Value Creation: Strategies for the Chemical Industry

by Editor: McKinsey & Company, Inc.; Editor: Florian Budde (McKinsey & Co.); Editor: Gary A. Farha (McKinsey & Co.); Editor: Heiner Frankemölle (McKinsey & Co.); Editor: David F. Hoffmeister (McKinsey & Co.); Editor: Konstantin Krämer (McKinsey &

• ISBN13: 9783527302512
• ISBN10: 3527302514
• Format: Paperback
• Copyright: 2001-06-01
• Publisher: Wiley-VCH

Summary

Corporate performance has increasingly come to be judged by shareholder value in the last few years, and chemical companies are among those embracing the trend. Written by an international team of leading experts from the prestigious top management consultancy McKinsey & Company, this book provides a guide to value creation for chemical companies which is based on first-hand experience gained in hundreds of strategic and operational consulting engagements in the industry, as well as extensive research projects.The book discusses today's challenges in an ever more rapidly changing business world. What is the relevance of capital markets to strategic decision making in chemical companies? What strategic paradigms currently apply to the industry? How can the selected strategies be implemented successfully? This book presents a detailed examination of innovative and traditional ways to create value, and offers authoritative information on the required management approaches. It includes some important recently emerging aspects such as the impact of e-commerce, biotechnology, and the role of financial investors.Although mainly directed at managers in the chemical industry, the knowledge contained in this comprehensive introduction to the area has sufficient general validity to benefit scientists, engineers, investors, students, and anyone else dealing with management issues in this and related fields.

Table of Contents

Today's Chemical Industry: Which Way is Up?	1	(10)
Florian Budde
Konstantin Kramer
The Chemical Industry Today -- a Snapshot	1	(6)
Eras of the Chemical Industry	7	(4)
Today's Challenge -- Value Creation	11	(12)
Robert Berendes
Florian Budde
Konstantin Kramer
Christian Weber
Shareholder Value -- Why the Recent Rise to Fame?	11	(3)
How Good a Measure is Shareholder Value?	14	(2)
Understanding and Managing Capital Market Expectations	16	(7)
Understanding Historic Capital Market Performance	16	(2)
Quantifying Future Expectations	18	(1)
The Impact of Strategic Action	19	(1)
Delivering on Short Term Earnings Expectations	19	(2)
Creating a Long Term Growth Story	21	(1)
Effective Communication	21	(2)
Strategic Choices for the Chemical Industry in the New Millennium	23	(14)
Florian Budde
Brian Elliott
Gary A. Farha
Heiner Frankemolle
Tomas Koch
Rodgers Palmer
The Chemical Industry Today -- Forces for Change	23	(3)
Strategies for Value Creation	26	(8)
The Focus of Asset-Leveraging Strategies	27	(2)
The Ideas behind Knowledge-Leveraging Strategies	29	(5)
The Impact of Value Creation Strategies	34	(3)
Managing Commodity Portfolios	37	(10)
Thomas Rothel
Gary A. Farha
David F. Hoffmeister
The Shakeup has Begun	37	(3)
The New Game -- Disaggregation and Focus	40	(2)
Overcoming Barriers to Action	42	(5)
How to Succeed in the Rapidly Maturing Specialty Chemicals Industry	47	(18)
Joel Claret
Simon Lowth
David McVeigh
The Commoditization of Specialty Chemicals -- What Happens Next?	47	(4)
Recasting the Portfolio	51	(5)
Achieving Superior Performance at the Business Unit Level	56	(4)
Selecting a Single Winning Business Model	56	(3)
Executing the Selected Business Model Outstandingly	59	(1)
Going for Growth	60	(1)
Designing a Value-Adding Corporate Center	61	(4)
Putting in Place a Lean, Investor-Type Corporate Center	61	(1)
Ensuring Differentiated Management of Various Business Units	62	(2)
Driving Selected Corporate Themes	64	(1)
Sharing Best Practices Across Businesses	64	(1)
Chemical Companies and Biotechnology	65	(14)
Rolf Bachmann
Wiebke Schlenzka
Biotechnology -- the Background	65	(2)
Attractive in Agrochemicals	67	(4)
Other Chemical Businesses: Fast Moves Needed	71	(4)
Defining the Directions for Moving into Biotechnology	75	(4)
Performing a Diagnostic for Individual Chemical Businesses	75	(1)
Outlining the Strategic Options for Biotechnology Portfolios	75	(2)
Making the Transformation	77	(2)
The Impact of E-Commerce on the Chemical Industry	79	(14)
Ralph Marquardt
Jan-Philipp Pfander
Boris Gorella
David McVeigh
Winning Control in E-Commerce	79	(2)
The Creation and Redistribution of Value	81	(4)
Strategic Questions for Top Management	85	(5)
How to Overcome Transitional Challenges	90	(3)
The Alchemy of Leveraged Buyouts	93	(16)
G. Sam Samdani
Paul Butler
Rob McNish
The Saga of the Deals	94	(3)
What is Attractive about Chemical LBOs	97	(1)
How Value is Created in Chemical LBOs	98	(3)
Infecting Chemical Corporations with the LBO Virus	101	(3)
Maximizing M&A Performance and Divestment Value	101	(1)
Operating Like a Financial Holding Company	102	(1)
Implementing Do-it-Yourself `Internal LBOs'	102	(1)
Harnessing the Catalytic Power of Collaboration	103	(1)
Executing Levezaged Recapitalization	103	(1)
New Roles for LBO Players	104	(2)
Portfolio Optimizer	105	(1)
Aggressive Consolidator	105	(1)
Spanning the Alliance Spectrum	105	(1)
LBUs: Moving beyond the Conventional LBOs	106	(1)
Steps toward a Natural Convergence	106	(3)
Revitalizing Innovation	109	(12)
Wiebke Schlenzka
Jurgen Meffert
The Innovation Challenge	109	(1)
Defining the Innovation Strategy	110	(4)
Focusing on High Impact Innovations	110	(2)
Defining the Specific Company Strategy	112	(2)
Approaches to Stimulating Innovation	114	(7)
Clearly Structured Idea Generation Processes	114	(3)
Corporate Venture Funds	117	(2)
New Company Structures and Incentive Systems for Business Building	119	(2)
Managing the Organizational Context	121	(16)
Karsten Hofmann
Heiner Frankemolle
Supporting Strategy by Structure	121	(3)
The Corporate Center -- Lean but not Anorectic	124	(4)
The War for Talent	128	(3)
Corporate Culture: The Key to Top Performance	131	(6)
References	135	(2)
Creating an Entrepreneurial Procurement Organization	137	(14)
Khosro Ezaz-Nikpay
Ulrich Horsmann
Helge Jordan
A Bold Move in Purchasing can Create Huge Value	137	(1)
PSM Comes into its own when Linked with Key Strategic Challenges	138	(4)
Treat Purchasing Opportunities as a Business Idea	142	(7)
Captivate the Company's Attention: Create an Entrepreneurial Value Proposition	143	(4)
Capture the Opportunities: Embark on a Comprehensive Program
Build Capabilities: Evolve a Dynamic Organization and Design Communities of Practice	147	(2)
How to Unleash the Power of Purchasing: to Boldly Go...	149	(2)
Achieving Excellence in Production	151	(12)
Markus Aschauer
Christophe Bedier
Robert Berendes
Jens Cuntze
Heiner Frankemolle
Thomas Rothel
Levers for Optimizing Production Costs	152	(3)
Implementing Operational Change Programs in a Chemical Plant	155	(8)
High Aspirations	155	(2)
Step Changes	157	(2)
Continuous Improvement	159	(4)
A Customer-centric Approach to Sales and Marketing	163	(10)
Sonke Bastlein
Jan-Philipp Pfander
Customer Portfolio Strategy	164	(3)
Profitable Long Term Customer Relationships	167	(2)
Absolute Control over the Sales Generation Process	169	(2)
Securing Implementation by Superior Micro-Market Management	171	(2)
The Role of Mergers and Acquisitions	173	(10)
Markus Aschauer
Christophe de Mahieu
Philip Eykerman
Gary A. Farha
Michael Graham
Thomas Rothel
The Case in Favor of Consolidation	173	(4)
Finding a Partner	177	(3)
Is there an Alternative?	180	(3)
The Delicate Game of Post-merger Management	183	(14)
Tomas Koch
Andre M. Schmidt
Boris Gorella
The Obligation to Create Value
The Keys to Success	185	(3)
The Road to Successful Integration	188	(9)
Phase One: Integration Design	189	(1)
Developing a Shared Vision	190	(1)
Identifying the Potential for Adding Value	190	(2)
Securing Current and Future Business	192	(1)
Building the Shared Performance Culture	192	(2)
Phase Two: Execution of Integration Projects	194	(3)
Cyclicality: Trying to Manage the Unmanageable	197	(16)
Paul Butler
Robert Berendes
Brian Elliott
The Drivers of Cyclicality	199	(3)
Managing Cyclicality for Competitive Advantage -- a Worthwhile Endeavor?	202	(7)
Getting Investment Timing Right	203	(1)
Price Prediction as a Strategic Tool	204	(3)
If Managing Cyclicality is not the Best Route to High Returns, What is?	207	(2)
Cyclical Asset Trading	209	(4)
Index	213