Celanese Corporation: Mid Term Report on Business Analysis

This mid-term report analyzes Celanese Corporation's business environment, including its history, purpose of study, and external analysis. The external analysis covers the general environment, including demographic, economic, political, socio-cultural, technological, and physical segments, as well as driving forces. An industry analysis explores the chemical industry's features, market size, trends, and a five forces analysis. A competition analysis examines industry competitors, strategic moves, and key success factors. The report concludes with a summary of opportunities and threats, providing a comprehensive overview of Celanese's position in the market and recommendations for strategic planning. The report is contributed to Desklib for students to study.

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MID TERM REPORT
By: Kayelyn Korenek, Matthew Center, Samantha Penland, & Trevor Belcik
Celanese
Organization

Table of Contents
2.0 Company History.......................................................................................................................2
2.1 Background................................................................................................................................3
2.2 Purpose of Study........................................................................................................................3
3.0 External Analysis.......................................................................................................................5
3.1 General Environment Analysis..................................................................................................5
3.1.1 Demographic Segment........................................................................................................6
3.1.2 Economic Segment..............................................................................................................7
3.1.3 Political Segment................................................................................................................9
3.1.4 Socio-Cultural Segment....................................................................................................10
3.1.5 Technological Segment.....................................................................................................11
3.1.6 Physical Segment..............................................................................................................12
3.1.7 Driving Forces..................................................................................................................13
3.2 Industry Analysis.....................................................................................................................15
3.2.1 Description of the Industry...............................................................................................15
3.2.2 Industry Dominant Economic Features............................................................................15
3.2.3 Market Size and Growth...................................................................................................17
3.2.4 Industry Trends.................................................................................................................18
3.2.5 Five Forces Analysis.........................................................................................................18
3.2.5.1 Threat of New Entrants..............................................................................................19
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3.2.5.2 Power of Substitute Products.....................................................................................19
3.2.5.3 Power of Buyers.........................................................................................................20
3.2.5.4 Power of Suppliers.....................................................................................................21
3.2.5.5 Intensity of Rivalry.....................................................................................................21
3.3 Competition Analysis...............................................................................................................22
3.3.1 Industry Competitors.........................................................................................................23
3.3.2 Rivals Anticipated Strategic Moves..................................................................................25
3.3.3 Key Success Factors..........................................................................................................27
3.4 Summary of Opportunities and Threats...................................................................................29
References......................................................................................................................................32
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2.0 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 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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