strategy analysis
DESCRIPTION
Analysis for Construction IndustryTRANSCRIPT
1
Case Study: Global Market Entry Assessment (1/4)Project aims, objective & scope – Client requested Frost & Sullivan services to support its decision on whether to invest in a plant to produce Chemical X via a new feedstock process
Client
• Client was a family-owned company established in 1842
and based in Germany
• Along with a focus on various metals, it has a Chemicals
division with three plants across Germany, that supplies
specific specialty chemicals based on sulphur chemistry
for a variety of applications across global markets
Project objectives
• Client developed a process based on a low cost feedstock,
which has higher efficiency and produces Chemical X with
less by products than current production processes
• As part of the decision whether or not to invest in a
production plant for Chemical X, the client asked Frost &
Sullivan to conduct a global market assessment to determine
the opportunity for the Client in the Chemical X market
Project Scope
• Geographic: Europe, US, Asia (China, India, Japan, Taiwan)
• Product: Chemical X in two separate forms (anhydrous & 70%)
• Application: Three main applications (one with 8 sub-applications) and scouting for new applications
Key Questions to be answered:• What is the current global X market situation and expected situation in the future, including the development of volume demand?
• For which purpose and which products are X 70% and X anhydrous used and how are the application markets expected to develop?
• Who are the consumers of X, how high is their demand and where are they located?
• What expansion plans do current market participants have, and are there any future market participants expected, especially in China?
• What is the market share of suppliers, by volume?
• What are the market entry barriers for a new market entrant and how strong are they?
• What does the supply/demand equilibrium look like and how is it expected to develop?
• What are the prices of X 70% and X anhydrous and how are they expected to develop?
2
Go
/ N
o G
o d
ecis
ion
on
wh
eth
er
to d
o
furt
her
an
aly
sis
an
d e
va
lua
tio
n o
f th
e
mark
et
seg
men
ts t
o t
arg
et
Phase 1 – Supply Side
Overview of
Global Chemical
X Market
On-siteWorkshop
Research focus:
Existing Chemical X manufacturers &
distributors
• Secondary & primary
research (36 interviews)
• Analysis
• Short market report:• Market sizing &
potential by
region/application• Growth drivers• Supply / demand
equilibrium & future trends
• Competitive landscape (supply side)
• Identification of growth
hot spots
• Go/no go investment decision
• Development of project
roadmap i.e. selection of
phase two segments to focus on
Phase 2 – Demand Side
Deep Dive:
Understanding
the Customer
Presentation of Findings
Research focus:
Current & potential
Chemical X end users
• Secondary & primary
research (50 interviews)
• Analysis
• Final report:• Customer information
to understand
purchasing requirements and decision making unit
• Competitive landscape (demand side)
• Evaluation of global
opportunities
• Onsite presentation of project findings
8 weeks from project kick off Estimate for 3 segments: 8-10 weeks
Case Study: Global Market Entry Assessment (2/4)Proposed approach & timeline – Frost & Sullivan proposed a phased approach to ensure Client had an overview of the market in time to make a decision on investment & also to enable customer analysis to focus on the specific market segments of most interest to Client
Source: Frost & Sullivan
3
Case Study: Global Market Entry Assessment (3/4)Project Output – Phase one findings confirmed that there were no red flags preventing market entry, therefore we moved to a second phase of the project to deepen demand-side understanding of the market in order to build a route-to-market plan
Source: Frost & Sullivan
4
€10 million initial investment recouped during year 8 (assuming 50%
margin). This increases to year 19 if 10% margin is assumed.
792 t 873 t 989 t
435 t
1067 t
661 t
1135 t 1217 t
920 t
1319 t
1006 t
1337 t
1135 t
1356 t
1171 t
1375 t
1212 t
1394 t
1258 t
1413 t
1310 t
326 t
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
0
5
10
15
20
25
30
Sa
les
Re
ve
nu
es
(m
illi
on
EU
R)
59 t316 t
683 t866 t
74 t
1063 t
190 t
1424 t1728 t 1882 t
747 t
2140 t3 t
2351 t26 t
2544 t72 t
2619 t92 t
2733 t
146 t
2848 t
196 t
3049 t
2.005.102.20aXXX
1.203.201.7070% XXX
China
(€/kg)
US
(€/kg)
Europe
(€/kg)
Assumed
Pricing
Conservative pricing estimates were used
to develop this scenario. It may be possible to
demand slightly higher prices than those indicated.
Application 3 is very slow to start with but
is the best outlet for high quality products.
The volume taken by each customer is small so multiple contacts are needed.
Distributors
Application 1
Application 3
Cumulative Sales
Application 1 will take a bit of time to
penetrate (due to the testing required) but
offers good volumes, particularly if EU and US XXX are targeted. Initial sales come via distributors. XXX
distributors like XXX and XX are key to
supply Application 3 R&D but other distributors require higher volumes
Note: The numbers shown in red are the total annual volume sold across all routes to market. Those on the bars are the volumes for each route to market. The height of the bars represents revenue. All volumes are quoted as anhydrous (99%) Chemical X equivalents.
25 customers 25 customers →→→→→→→→ all regions (EU 6, US 6, China 13) & all routes to market (distall regions (EU 6, US 6, China 13) & all routes to market (distributors: 10, Application 1: 7, Application 3: 8)ributors: 10, Application 1: 7, Application 3: 8)
Source: Frost & Sullivan
Case Study: Global Market Entry Assessment (4/4)Project Conclusion – Frost & Sullivan was able to create a 15 year potential sales scenario, based on recommended route-to-market and pricing