The Great Lakes Chemical Corporation is the dominant provider of leaded additives to underdeveloped countries. However, because of the damaging effects their product has on its users, the corporation is looking to transfer out of this industry in order to appease the developed countries and environmentalists that are protesting their production of lead additives. By doing this, however, the Great Lakes Corporation will force those underdeveloped countries that rely on this product to find this source from another company or by transferring over to unleaded additives; possibly slowing down their overall economic growth. Certain research and analysis must be completed in order for the corporation to transfer from this market into a more respectable one.
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 first step in performing a STEEP analysis is to find out how the social/demographic factors play a role in a business or organization. The socio-cultural aspect of this analysis looks at a businesses??™ age range, income brackets, gender, ethnicity, life-style, leisure, social trends, and any shopping trends that their prospective customers/clients might enjoy.
In the Great Lakes case, the socio-cultural aspects determine how Ellie Shannon makes decisions that shape her company??™s appeal to their clients. The Great Lakes Chemical Corporation became a bromine and chemical business and became the largest provider of tetraethyl lead (TEL) to underdeveloped countries. These countries that are being provided the leaded gasoline cannot afford the high costs associated with safer, unleaded gasoline. Therefore, the ethical dilemma Ellie has to solve can determine whether or not their company continues to receive their 59% ($259 million) of their overall profits or continue to be painted irresponsible by the environmental specialists.
The second part of the STEEP analysis is the technological aspect. The company??™s main clients do not have the funds to utilize a safer product in unleaded fuel to help their economy. This lack in technology is what is causing pressure to be placed on the Great Lakes Chemical Corporation.
Economics is the third step in analyzing a company when using the STEEP process. The economy of the Great Lakes is in great condition when providing leaded gasoline to their underdeveloped clients. A $259 million amount is a lot of revenue being brought into the corporation by one single source. However, if the pressure from other developed nations keeps on growing, they might have to develop a new way to run their business without the use of Octel. By eliminating the leaded gasoline factor of their business, Great Lakes will now only be competing in an industry that has many other competitors; unlike that of the leaded industry.
The environmental factor in this analysis is pretty easy to determine. The negative effects that leaded gasoline have on the environment and the citizens of the underdeveloped countries are the main reason that the corporation is being attacked by the environmental activists.
The last part of the STEEP analysis involves the political factors associated with the chemical corporation. Great Lakes Chemical Corporation is under a lot of pressure to maintain their international relationship with the underdeveloped countries as well as try to save their business??™ appearance to the public. This balance is considerably difficult to reach and especially hard to maintain.
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 of Competition Model is a tool that firms use to find the best industry for them to invest into. The first aspect of this tool is to study the rivalry in a certain industry. When it comes to the lead additives industry in the United States, the rivalry is not very competitive because the sale of leaded additives has been outlawed in the United States because of its harmful effects on people. In the leaded additives industry, Great Lakes Corporation dominated the sale of their leaded products and, with no immediate competition; they were able to control the prices.
The second force of the competition model is the threat of substitutes. The reason the underdeveloped countries purchase these leaded additives is because they do not have the funds to purchase vehicles that accept unleaded fuel. This means that the threat of substitutes is still present (unleaded fuel) but are not likely to replace the leaded additives that the underdeveloped countries currently rely on to operate.
The third thing a company will look at when wanting to join the leaded additive industry is the buyer power force. This is the impact that the customers have on a producing industry. For example, if there are many competitors in the lead additives industry but there is only one buyer, there would be a definite buyer power. This buyer has more power to determine the costs they will pay than the company would have to force a price on them.
Once the level of power the buyer has been identified, the next step is to analyze the level of power the seller has. A powerful supplier would be able to exert a large enough influence on an industry to be able to control the price of a product or service. This would happen when a supplier does not have many competitors in their industry. In the Great Lakes Corporation case, the industry of providing leaded additives is frowned upon because of the level of danger associated with the product. With so little competition, it is easy for Great Lakes to set the price for their product.
The final step is the threat of new entrants into the industry. As stated before, the particular industry of providing leaded additives is not looked at as an ethical one to the environmental activists in the United States. Because of this, the threat of any new competitors entering this market is very low. Also, with the political pressure rising, the Great Lakes Corporation is actually looking to exit this industry.
With these five factors of competition analyzed, I believe that it would be a good industry to enter if your main goal is to profit and you have very little to no regard for ethical pressure from developed countries. It may be difficult to enter the industry and gain customers at first, but with the main provider of leaded additives under so much unwanted pressure, they may exit the industry to save face; leaving room for another corporation to take their place.
Describe who Great Lakes??™ immediate, impending, and invisible competitors are and how Great Lakes measures up against these competitors.
The Great Lakes Corporation is matched by none because of the product that they provide underdeveloped countries. Therefore, they have no immediate competitors. However, the biggest factor that could hinder their continued dominance in this industry would be the environmental activists that are placing so much political pressure on them.
Describe the main capabilities of Great Lakes.
The Great Lakes is a dominant force in the leaded additive industry. Without the competition, this corporation is free to produce their product and supply it to the underdeveloped countries. The Great Lakes Corporation is capable of becoming an ???ethical icon??? in the leaded gasoline industry. Risking the profits being lost, the company would be able to reduce the health and safety risks associated with the leaded additives by minimizing the amount that they sell.