Degusa Essay

The integration into existing operations doesn’t seem to pose a big problem since the facility is going to operate relatively independently and Degussa has experience implementing their “Perfect Plant” program to standardize and optimize the production process. One more argument for acquisition or joint venture is the possibility to use the established supply and distribution networks of a local player (local players have closer relationships with suppliers and customer base which is different from international players and can help to win market share). Industry-level factors Industry can be characterized by high growth rate (7-9% annually) and intense competition from both local and international players. Worldwide there’s an over-capacity which drives the prices down, however within China there’s still a gap between supply and demand and China meets 30% of its domestic demands through imports. That means that theoretically there’s a space for another production facility and speaks for greenfield. Production is relatively technology intensive, however most stabilizers are considered commodity products with the exception of proprietary products. To differentiate companies have to focus on providing good lead time, supreme service and technical support. Therefore we can consider the industry highly consumer-oriented, which can serve as an argument for acquisition or joint venture. Country-level factors China scores very high on