Introduction
Great Lakes Corporation was formed in 1933. The Company was previously called McClanahan Oil Company and was later changed to be Great Lakes Chemical Corporation. When it started to produce the lead additives, it performed well surpassing other key players in the market. Its chemical products were used as flame retardants, household cleaners, polymer stabilizers, performance chemicals and polymer stabilizers.
The leadership of Emerson Kampen made the company perform very well. He became a CEO when the company had only fifty million dollars in revenue and stepped down in 1993 when the company had $1.8 billion in sales (Mead, Wicks, Werhane, & Freeman, 2009).
Social/ demographic analysis of Great Lakes
According to Mead et al. (2009), leaded gasoline is no longer sold in many developed countries. This is because of its negative effects such as brain damage in children, respiratory problems in old people and damage to air quality.
However, many developing countries have not yet eliminated the use of unleaded gasoline. These countries have high populations and the level of income is low. This makes them unable to purchase unleaded gasoline.
According to statistics on leaded gasoline, “developing countries are common with leaded products. All children under two years and more than 80% between three and five years have blood lead levels exceeding the World Health Organization (WHO)’s limit.
As a result, approximately 15 to 18 million children in these developing countries suffer from lower intelligence, disabilities in learning, reduced attention span and abnormalities in behavior” (Mead et al., 2009, 157). The effects of this on Great lakes are unpleasant because of the environmental impact, and undesirable public image.
Technological analysis of Great Lakes
Since Great Lakes aims at being a leader in producing its chemical products, it has embarked on ventures in fuel additive processing, development and patenting of its products. This has increased the quality of their products (Great Lakes Chemical Corp, 2012). As a result of these initiatives, the company has become highly competitive.
Economic analysis of Great Lakes
As the developing nations are aiming at achieving status quo, they are still using leaded fuel. Additionally, the cost of converting the gas is high in these countries. With recession, many companies and populations may opt for other fuel alternatives like the cheaper leaded gasoline (Great Lakes Chemical Corp, 2012).
These factors can make the profits of the Great Lakes to remain high for the time being. Since many companies stopped producing leaded gasoline, competition on Great Lake’s products is less.
Environmental/ Geographic analysis of Great Lakes
Great Lakes’ lead additives are harmful to people’s health. According to Mead et al. (2009), “in the mid 1990’s, Egypt which still consumed leaded gasoline had its air filled with lead, that caused 6,500 to 11,600 annual heart attacks, 6,300 to 11,600 annual premature adult deaths and close to 820 infant deaths” (p. 157).
With World Health Organization’s (WHO) check on Great Lake’s operations, the company may have to stop production of leaded gasoline. This can cause reduction in profits because Great Lakes depend mainly on lead additives for revenue.
Political or Legal and Government analysis on Great Lakes
With adverse effects of leaded gasoline on children and old people, laws have been put in place to control Great Lake’s production of leaded gasoline. For instance, the World Health Organization mounted pressure on the company to stop the production of lead additives. These threats can affect revenue and sales of the company from which it obtains most of its income.
New Market Entrants, e g:
- entry ease/barriers;
- geographical factors;
- incumbents resistance;
- new entrant strategy;
- routes to market.
© alan chapman 2005, based on Michael Porter’s Five Forces of Competitive Position Model.
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Porter’s Five Forces of Competitive Position
Presence of competition conflicts among suppliers
This is competition to achieve competitive advantage over the other firms (Porter, 2010, par. 3). Factors such as the huge number of businesses in the market and slow growth of the market can create rivalry (Potter, 2005, par. 3).
There is a lot of competitive rivalry from the other gasoline suppliers who have switched to production of unleaded gasoline. This is because a majority of consumers are switching to consumption of unleaded gasoline. This makes this industry completely unattractive.
Threats and challenges of fresh competitors
This is the occurrence of new competitors in to the industry (Porter, 2010, par. 14). Such barriers can be created by the government or ideas or information that creates competitive advantage. There is little competition in the lead additives industry because the entire world is being advised to switch to use of unleaded gasoline. With this in mind, it is not attractive to venture in to this business.
Buyers’ ability to bargain
This is the effect that consumers have on the industry in producing a certain product. If the buyer has strong power in the industry, it may be the same as having many suppliers with one buyer who sets the price (Porter, 2010, par. 12).
The lead additives industry in the US is less profitable due to the high of buyers to bargain. Since it was outlawed, US buyers of leaded gasoline are very few if at all there are any. This is given the campaigns about the negative health effects of leaded gasoline. It is therefore completely unattractive to venture in to this industry.
Suppliers’ ability
Supplier power is the level of influence that a supplier has on the production industry (Porter, 2010). Suppliers are powerful when they are few or if the customers are powerful. Suppliers can be weak if they are many, or if the customers are weak (Porter, 2010, par. 13).
Since the production of leaded gasoline has been outlawed in the US, the consumers of lead additives in US are very weak. They are very few or they may not be there at all. This makes the suppliers of lead additives such as Great Lakes very weak because they cannot influence the consumers to buy the leaded gasoline.
Problem of alternative goods
These are products that are also available in other industries. With the outlaw on leaded gasoline, many consumers of gasoline in the US opt for unleaded substitute which has minimal health effects. With this kind of consumer free will, it would not be advisable for any business to venture in to production of leaded additives.
Great Lakes’ immediate competitor is the environmental responsibility as result of lead additive production. With the outlaw of lead as an automotive gasoline additive, the company was faced with calls from environmental groups and the government to quit production of leaded gasoline. These laws have been implemented in many developed countries so far.
The developing countries are also following suit. This is an immediate competitor to the operations of the Great Lakes. The company has an option of quitting production of leaded gasoline and selling the other products. It can also continue with producing the leaded gasoline and sell it to the countries that are still using unleaded gasoline.
The company’s impending competitor is bankruptcy or closure. The company is being faced with several conflicts from the world environment groups and the law enforcers because of production of the leaded gasoline. The negative health effects of leaded gasoline have made these groups to force Great Lakes to stop the production of this commodity.
This can affect the profits of the company because it relies mainly on sale of the leaded gasoline for its revenue. The company has several other commodities it can sell in large scale in order to remain in the market. For instance, bromine related chemical products such as methyl bromide, brine fluids and fluorine specialties.
Great Lake’s impending competitor is image and competition from other players in the industry. With the knowledge of the harm that leaded gasoline can cause, people are very likely to have a bad image of the company. Great Lakes’ competitors can opt out of unleaded gasoline production on time. They can establish customers on time therefore retaining the market share.
Main capabilities of Great Lakes
Great Lakes Corporation has a very innovative leadership. For instance, Emerson Kampen was able to discover the presence of bromine-rich brine deposits. Because of this new business, Great Lakes became a leader in the lead industry therefore outdoing other competitors.
The acquisition and purchasing capabilities of Great Lakes has helped grow its capital capacity and revenue. For instance, “Great Lakes’ acquisition of Octel Associates in1989 accounted for over half of Great Lakes’ total operating profit every year thereafter” (Mead et al., 2009, 155).
Great Lakes’ success in the acquisition of Octel enabled it obtain bromine production capacity. It also acquired other companies in different countries. As a result of this acquisition, Great Lakes has improved its performance in the production of lead.
Conclusion
The Great Lakes Corporation has produced lead additive that causes great harm to human health. This has led to organizations coming up with laws discouraging this habit. As a result, this has impacted on the company’s profits. The lead additive industry is therefore not an attractive one. This is considering the negative healthy effects that lead has on people.
References
Great Lakes Chemical Corp: Great Lakes Great Decisions. (2012). Web.
Mead, J., Wicks, A., Werhane, P.,& Freeman, R. (2009). Great Lakes: Great Decisions Case Study. University of Virginia: Darden School Foundation.
Porter, E. (2010). Porter’s Five Forces: A Model for Industry Analysis. Web.