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Growth Plan Apex

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WEEK 2 – CASE STUDY
APEX CHEMICAL CASE

We learned that innovation is creating and implementing ideas that generate new customer value and/or improve the value of the firm.[1] While Apex desires to be an innovative company, I don’t believe that the only way to accomplish this is through the introduction of Compound A-115, a new electrolysis agent. It is important that Apex carefully weigh the benefits and drawbacks of their two options. Given the limited information we have, I would recommend that Apex Chemical commercialize the Compound B-227 beta-prednigone. In offering this recommendation, I would stress the fact that innovation is not simply R&D, or new product development. From an innovation perspective, the commercialization of Compound B-227 would represent a new product in a market they already serve, as well as a potential branding innovation, whereby Apex could now be marketed and viewed as a comprehensive supplier of plastic oxidizers. From a pure financial standpoint, the market for electrolysis agents is $10 million and one competitor, Hamfield, dominates the market supply. The information provided indicates that Hamfield’s customers are loyal, satisfied and, in all likelihood, would not be quick to adopt a new product such as A-115, despite its claims of superiority. Apex believes that customers would gravitate towards A-115, but we have little sense of how long this transition in product loyalty would take to transpire. Apex is not recognized in the electrolysis market, currently having zero presence in this space. We could assume that in a best case scenario Apex might be able to capture 25% to 30% of the amenable market in their first year. This would equate to approximately $2.5 million to $3 million in revenue. Over time, they might be able to capture a higher percentage of the market, but it would be a prolonged process and,

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