Great Lakes: Great Decisions

Professor

BUS 499

January 8, 2012

Great Lakes: Great Decisions

1. Perform an analysis of the social/demographic, technological, economic, environmental/geographic, and political/legal/governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors.

The social segment that Great Lakes faced were the environmental groups that were publicly criticizing and putting pressure on Great Lakes to stop the production of its lead based products. The major affect that the environmentalists will have on Great Lakes is to make it more socially conscious and to try to drive it to make decisions based on the good of the world and not its own profits. The demographic segment of Great Lakes switched from developed countries to less developed countries that still used leaded gasoline. The affect that the demographics will have on Great Lakes is significant, in that, when the poorer nations begin the process of switching from leaded gas to unleaded gas, Great Lakes will need to have a strategic plan in place to continue to find a way to keep their business viable.

Although Great Lakes never set out to be a lead additive producer when it acquired Octel Associates it now had the technology that enabled the company to make a profit. Great Lakes’ has few competitors in this field but will need to find a way to use the technology it now uses to produce lead additives in another capacity. The economic environment that Great Lakes sells its lead additives to needs to be monitored closely since developing nations could decide to switch to unleaded products and Great Lakes would not have anyone to sell its products too.

The environmental and geographic segments are arguably the most important that Great Lakes have to face. The potential threats that leaded gas has on the environment are too serious for Great Lakes to ignore. “U.S. National Academy of Sciences calls leaded gasoline the greatest source of atmospheric lead pollution”. (Hitt, 2011) By continuing to supply developing nations with leaded gasnt. "he oline, Great Lakes’ is not helping the environment or the health of the developing countries citizens.

The political, legal, and governmental segments that affect Great Lakes are not as clear cut as the other segments in the industry. The use of leaded products is banned in developed countries but it not illegal so Great Lakes is not doing anything against the government, politically, legally, or governmentally. But the fact that these products are being phased out should indicate to Great Lakes that need to start developing alternative products.

2. Analyze the lead additives industry in the U.S. using the Five Forces of Competition Model. Describe the impact of each of the five (5) forces on the industry and based on this analysis, determine if the industry is attractive or unattractive.

The five forces model of competition is used to analyze the profitability potential within an industry in which a company competes. The five forces of competition are threat of new entrants, bargaining power of supplies, bargaining power of buyers, threat of substitute products, and rivalry among competing firms. The threat of new entrants as it relates to the lead additive industry is not a force that I believe Great Lakes would have to worry about since the lead additive industry is coming under a lot of fire for the harmful effects lead has on the environment and people. For this reason I do not believe that there would be new entrants in this field. The bargaining power of suppliers is a force that Great Lakes would have to contend with since lead is used in many products so the industry would have to find a supplier that would be willing to sell to them. According to www.madehow.com, “Lead is a dense, soft, low-melting metal. It is an important component of batteries, and about 75% of the world's lead production is consumed by the battery industry. Lead is the densest common metal except for gold, and this quality makes it effective in sound barriers and as a shield against X-rays. Lead resists corrosion by water, so it has long been used in the plumbing industry. It is also added to paints, and it makes a long-lasting roofing material”. Great Lakes’ is not a significant customer to this supplier group or critical to their success giving the supplier more power. However, the bargaining power of the buyer, which is Great Lakes, would have some impact on this industry since they will have to purchase the lead from a supplier. If the supplier considers that Great Lakes can purchase a significant amount then the supplier may feel that Great Lakes’ has some power. Although if the supplier is watching the industry trends, the supplier would realize that Great Lakes will phase out this part of its business soon but if will supply them as long as they can. Great Lakes will have some power in this exchange but not as much as the supplier. The threat of substitute products is very high for Great Lakes since there are many products being made that will be just as effective as lead in the performance and function of automobiles. The rivalry of among competing firms is not really a concern for Great Lakes because there are very few lead additive producers in the world.
3. Describe who Great Lakes’ immediate, impending, and invisible competitors are and how Great Lakes measures up against these competitors. As far as competition for lead additive products Great Lakes’ does not have many. “Indeed, today, the only remaining private sector corporation producing and marketing TEL is Great Lakes' subsidiary, Associated Octel” (www.corpwatch.org). TEL stands for tetraethyl lead used as an additive in gasoline to prevent knocking in the engine. Since TEL has been banned in all developed countries there are no immediate, impending, or invisible competitors to that portion of Great Lakes offerings. Great Lakes’ has developed a number of specialty chemical solutions and operates internationally. Great Lakes’ has two segments to its operations. It’s Industrial Performance segment which produces: “polymer additive solutions and performance products to various markets, including consumer electronics, computers and business equipment, automotive, furniture, fibers, wire and cable, household appliances, communications equipment, building and construction materials, packaging, textiles, polymers, cosmetics, soil fumigants, water purifying, fire suppression, and optical monomers. It also provides flame retardants, polymer stabilizers and optical monomers, brominated performance products, fire suppression products, fluorine specialty products, and industrial water additives. The Consumer Products segment provides recreational water care products and household products. This segment also offers nonabrasive bathroom cleaners, glass and surface cleaners, toilet bowl cleaners, drain openers, and rust and calcium removers, as well as the greased lightning family of multipurpose cleaners. The company’s products are used to treat and purify water, eliminate germs and contaminants, and to protect against and extinguish fire”. (http://investing.businessweek.com)
In this area of Great Lakes business there is a lot of competition, for example, Dow Chemical and PPG are just two of the immediate threats that Great Lakes will have to contend with. The specialty chemical companies have an advantage over Great Lakes since both companies sold the part of the businesses producing lead additives. Since Great Lakes has continued to produce and sell lead additives knowing the detrimental effects it has on the environment and people, Great Lakes will have a hard time measuring up to these companies. Although Great Lakes has said that leaving developing countries without leaded gas would have negative effects on the countries, it would be more beneficial to have clean air and less illness for the citizens. Great Lakes’ has also stated that company would be hard financially since lead additives represented 59% of the total operating profit. To take away the lead additive business of Great lakes could result in knocking Great Lakes out of the competition.
4. Describe the main capabilities of Great Lakes. The main capability of Great Lakes is that they are able to offer a variety of products as listed above. Great Lakes’ does realize that it needs to expand its product line to be competitive and its partnership with Chemtura was a great strategic decision to keep the company viable. Great Lakes’ has invested in technology to add value added services to its growing list of product lines and with this partnership is able to continue developing new products and services. Great Lakes Energy, Health, and Safety Policy states “Great Lakes was committed to “protecting the health and safety” of its employees, communities, and the environment” (Hitt, 2011) and yet the company still produced and sold TEL to developing nations. Great Lakes has the capability to stop selling leaded gasoline and improve its reputation by becoming an advocate of protecting people’s health and the environment but chose to continue its production and selling of a harmful product. Bibliography/Webliography

Hitt, M.A. et al, 2011, Strategic Management Concepts & Cases, Competitiveness & Globalization, 9th Edition. Cengage Learning, Mason, OH 45040

Woodard, A., n.d., How Lead is Made. Retrieved January 10, 2001 from http://www.madehow.com.

Great Lakes Chemical Corporation, n.d. Retrieved January 14, 2012, from http://www.corpwatch.com.

Chemicals, 2012. Great Lakes Chemical Corporation. Retrieved January 14, 2012, from http://investing.businessweek.com.