Case Analysis on Rohm and Haas.

4227 Words Dec 16th, 2003 17 Pages
Introduction

1.1Background

This report has been written as part of the academic requirements of the Master of Business Administration.

1.2Size up

A small part ($5.4 million) of Rohm and Haas' $1.9 billion sales (1983) is derived from the sale of metal working fluids. Currently these sales are realized through the product Kathon 886MW (886MW), which is mainly used as a maintenance biocide in central metal working systems fluid reservoirs.

Because of suggestions from the current end-users and the limitations of 886 MW in terms of minimum reservoir size, recently a new product was developed for use in smaller individual reservoir systems, namely Kathon MWX (MWX).

1.3Problem statement

The main problem stated in the case is the
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In this alternative, we will set up a very strong sales force to keep close contact with those shops. The profit margin of Industry Supply House and Machine Tools Shops will be increased by cutting first level of distribution. The Point of Sales in the shops will be strengthened.

Alternative C:

Direct distribution to end-users. In this alternative, we will set up a telesales team to contact end-users, and also receive enquiries from customer response to print advertising. The profit margin per packet to Rohm and Haas will be significantly increased by going direct to end-users.

3.2Size of the market

Current Situation:

There are 10 large national formulators; 20-30 middle size formulators and several hundred small formulators in the market. The secondary distribution level is Industrial Supply Shops and Machine Tool shops, which number approximately 18,000. The number of individual service plants (end-users) is 150,000.

To measure the size of this market we assume:

*1 packet can treat 25 gallons of fluid

*1 packet can treat fluid for 4 weeks

*The average number of machines per plant is 11 (1,701,000/150,000),

*1 machine requires 48 weeks' maintenance biocide per year. (There are 52 weeks per year and there is no need for the first four weeks)

Therefore, 1 machine needs 12 packs per year (= 48/4)

*The individual system is most commonly 50 gallon tank.

Therefore the total

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