Bayer's Makrolon polycarbonate is a leading material in the engineering plastics market. It faces high risks from new entrants, substitute products, and bargaining power from suppliers and buyers. Bayer has integrated branding of Makrolon and partnerships in China to strengthen its competitive position. It focuses on research and development as well as maintaining high quality and a trusted brand to retain customers. Regulations and competition present ongoing challenges that Bayer addresses through innovation.
2. +
Overview
- Bayer‘s Makrolon polycarbonate is designed for ‗flawless quality‘
- Transfer tpositive image to the end product with the help of brand
name. Unique selling proposition encourages end customer to
give preference to products with Makrolon logo
- Uses ingredient branding – brand awareness isn‘t enough
- One of the global leading enterprises with core competitencies in
the fields of health care, nutrition, and high-tech materials.
- There are 3 subgroups and 3 service companies (business,
technology, industry) They are led by the management holding
company.
- 75% of the polycarbonate market is Bayer and GE Plastics
3. +
5 Forces Analysis
Threat of New Entrants: High Risk
- Bayer chose China with Shanghai as location to strengthen it‘s
competitor advantage.
- BW and GE experiencing new entrants due to U.S and foreign
firms entering into Engineering Plastics. Of those new
entrants, most are sold through brokers and independent
regional resellers
- BW and Miles had to integrate GE‘s FMD method to stay
competitive and giving GE more competition.
- Engineering material suppliers soon found sales efforts at
molders to be difficult
4. +
5 Forces Analysis
Bargaining Power of Buyers: High Risk
- Headlamps demanded a different altercations regarding size or
shape
- A very price sensitive market
- Environmental changes creating market stress for not only
suppliers but manufacturers and end users
- Specifiers developed new strategies – lack of flexibility led Ford
and GM to develop internal standards in order to alleviate
supply problem
5. +
5 Forces Analysis
Threat of Substitutes: Moderate Risk
- Innovative products replacing the headlamp materials or the
combination
- Safety regulations brought to attention – no use for product
- Substitutes for commodity plastics – banning all together due to
environmental issues
- Banning of all lighting products recently produced – shifting the
way companies work
- Polycarbonate no longer of use to our world due to innovative
substitute that is eco-friendly
6. +
5 Forces Analysis
Bargaining Power of Suppliers: High Risk
- Facing competition due to GE‘s FMD implications
- Changing market environment
- Sales channels and field marketing where a huge impact on
the way companies chose to provide products/services to
customers
- Some independent suppliers that made glass headlamps that
made glass headlamps had investments and vested interests in
conventional glass sealed- beam lamp manufacturing. Not
receptive to change.
7. +
5 Forces Analysis
Rivalry Among Existing Competitors: High Risk
- Other engineering suppliers adopted GE‘s FMD method to
stay competitive - Bw and Miles
- Bayer‘s existing competition is consisting of 9 different
companies: SABIC, DOW, Teijin, Mitsubishi Chemical Group,
Idemitsu, Sam Yang, Chi Mei, Formosa, and polycarbonatos do
Brasil. SABIC owns 75% of the marketplace
- There was some objections that plastic headlamps would work
8. +
Value Chain Analysis
Logistics
-Bayer‘s started integrated branding campaign to inform buyers about Makrolon.
Both partners are advertising together which essentially creates added-value
without Sharing costs
R&D
- Copious amounts of R&D for product standards and safety regulations
- Extensive research for PC and rise into new intermediates
Product
- Use of Polycarbonates is continuous
- Countless producers rely on this ingredient for their products to which they sell
or manufacture
- Within a price sensitive market segment. Consumer faith in core product
- Brand usage agreements
- Thermosets and Thermoplastics – product differentiation
9. +
Value Chain Analysis
Marketing Competition
- Unique integrated branding strategy
- Brand in it‘s own right and uses Bayer‘s cross
- Sensitive use of brand in order to maintain ‗flawless quality‘ seen
by customers
- Intercity locomotives for advertising space
Sales/Delivery
- Business to business model – through the purchase of raw
materials (pellets) and manufacturers->suppliers->buyers
Service
- Not involved in ‗price wars‘ with the constant use of Bayer‘s cross
- Interdependence
10. +
Value Chain Analysis
Firm Infrastructure
- Manufacturing and production
- Environmental, energy and power – Bayer MaterialScience
Human Resources
- Promotes training and opportunity development
Technology
- Bayer Technology Services – backbone – plant engineering
Operations
- Raw materials manufactured then to suppliers
11. +
Product Life Cycle
Polycarbonate Makrolon is nearing the end of their growth
stage and will start to ―milk sales‖
- Managing demand at this point and focusing on their
penetration method – if demand is too high then they should
focus on skimming
Bayer is at the early stages of the cycle – establishing a high-
tech plastics Makrolon as a brand with the user
- Relationships are very important to Bayer at this stage of their
product life cycle – innovation should be pushed
- Making their customers feel as though they are irreplaceable
12. +
Brand Analysis
Brand Promise:
To maintain their ―flawless quality‖ and
give their customers the best they
possibly can achieve
Brand Personality:
Very Strict, passionate, concerning, tedious,
classy and genuinely optimistic brand
Brand
Impression:
Customers recognize their brand as
very trust worthy and consistently
bringing results
13. +
Brand Positioning – Market Share
Market Share
SABIC (GE Plastics)
DOW
Teijin
Mitsubishi Chemical
Group
Idemitsu
Sam Yang
Chi Mei
Formosa
Polycarbonatos do
Brasil
15. +
Channel Relationship Analysis
Economic Utility
- Provides the best quality polycarbonate to customers within it‘s
market and covers a huge market share.
Advertising:
- Advertising campaigns, brochures, flyers, websites and
exhibitions
Physical Distributions
- China has a growth market and Bayer has partnered with them
Integration
- Backward Vertical integration
16. +
The Buying Centre Analysis
Bayer provides Good service – fast- not cheap
Suppliers of Engineering plastics were not backward integrated in the
supply chain for chemicals
The Buying Centre:
- Indicator: Financial advisors, managers indicating a problem area
- Influencer: Corporate, Bayer HealthCare, CorpScience, and
MaterialScience
- Decider: GE and the FMD method for Commodity plastics
- Buyer: General Motors, Ford buying the end product from their OEMS
- User: Consumer buying the end products, General Motors, and Ford
- Gatekeeper: Bayer Group
17. +
TOWS Analysis?
External Opportunities
- Crude oil crisis in the past as well as shifting market environment
- Increase in demand for U.S market
External Threats
- Increasing costs for material/raw goods/chemicals
- Competition is rising within the polycarbonate market
Internal Strengths
- Unique marketing method – integrated branding
- Maintaining healthy supplier partnerships
- Brand strength - Bayer Cross – flawless quality maintained
Internal weaknesses
- Deterioration arising in the future
18. +
TOWS Strategy
Maxy-maxy (SO)
- Bayer‘s has control of the market and must maximize strenghs and maximize it‘s opportunities
Maxy-mini
- Think about acquisition partners or expand to meet market demand. Skimming or penetration methods
- CRM Analysis
Sales Promotions: Allowed to require foreign affiliates due to military government pushing Allied law
Public Relations: Build up familiarity of brand – partners explain advantages of their polycarbonate and why it
differentiates it‘self.
- Uses Ad campaigns in order to initiate pull factor from buyers and find potential buyers as well.
- Advertising campaigns, flyers, web sites and exhibitions
- Intercity locomotives
Personal Selling:
- Dealing directly face-to-face with it‘s end users and suppliers to develop relationships
19. +
PESTLE Analysis
Political:
- The Department of Transportation (DOT) and NHTSA were responsible for
maintaining safety standards for the industry; regulating lighting (lamp division).
Issues with plastic headlamps for cars – lifetime, durability.
- License contracts for pre-product tests to secure quality for not only Bayer‘s but
also contractual agreements amongst BW and GE. FMD, providing Goodwill
provided specifiers with up to date product developments
- Increased competition due to ignorance of the Engineering Plastics. U.S
companies and foreign companies entering U.S market
- 1990s faced globalization barriers. The radical political changes that occurred
in Germany and Europe
- Gross cash flows decreasing in 2006 impacting overall performance for all
companies dealing with plastics. – suppliers, OEMS, and manufacturers
- The plastic and halogen bulb combi-nation would reduce the risk of fire in a
rear-end collision— since the Lexan was virtually unbreakable and even if
broken, the bulb fila-ment was separately encapsulated.
20. +
PESTLE Analysis
Economical/Financial
- Crude oil, energy crisis of 1970 had a major impact of plastics industry which
not only affected Bayer‘s Makrolon due to cutbacks in crude oil meant plastics
manufacturers were not able to meet demand from molders materials or
suppliers.
- BW implemented PSC‘s in order to serve a new demand/approach. Bayer‘s
underwent many modifications before it became extremely successful.
- Many firms were competing within the U.S markets regarding the plastics
industry and Makrolon polycarbonate was lagging within this industry. GE was
experiencing more competition within the U.S markets.
- General Electirc Plastics and General Electric Lamp Divisions were undergoing
innovation issues. All 3 cases dealt with some sort of innovation issue due to
the changing market and cometition.
- 75% of the polycarbonate market is held between Bayer‘s and GE Plastics
- Mild recession earlier in business life
21. +
PESTLE Analysis
Social/Cultural
- Borg Warner had the skills and the culture to assemble the kind
of service packaging for LTL customers. Bayer‘s, GE, Ford and
GEL were all dealing with the competition of new entrants –
Changes in distribution
- Change in demographics due to the distribution changes of
new entrants leading to greater competition or even losses
- Switching from glass to plastics for BW was a very difficult
barrier it needed to endure in order to maintain it‘s culture.
- Objections that plastic headlamps wouldn‘t work – unable to
keep seal, lens failure, engineering not approved by regulators
22. +
PESTLE Analysis
Technological
- Bayer‘s Medical Technology is one of their successful
segments which has gone under extensive R&D and
undergone many practices in order to avoid failure
- GE and BW with the functionality through their headlamps
transfer to vehicles of Ford, General Motors, etc. Engineers
have given the opportunity to focus on R&D and how to build
the innovative products from glass to plastic or combination of
materials.
23. +
PESTLE Analysis
Environment
- -Risk of fire in the rear-end collision
- The plastic material‘s impact on the environment and the damages
it could cause from poor disposal or overuse
Legal
- U.S DOT (Department of Transportation) and NHTSA were
responsible for maintaining safety standards for the industry and
the final product (lighting, headlamps) as well as regulatory
precautions
- There are numerous patents for all companies dealing with the
plastics as well as BW and GE in order to maintain sequences or
products.
a value chain goes from raw materials to vision, goals and systems. Quality products and services and engaged employees for the value chain analysis. You analyze 3 areas. Products should be pulled through the chain by the consumers-Identify how well information flows as the second part of the analysis. The third looks at relationships- trust is the fundamental enabler. The analysis helps to identify the challenge areas and helps to add to the patient as well. If you can identify customers that are wiling to pay more for the product we can then add to that chain. Material---product---- user. A value chain can push savings down or pull money into the value chain.
Differentiation – stand out in the markets. Whether it’s packaging or different style to the products or make up. First the buying centre starts of with an indicator then influencer, decider, buyer, user and Gatekeeper. Consumer buying decision process:1) Problem recognition – Lack of differentiation, hence the launch of Makrolon2) Information search – Huge market for polycarbonate, decided to gain value in that market3) Evaluation alternatives – more than brand awareness, integrated branding required – build a name4) Purchase decision - 5) Post-purchase evaluation – made up to 75% of the market with GE
GE was experiencing more competition within the U.S markets because firms that were ignoring the Engineering plastics were now trying to get into that market segment due to high margins. Both Bayer’s and GE were experiencing definite issues economically through the U.S.