Analysis On The Development Strategy Of M Chemical Company's Positioning In The High-end Market

Caprolactam,also named Polyamide is one of the significant organic chemical product.For many years,the capability of production is hold by large chemical companies from developed countries due to its complicated process and large investment requirement.With development of Chinese economy and technology,the Chinese capacity has been significantly increased and changes the situation of import dependent.The high profitability attracted many investors who also invested in this industry in addition to the capacity enlargement of existing manufacturers.However,the surge of the upstream capacity is not supported by the downstream market which is weak and suffers from deereased overseas demand and increased raw material price as well as labor cost.The unbalanced demand supply forced manufacturers to cut the price for market share which leads to zero profit and even big loss.How to win the market and eustomers while safeguarding the profitability for future development is the question for the whole industry.This paper takes M Chemical Company as a study ease,which is greatly impacted by the fierce competition during change of industry from an oligopoly situation.The eompany has to study its external threats and opportunities as well as internal strengths and weaknesses to make its development strategy by which M company can build on its core competence while adjusting its management philosophy,optimizing its system,improving its production level and strengthening its cooperation with suppliers and customers for the ultimate target of M Company to maintain its current high-end market and position and prepare for developing new market and new area.The paper firstly introduces product,industry and M company,focusing on the great change in the past 5 years and impact to the company.With conclusion that M company should adjust its strategy,the paper analyses external market,industrial competition forces and specific competitors of M company.Regarding company itself,the papers uses value chain theory to indentifiy the important activitities exsisting in the internal chain.Based on the findings from industry and company,SWOT tools is applied to summarize the strengths,weaknesses,opportunities and threats and concludes that M company shall enlarge its strength of high quality combining the oppotunity in high-end market and overseas market,and eliminate the weakness of lack of up and downstream resources especially during decreasing market demand period.Based on above analysis,a development target is suggested with three supporting strategies including market penetration,market development and vertical integration advised.To guarantee the successful implementation of above strategies and target,detailed actions with respect to quality upgrade,marketing and sales team improvement as well as shareholders support are provided.