The Research Of The Adjustment Of Covestro Company’s Strategy And Structure

Looking back to the past 10 year’s sales performance of COVSTRO BU CAS,we can easily find that start from year 2013,the sales of COVESTRO BU CAS is quite flat.With the consideration of the Global Economic growth is still stable,and the downstream industries the Coating and Adhesive industries ‘growth are still at an acceptable CAGR rate,which is almost around 5%.Compare this 2 figure,COVESTRO’s management team are not satisfied with the performance.Although the margin level did not decrease thanks to the fact that raw material price level decreased a lot during the time.The reason for this flat sales growth,can be separated into 3 sector.CAS’s products major is standard isocyanate,the solvent born isocyanates is a quite standard products with decades of history.According to products cycle theory,it is already in the stage of mature.Which means the stage is at a low growth rate,but high sales revenue.This products although as cash cow bring cash to the company,but do nothing about growth the company business.And also due to the standard products as it is,the entrance barrier is not technical capability,but capital capability.Hence,when the new comer has enough capital,COVESTRO cannot stop them from entrancing this market.The new comer of the Isocyanate market caused the decrease of COVESTRO BU CAS’s market share.And at the same time,the downstream industry,the COATING industries are more and more consolidated during the past 10 years.Big players merge small player,and exchange business unit in different segments,the COATING industries trends to be growth in each individual’s size,and decrease in player’s number.And due to this consolidation trends,the negotiation power of the buyer tends to increase.With the factor mentioned above,the COVESTRO BU CAS’s core business,the isocyanate and derivatives tends to be flat,with very low growth rate,and in some years,negative figurer.This paper’s analysis focus on how COVESTRO to adapt the new industry environment.How to increase his position in the industry.Facing the challenge that its major products is at the stage of mature,this paper provide a deep analysis on the Marco economic and policy environment,the market environment,and competition environment.Combined with COVESTRO’s current capability analysis,referring the products cycle theory,using a SWOT model to do the strategy analysis for COVESTRO BU CAS.And then based on COVESTRO’s Target using QSPM tools to identify the strategy that fit COVESTRO BU CAS Most.Finally,we analysis the change of operation and structure that needed for implementing this strategy.