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Alto Chemical Case Analysis

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ALTO CHEMICALS EUROPE
PROBLEM STATEMENT
How will Graaff implement the revised strategy across all the subsidiaries which will be beneficial for the company in long run?
COMPANY BACKGROUND:
• ACE was the regional headquarter of Alto Chemical Corporation.
• There were nine wholly owned subsidiaries which produced and sell finished and building block chemicals across Western Europe.
• ACE accounted for 1/3rd of alto’s global production and sales Companies had matrix structure.
• Company choice for stabilizers was TIN because they have ample raw materials sand feedstock.
• Company has competitive advantage as they have started a new plant for feed stock of TIN whereas other procured from third party
CASE ANALYSIS:
After taking over as the headquarters’ marketing manager, Graaff has devised a new strategy for ACE’s stabilizer business. Earlier the focus of the company was to capture the market share. The company was volume-oriented and competed on price. There are two kinds of stabilizers Tin and Barium, the company’s choice was Tin as it had ample stock of the needed raw material. The switching cost between two variants was high
The company focused on trying to convert Barium customers to Tin by offering them a discount of 2-3% below Barium prices and better product performance. The company offered technical service which was important for small and medium sized client. With this strategy they were able to cover 18% market share.
Issue with the current strategy are:-
• Sales force was compensated primarily on fixed salary and they were able to manage their sales quota through few large clients by offering them discount. This resulted in narrowing there market base.
• There was a Conflict among subsidiaries. Due to lack of central co-ordination and differential pricing among subsidiaries they were cannibalizing the market.
• Due to price discrepancies

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