Strategic Management Report: Celanese Corporation, Part 3 Analysis

This report, focusing on Celanese Corporation, presents a comprehensive strategic management analysis. It begins with an in-depth SWOT analysis, evaluating the company's strengths, weaknesses, opportunities, and threats within the chemical industry. The methodology used is the convert and match matrix method. The report identifies key opportunities like the growing demand for UHMW-PE and glass fibers. It also highlights threats such as intense competition, raw material price volatility, and environmental regulations. Recommendations are provided based on converting weaknesses into strengths and matching strengths with opportunities. The analysis covers capacity constraints, supplier relationships, and strategic initiatives. Action plans, goals, and risk assessments are included to aid implementation. The report emphasizes the importance of adapting to market dynamics and leveraging core competencies for sustainable competitive advantage.

Running Head: STRATEGIC MANAGEMENT CELANESE CORPORATION
Celanese Corporation
– Part III
PART 3
By: Kayelyn Korenek, Matthew Center, Samantha Penland, & Trevor
Belcik

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Table of Contents
5. SWOT Analysis...........................................................................................................................2
5.1 Methodology..........................................................................................................................2
5.2 SWOT Matrix........................................................................................................................4
5.3 Recommendations..................................................................................................................7
5.4 Recommended Strategies.......................................................................................................9
6. Implementation..........................................................................................................................11
6.1 Action Plans.........................................................................................................................11
6.2 Goals and Objectives...........................................................................................................13
6.3 Time for Completion and Milestones..................................................................................14
6.4 Resources Needed................................................................................................................15
6.5 Risk Assessment..................................................................................................................15
6.6 Contingency Plan.................................................................................................................15
7. References..................................................................................................................................16

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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)

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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

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help of Medical and Prosthetics applications. North America and Asia will be the leading
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

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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
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

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viable new products, applications or product grades, innovative process technologies. But
all these activities are fulfilled with various unanticipated operational or
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.

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 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

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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.
5.4 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.
They are:

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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.

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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:

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- 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.

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- 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.
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

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- Establishing employee assessment division under labor relations department
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
- Establishing procurement assessment division under supply chain management
department
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):
Timeline for recommendation 2 (Duration: 80 days):

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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.
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

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7. References
Annual Report 2014. (2014). Investors.celanese.com. from
http://investors.celanese.com/Cache/1001195830.PDF?
O=PDF&T=&Y=&D=&FID=1001195830&iid=4103411
Dai, Q. & Kelly, J. (2015). Life-Cycle Analysis Update of Glass and Glass Fiber for the
GREETTM Mode.
Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social
issues: what's the bottom line?. Strategic management journal, 22(2), 125-139.
Need, W. C. D. H. P. (2006). Human resource management: Gaining a competitive advantage.
Neville, B. A., Bell, S. J., & Mengüç, B. (2005). Corporate reputation, stakeholders and the
social performance-financial performance relationship. European Journal of Marketing,
39(9/10), 1184-1198.
UHMWPE Market Size Projected To Reach $2.60 Billion By 2022. Grandviewresearch.com.
Retrieved from https://www.grandviewresearch.com/press-release/global-uhmwpe-market
Walter, A., & Georg, H. (2000). Bridging the gap between suppliers and customers through
relationship promoters: theoretical considerations and empirical results. Journal of Business &
Industrial Marketing, 15(2/3), 86-105.