Re-forging The HZ Success By Adopting Cost Competitive Advantage Strategy

In last1990’s, some of strong companies listed on Fortune top500invested in Chongqing including industrial giants in pharmaceutical sector GlaxoSmithKline, air separation sector Air France, mobile manufacturing sector Nokia and furniture sector B&Q, etc. The above mentioned investors who were with full of hope to be benefited by the investment finally divested from this region. There’s one has been operating ever since end of1990’s, and with remarkable performance record in the past previous years. That’s PB. PB invested in HZ Co.to together with Sinopec CW and Chongqing Construction Investment Group (later changed into Chongqing Energy Investment Group) in December,1995. Since HZ has been authorized to use the PB acetic acid patent which was the edge leading technology in this industry, hence HZ wins strong competitiveness with this evident advantage in acetic acid market. And this company has obtained the magnificent achievement ever since the operation on stream. Under the condition of high investment return, and when patented technology went out it’s security period, many domestic acetic acid plants came into its stream in recent years. That causes the advantages of HZ to wane. Besides this, with the price increasing of natural gas, the original competitive element of feedstock no more exists. So HZ must face the situation, and find its other advantages or choice suitable competition strategy to cope with these challenges for surviving in the future.With the competition strategy theory’s instruction as well as analyses tools, this article particularly analyzed the situation of HZ. This article first described and analyzed the macroscopic environment and industrial environment and then facilitated the Porter’s Five Forces model analysis tool to analyze the acetic acid environment of competition and the next, through the external and internal environment analyzing, industrial lifespan analyzing and Value Chain analyzing, figure out the best solution to cope with the challenges. Finally I propose the series potential measures to reduce the cost of HZ Co for achieving cost competitive advantage strategy.