two sets of recommendations derived from convert and match matrix. The strategic
recommendations completely depend on converting a weakness into strength or threat into an
opportunity. And the other strategic recommendations are based on matching strength with an
opportunity to create a competitive advantage for the organization in its relative market.
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Positive Negative
Internal
List of Strengths
1. Broad portfolio of
high-quality
polymers.
2. Usage of advanced
polymer technology
such as composite or
utility transmission
line.
3. Core competency in
developing
differentiated products
with chemical and
physical properties
such as POM, LFRT,
and PBT.
4. High-class technology
for production of
products, such as anti-
counterfeiting
technology for
producing original
equipment.
5. Global Presence in
countries like Brazil,
Germany, China, etc.
6. Expansion of portfolio
to include products
with higher stiffness,
and impact, improved
wear and enhanced
the appearance or low
emissions (Annual
Report, 2014, p. 6).
List of Weaknesses
1. High capacity
constraints due to
labor disruption or
construction delays
(Annual Report, 2014,
p.17)
2. Poor relationship with
supplier due to
inability of a supplier
to meet delivery
orders on timely basis
(Annual Report, 2014,
p.17)
External
List of Opportunities
1. Growing demand for
UHMW-PE
("UHMWPE Market
Size Projected to
List of Threats
1. High competition
between industry
competitors (Annual
Report, 2014, p.10)
63

reach $2.60 Billion by
2022", n.d.)
2. Growing demand for
chemical products
such as coatings and
glass fiber (Dai,
2015)
2. Increasing volatility in
prices and availability
of raw materials has a
significant negative
impact on the
financial margins.
(Annual Report, 2014,
p.16)
3. Fluctuations in
environmental
regulations
concerning climate
change influence the
profitability level
(Annual Report, 2014,
p.20)
4. Presence of various
unanticipated
operational or
commercialization
difficulties such as the
development of
competing
technologies (Annual
Report, 2014, p.17)
5.2 SWOT Matrix
Opportunities
The below mentioned are some opportunities that exist in the external environment that
Celanese should exploit to establish itself in the market and gain competitive advantage over its
competitors:
 Increasing demand for UHMW-PE: It stands for ultra-high molecular weight
polyethylene. It is expected that demand for UHMW-PE products will continue to rise
until 2022; it will be about 2.60 billion. This will influence the productivity of the
company in a positive manner. This increasing demand can be effectively served with the
help of Medical and Prosthetics applications. North America and Asia will be the leading
64

regional market with demand share estimated at over 40% in 2022. The region of both the
countries is expected to grow with 11.7% of CAGR amount ("UHMWPE Market Size
Projected to reach $2.60 Billion by 2022", n.d.). This will bring various opportunities for
the company. By enhancing the productivity of UHMW-PE products, the company can
serve a large number of customers which ultimately enhance the competitive advantage
of the company.
3. Increasing demand for glass fibers and coatings: The glass fibers demand is continuously
growing day by day. It is mainly utilized as the reinforcement of a matrix to form
composite. The global consumption of glass fiber was about 4 million metric tons in
2011, and it will reach 4.5 million metrics in 2018. Growing demand for glass fiber in the
construction, equipment manufacturing, and automotive industries are expected to lead
the growth. On the other hand, demand for coatings products is also increasing. Overall
demand from 2014 to 2019 will increase at average annual rates of 3% in the United
States and 1.5-2.5% in Western Europe (Dai, 2015). The demand for coatings will lead
due to emergent countries of the world such as Eastern Europe, Asia, and Latin America.
Threats
The following threats exist in the external environment which significantly influences the
profitability and competitive capability of Celanese Corporation:
 High completion between industry competitors: Competitors between sellers for chemical
products is strong due to the lack of differentiation in product quality offered by the
company to its customers. Celanese Corporation has to compete against small and large
companies that offer the same products and services, so it is tough for Celanese to gain a
competitive advantage and significant market share. Principal competitors for Celanese
65

are BASF SE, Wacker Chemie AG, Dairen Chemical Corporation, and The Dow
Chemical Company (Annual Report, 2014, p.10). The company needs to prepare itself to
face its competitors in a significant manner.
5. Increasing volatility in prices and availability of raw materials: The company purchases
its raw material for the products such as ethylene, carbon monoxide, methanol, and
natural gas from its third party who is known as Acetyl Intermediaries segment, and vinyl
acetate monomer (Annual Report, 2014, p.16). Thus, the prices of its products are highly
dependent on the available supply of raw material and may increase due to natural
disasters, strikes or lockout, and plan or production disruptions. Due to this, the company
is exposed to volatility in the prices of its raw materials and energy.
 Fluctuations in environmental regulations concerning climate change: Celanese
profitability highly influenced by the threats associated with climate change legislation or
regulation. Greenhouse Gas is considered an emission which has become the subject of a
large amount of national, international and local and state attention. The Environmental
Protection Agency formulates the rules and regulations related to the greenhouse gas
emissions (Annual Report, 2014, p.20). Thus, future environmental regulatory and
legislative developments related to climate change are possible, and this could
significantly enhance the operating costs of the company.
 The presence of various unanticipated operational or commercialization difficulties: The
operating result of the company largely depends on the development of commercially
viable new products, applications or product grades, innovative process technologies. But
all these activities are fulfilled with various unanticipated operational or
66

commercialization difficulties (Annual Report, 2014, p.17). If the company becomes
unsuccessful in performing all such activities, it will influence the operating results and
competitive position in a significant manner.
5.3 Recommendations
The below-mentioned strengths measure what capabilities and resources Celanese
Corporation currently have in place that can be used to enhance its competitiveness in the
marketplace:
 Broad portfolio of high-quality polymers: Celanese has a broad portfolio of high-quality
polymers which make it popular in the existing marketplace. Emulsion polymers and
EVA polymers of the company are active in every global sector and serves different
consumer and industrial end-use applications. Due to the high quality of polymers, the
organization has a monopoly in the market. This will strengthen the competitive image of
the organization in the global market.
 Usage of advanced polymer technology: In 2014, Celanese introduced various new and
innovative polymer technologies which enhance the polymer products quality. This will
broaden the access of the company to the oil and gas industry, utility industry, original
equipment producers and companies that increase the supply chain efficiency. These
technologies are composite technologies for the utility industry that deliver high capacity
and reliability or anti-counterfeiting technologies for original equipment manufacturers
and suppliers. These unique technologies enable the competitiveness of the company in
its existing market.
67

 Core competency in developing differentiated products: The specialty polymers of the
company have different physical and chemic properties that enable them to perform in
different conditions. Chemical and physical properties of the company mainly consist of
enduring elevated temperatures, withstanding deformation, and resisting adverse
chemical interaction. This will enable the company to serve its customers in an efficient
way which ultimately helps the organization in gaining competitive advantage in the
market.
 High-class technology for production of products: Celanese generally utilizes the high-
class technology for production of its products. On the basis of these products, the
company is recognized in the market. With the help of composite and anti-counterfeiting
technologies, the organization can produce high-quality products. Due to this the
company becomes popular and has a unique identity in its market.
 Global Presence: The company conducts its business globally. The engineered material of
the company has operations in Brazil, South Korea, US, and Germany. On the other
hand, the company also tries to enter the market of other countries such as Saudi Arabia
and North Kingstown. This will strengthen the presence of organizations with which it
can serve its global customers in an effective manner.
 Expansion of portfolio to include products with higher stiffness: The company
continuously moves forward to innovate and expand its portfolio of Hostaform and
Celcon products in order to support the customer needs for higher performing polyacetal.
Celanese focuses on expanding its portfolio to include products with higher stiffness and
68

enhanced appearances such as metallic effects or laser marketing (Annual Report, 2014,
p. 6). This will expand the size of the market for Celanese products.
Weaknesses
The below-mentioned weaknesses measure what capabilities and resources are lacking and
place Celanese at a disadvantage in the marketplace:
 High capacity constraints: Celanese is suffering with lots of capacity constraints which
hampers the overall productivity of the company (Annual Report, 2014, p.17). These
constraints mainly include labor disruption, inventory turnarounds or shutdowns, and
labor disruption. This will influence the overall progress of the company.
 Poor relationship with supplier: It is necessary for organizations to have a better
relationship with their suppliers. But Celanese has a poor relationship with its supplier.
This is because the suppliers of the company have the inability to deliver orders or raw
material on a timely basis (Annual Report, 2014, p.17). This will raise conflicts between
them. Due to the unavailability of raw material the overall product process of the
company is influenced in a significant manner. This can harm the image of the company
in the market.
Recommended Strategies:
Based on the study of strengths, weaknesses, threats, and opportunities, the next phase is
about recommending strategies to the company. There are two strategies that have been
developed considering the opportunities and threats present in the external environment of the
company and the strengths and weaknesses of the company which form the internal environment.
69

They are:
i. Reducing the capacity constraints on the production side
As identified in the assessment of the weak areas of the company, the company faces
capacity constraints due to the labor disruption. The failure to manage the labor relation
effectively may result into the reduced production efficiency. As identified in the opportunities
that the demand for chemical products is expected to rise. Moreover, the demand of UHMW-PE
is expected to rise which is produced majorly by the company. Therefore, considering this fact, it
is important that the company should improve the labor relations so that the production level can
continue meeting the expected rise in the demand for the products. The two major threats,
namely, high competition and increasing volatility in the prices of raw materials is likely to
challenge the company on the cost aspect. Therefore, effective management of the labor can
expectedly keep the cost at suitable level.
ii. Improving relationship with the suppliers
The other recommendation that is being given to the company is improvement of the
relationship with the suppliers. The expected increase in the chemical demand in the coming
days and not so good management of the labor relations, it is imperative that the company keep
the relationship with the suppliers at good level to ensure effective cost management. The
improved relationship will ensure that the company gets long term raw material supply at
competitive rate. Due to the global presence of the company, the company can engage in
procurement of the raw materials from the country that provides at competitively lower cost and
requires minimum freight charges.
70

6. Implementation
The focus of this chapter is on suggesting the tactics that can be considered by the
company in implementing the given recommendations. It is expected that the application of this
recommendation within the company is likely to improve the cost management capability of the
company which in turn can convert into low cost products that can be sold in the market at the
competitive rates. Researchers have identified that the improved relationship with the labor and
suppliers usually converts to good cost management (Need, 2006; Walter and Georg, 2000). The
same consideration plays here based on the strengths and weaknesses of the company and the
opportunities that are present in the market along with the threats.
6.1 Action Plans
The recommendation summary is focused on actions that can be considered by the
company in implementing the recommendations given in the previous chapter. The two
recommendations given above are expected to provide the sustainable growth opportunity to the
company. The reason is that the improved relationship with the stakeholders (labor or suppliers)
helps the company move forward with more confidence (Neville et al, 2005; Hillman and Keim,
2001). Here are two recommendations and the actions that can be considered for its
implementation.
Recommendation 1: Reducing the capacity constraints on the production side
As identified earlier, the major issue in the capacity constraints is due to the strained
relationship with the labor. The relationship improvement steps with the labor unions can be the
appropriate initial step towards building the relationship. The company can consider the below
given points to manage the relationship:
71

- Establishing labor relations management committee which will have labor relations
specialists and the individuals from different management specialties. These people will
negotiate with the labor unions so that the situations can be improved further.
- Periodic employee assessment to continuously stay in the loop about the current situation
of the employees. This can be done through individual interviews or collective survey
through questionnaires. The implementation of the employee assessment branch is
important to gauge the mood, demand, need, and desire of the employees to take actions
before it’s too late.
Recommendation 2: Improving relationship with the suppliers
The improvement of relationship with the suppliers can be a key aspect in building
sustainable relationship. The selection of right suppliers who provide raw materials at
competitive rate and then building and maintaining strong relationship with them is imperative
for the sustained business. Mentioned below are the actions that have been suggested to
implement this recommended strategy:
- Developing consistent channels of communication can improve the frequency of
coordination with the suppliers. The improved communication is likely to create
transparency which will eventually positively impact the trust level among both the
parties. This can be done through the use currently advanced technologies available in the
market that are cost effective, convenient, and can be portably managed on various
devices such as laptop and smartphones.
- Establishing procurement assessment division that can continuously assess the
quantitative and qualitative aspect of the supplier relationship and the changes in the
trends. This will help the company stay ahead in making decisions that are pro-company.
72

Both the recommendation and their respective suggested course of actions have been
given considering the long-term perspective of the company. None of the actions or the
recommended actions is for the short term and is expected to bring appreciable return for the
company in the days to come.
The first recommendation about improvement of the relationship with the labor as it is
impacting the production capacity will positively impact the company in the days to come. The
improved relationship with the labor will convert into less labor constraints as most will prefer to
support with overtime in case required. Moreover, the labor would prefer to work for the longer
period with the company which will reduce the cost on the continuous training of the fresh batch
of labor every year.
The second recommendation about the improvement of the relationship with the suppliers
has direct impact on the cost of production. The improved relationship will ensure that the
company keeps procuring right raw materials at competitive market price from the suppliers for
longer period.
6.2 Goals and Objectives
The goal in the first recommendation is to reduce the constraints on the production by
improving the labor relationship. The objectives for the same are mentioned below:
- Establishing labor relations department within few months
- Establishing employee assessment division under labor relations department within few
months to assess the employee behavior and their responses regarding policy changes and other
aspects.
Success Indicators:
73

- The establishment of department and resolution of issues at hand should be considered as
the first success indicator.
- Complete training for the added individuals into the department for future challenges will
be the second success indicator regarding this goal.
The goal in the second recommendation is improvement of the relationship with the
suppliers. The objectives for the same are mentioned below:
- Establishing channels of communication. This will include adapting technological
improvements such as CRM, and online portals.
- Establishing procurement assessment division under supply chain management
department
Success Indicators:
- More than 70% of the individuals agree that all the aspects have improved in a survey
- Constructive feedback received from at least 50% of the individuals.
6.3 Time for Completion and Milestones
The timelines given below has been developed for the recommendations provided above.
It is expected from the company to follow through the timeline and tasks in sequence to ensure
successful implementation.
Timeline for recommendation 1 (Duration: 45 days):
74

Timeline for recommen dation 2 (Duration: 80 days
:
75

6.4 Resources Needed
The resources required for the implementation of the recommended strategies are human
resources, non-human resources, budget and time. The investment on the project is to be done
internally as the words moving outside about the organization about the challenge being faced by
the company might impact the shareholder confidence in the company.
If the new department is further frowned upon by the labor unions, it would be
crucial and important for Celanese Corporation to have one of the top level managers reach
directly to the labor unions. In addition, the top level manager can be tasked with the
responsibility of directly dealing with the unions and addressing any of their concerns. This
would smooth things out as the need for the labor unions to access the top level management
would be addressed.
6.5 Risk Assessment
There are some risks associated with the implementation of the projects. Mentioned below
are the risks that have been identified:
- Lack of interest among the labor unions to prefer new department. They might consider it
another roadblock to reach the top management.
- The ineffective communication channel might further strain the relationship with the
suppliers instead of building it in positive direction.
6.6 Contingency Plan
Given below are the contingency plans for each of the risk factors identified in the previous
section:
- Use of Kotter’s eight change management mode can be beneficial in this case. It is
important to make them understand the benefits of the changes.
76

- The establishment of channel for effective communication is important. The
advancement in the technology can be used to facilitate the communication bridge the
communication gap.
77

78

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