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Market Developments Changing Competitive Outlook – Isolated Interdependent Competition Emerging

September, 2018

Chemical Industry has also reacted with increasing mergers and acquisitions deal announcements to cope with the changing market dynamics for creating more and more value for its customer. Infoholic Research forecasts that if the current strategies remain in play, the chemical industry shall be dominated by the isolated yet interdependent companies competing each other mostly indirectly to increase stakeholder’s value.

The market when studies across segments of commodities, intermediates & specialties, agrochemicals, industrial gases, and heterogeneous, indicated that the organizations involved in large mega deals have been following the path of creating stakeholders’ value via increasing specialization. The traditional business knowledge of ‘bigger the better’ is moving out and the companies are reducing their diversification to create more focused and specialized multinationals which are dependent on other multinationals across value chain.

North America was the hot bed for business deals where the organizations were looking ways to grow inorganically. The study covers the period between 2010 and 2017 wherein the effect of recession had settled, and no big market shock were there (except for Europe; Greece & Brexit). Although the US Presidency also went against popular expectations, yet the direct effect on chemical companies was not seen during the time of study.

The biggest segment for the chemical industry, commodities was also one of the most active segments in terms of inorganic growth developments. High cash reserves and shrinking margins played crucial role in the developments within the commodities segment. Intermediates & specialties was the next segment with high inorganic developments during the study period.

Further, the technical analysis has been done for the value addition by organizations via various adopted development strategies. The effect of organic and inorganic development is clear and in sync with the traditional knowledge of acquisition as means of growth. However, while given further deeper look, a new trend of specialization can be seen. Some of the organizations which have been considered during the study are Sherwin-Williams, Axalta Coating Systems, Bayer, Linde, Air Liquide, LyondellBasell, and Covestro.

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