Competitive Environment and Direct Competitors of PCV - Assignment Example

Business Opportunity Executive Summary Presently, the PVC production is not that high in Indian markets where the manufacturing takes into consideration the capacity production of these chemicals for the construction business of reputed companies. The study will deal with the authors plan to expand and grow the PVC production business in Mumbai, India. The customers will highlight the various businesses, technical and non technical process included in the manufacture and sale of the PVC chemical and its application in the construction business. The author of the study will be highlighting the details of marketing activities for the PCV chemical will include the domestic and international marketing operation for a profitable business. Finally, the study will be concluded with the managerial capabilities required to manage the business in the production of PVC chemical by the author of the study. Table of Contents Executive Summary 2 Table of Contents 3 Introduction: Polyvinyl chloride Production & Sale 4 Business Opportunity 4 Feasibility: Micro-Market Analysis 6 Feasibility: Macro Market and Drivers 10 Feasibility: Competitive Environment and Direct Competitors 12 PESTLE analysis 13 Feasibility: Sustainability 15 Feasibility: Managerial Capabilities 17 Reference List 18 Introduction: Polyvinyl chloride Production & Sale Polyvinyl chloride also known as PVC is highly used for its application in the construction business and is manufactured by polymerization of vinyl chloride monomer, which is used in the reactor and then condensed from the reactor so that gases are emitted. The PVC production is one of the most profitable businesses and is regarded as a significant contributor in the economy. The importance of PVC production increases with the growth in the construction industry and is widely used for manufacture of plastics. The worldwide PVC production is one of the most important businesses in the world economy, which requires the manufacture of polyolefins polypropylene and polyethylene. These business products have a large number of market shares, which includes high quality processing and production of plastics in bulk quantity (Vox, 2008). Business Opportunity My company is already proficient in manufacturing high quality PVC chemical in South Korea and has been distributing the chemical to major medium and large sized enterprise of South Korea. It plans to expand further in Mumbai due to its easy availability of manufacturing sub parts, raw materials, and machinery and varied other materials. The major objective of my company would be to introduce my chemical in the Mumbai markets through innovation capabilities. It would be ensured that the chemical product would be highly compatible with the operational facilities and also with business environment of Mumbai. The market potential for the PVC chemical in India is quite high and is required mainly for water supply, tube well and land drainage schemes. The corrugated pipes are ideal for the drainage system of Mumbai and the requirement of the PVC chemical is necessary for the utility services of the common people in Mumbai. The North East region is in dire need of PVC chemical and the targeted customers for this region would be the Public Health Engineering Department (PHED) and Irrigation departments. Beside these two targeted customers segment, the municipal corporations in various cities also form integral customers for my company. However, my company would require a certain mixture like stabilizers, lubricants, resin etc for the production of the PVC resin in Mumbai. These all can be called the compounding materials required for the production of pipes and other products. The manufacturing process of the PVC chemical has been quite different from the Asian companies because the climate plays an important role in the manufacture and also requires certain parameters due to lack of availability of certain parameters like evaluation of the costs of the raw material process and also assimilation of the raw material for excellent output (Smallish Connect, 2013).The higher PVC production occurs in China which is at the rate of 51 percent more than half of the Asian regions. The preparation of the raw material for Chlorine would require certain chemical and materials, which is found in abundance in the south Chinese regions. This is crucial as it would help me in developing the market price of the PVC chemical and also distributing it accordingly into the market. Apart from the Chinese, South Korean PVC market the Indian market has been growing rate which also requires monetary assistance from the Indian government (Sauvant, Maschek, and McAllister, 2009). The manufacturing of the PVC material would require the production of pipelines for stronger durability. The demand for PVC chemical for the production of PVC chemical has grown at an increasing speed, which has prompted the Indian government to buy the bulk pipelines for its durability purposes (Ning, Lane and Sutherland, 2010). The need of durable pipeline is crucial because it helps in facilitating the process of PVC chemical especially in the oil industry and has been playing pivotal role in the Indian oil industry. The growing demand of pipelines has also led to the increasing demand to the PVC chemical, which is essential and cost effective for the manufacturing industries (Bruton, 2009). It would be advisable if certain amount of raw materials would be imported and the rest of the manufacturing operations is carried out in Mumbai for its access to unlimited raw materials, cheap labour, and low cost of production (Queensland Government, 2013). This would allow me to keep the base price of the PVC production at the minimum and also cater to the needs of the oil and plastic industry of India. The increase in the crude oil prices and the pipelines cannot be passed to the customers as it will affect the profitability of the business. Feasibility: Micro-Market Analysis Product Offerings The market size of the India polymer industry has been analyzed and it has been evaluated that the manufacturing polymer would be crucial for plastic manufacturing and also lead to effective product development (Lou and Tung, 2007).In this case before deciding upon the target market, price and the target distribution process, the production process and the composition needs to be decided with lot of precision in the process. The manufacture of PVC chemical needs to be composed of 57 percent chlorine and 43 percent of carbon which would be led dependant on polymers like crude oil, natural gas etc to save the consumption pattern of plastics ( PVC, 2012).As per sources the demand of PVC among industrial and individual customer is estimated at 2.08 million and the capacity production is estimated at 1.33 million in a year( PVC, 2012).The consumption patterns among industrial and individual customers is expected to grow to 3.1 million in a year by the end of tenure 2014 to 2016 and the industrial is expected to grow at further rate of 1.63 million ( PVC, 2012). It has been observed that the oil and construction businessmen are the biggest PVC customers with a market share of 70 percent and there has been the requirement of PVC chemical at every stage in construction of material, transportation, usage of recycled items and other factors. The PVC pipes require the assimilation of high quality raw materials, which have the potentiality of manufacturing products which are compatible with PVC chemical production process and also helps in protection of the environment. In India infrastructural growth is largely dependent on the PVC chemical which has the potentiality of doubling the growth of this particular industry. The Indian Government is welcoming companies manufacturing this product. As per our analysis and statistical data the below mentioned industries would be targeted like Building& Construction, Roads, Port, Aviation, Power and Telecommunication etc. The following industries would be targeted along with the target consumption patterns expected. Industry PCV Application Consumption Pattern Expected Percentage Building & Construction To install radiators which are require for the mixture for construction process for an exothermic process. 800000 to1000000 Tons approximately 14 % first 3 months Power &Telecommunications It is used for the production of cable wires which helps ins semi conductor facilities. 1500000 tons approximately 21 Percent in the first 6 Months Aviation It would be required to make cable wires, coat finishing purposes and installation of single glazed windows. It would also helps in the manufacture of the window panes and doors. 1500000 tons 33 Percent in the first 4 months Ports The chlorinated PVC is required is required for the glazing of window panes and also for varied other fitting purposes. Apart from these fittings, it is also required for the flooring purposes. 2100000 tons 22 Percent in the first 3 months The consumption pattern of the PVC chemical has been done taking into consideration the behaviour of the customers in the past few years and also by mere observation. Moreover, it has been estimated that the global consumption of PVC chemical would largely depend upon the overall capacity production of the companies. My company plans to manufacture PVC chemical which would contain high amount of chlorine and would help in production of environment protection plastics. The major objective would be to cater to the below mentioned industries due to their following advantageous business attributes. Industry Present Consumption Pattern Impact of my PVC product Building & Construction The direct and oxy chlorination have been highly consumed in this sector. With the advent of my PVC product the chlorine content will help in easy dissolution and would also be required for easy construction. Power &Telecommunications The thermal decomposition would help in making extra heat proof cable wires The high chlorine content would be required for making high energy saving cable wires. Aviation PVC chemical is highly prerequisite for the glazing of window panes and for the lubrication of the doors. Ports The solidified version of the chemical is used and utilized in making insulated cable products. PVC chemical would enable the manufacturing of smooth cable insulation wires. Feasibility: Macro Market and Drivers The importance of the PVC product has increased with its gradual presence in the overseas market and has helped in meeting the needs of various architecture products (Lee and Kotler, 2009). PCV is widely used and is one of the few products which cannot be replaced with anything in the manufacturing industry. It is widely used as refurbishment for traditional materials like wood and metal. PVC production in India is ultimately lightweight, abrasion resistance and quite light weight and has certain technical advantages like its bio degradability, mechanical strength and the toughness of the pipelines. It is regarded as one of the toughest material for construction purposes and its application has been popular in the manufacturing industries for its competitive pricing and enhanced properties (Zhou et. al., 2010). The PCV market has been growing at an increasing rate in India and requires significant demand from the industry. The capacity of the PVC growth has been at gradual rate of 10 percent and has been compared to the world average production of 4 percent. The global PVC production and the consumption pattern has been growing and been compared with the world average. As per the statistical data of Chemical Marketing Associates Inc (CMAI) the PVC demand had been 2.08 million tones and the capacity production was estimated around 34.8 million tons( ICIS.Com, n.d). The global demand of PVC production rose from 1.63 million tons to 3.1 million per tones (ICIS.Com, n.d). The demand for PVC production has been mainly for the manufacturing, glazing of the window panes and the doors. PVC chemical is required for the thermal production and its durability purposes. The manufacturing of window panes is required to exhibit durability of the window panes and doors. The popularity of the window panes has been growing at increase in rate in the metropolitan cities. The consumption pattern of the PVC chemical has almost doubled almost three to four times. The demand of PVC production has been increasing at a rate of 10 percent compared to the world statistics of 4 percent (Reliance, 2013). The consumption pattern of PVC chemical has been increasing with a substantial capacity addition of 30 kt to 250 kt and the gap between the demand and the supply of the PVC chemical is expected to increase during the tenure of 2013 to 2017(PVC, 2013a). The heavy investment in the manufacturing and the chemical industries are some of the main drivers of the PVC production in the Indian market. The most important elements of PVC chemical would be the manufacture of suspension polymerization, emulsion polymerization, mass polymerization and solution polymerization. The market for these elements require license from the government and also from leading chemical companies (Lynch, Dorsey and Sciarra, 2010). The basic macro and micro market drives for this industry would be the increase in GDP, national and per capita income and also other economic factors like the growth, stability of the construction, pipeline and other industries (SmallBiz Connect, 2013).The basic potentiality and the consumption pattern if the market has been growing at an increasing rate which has also led to the increase in the per capita consumption pattern of the pipeline and PVC chemical (Chaffey et. al., 2008). Out of the entire analysis it has been observed that the government investment in the pipeline is one of the crucial factors responsible for the growing demand in the PVC chemical. (Source: Young and Pagoso, 2008) Presently, the pipeline and the construction sector is largely fragmented and is quite dominated by leading industries with very little focus on the quality of production of chlorinated PVC pipelines and its emphasis is on the targeted output production. The pipeline manufacturers are investing heavily in processor technology and high output extruders, which help in the quality production of foam core pipes and oriented pipes. Thus, the marketing of the PVC chemical would require the dependence on bulk production of the chlorine and also the solution dispenser in the current and upcoming five to six years. The establishment of the large scale manufacturing plants would also require large deficit and assistance from the government (Witt, 2008). However, the slowing down of the PVC production projects would means low production of chlorine of no help from the government. However, the production of Vinyl in bulk volumes would automatically lead to the production of highly chlorinated PCV and its effect would be having a positive effect on the marketing activities (Albaum, Duerr and Strandskov, 2006). Feasibility: Competitive Environment and Direct Competitors After conducting a competitive analysis it has been observed that some of the leading industries like Reliance and OGC in India are largely dependent on the import of chlorine and the PVC chemical (Griffin, 2011). However, it has been observed that mostly the medium sized manufacturing enterprises are largely dependent on the small enterprises manufacturing chlorine and chemicals. My company would be initially distributing the highly chlorinated PVC chemical to the below mention companies on annually contractual basis. Lumega industries Maharashtra Organo Metallic Catalysts Pvt. Ltd These industries are expert in manufacturing chlorine, chlorine sulphide and also other chemicals (City of Chicago, 2013). Sankalp Organics Private Limited, Manufactures high quality methyl, chlorine, lead and supplied. R. B. Plasticizers Private Limited, Manufactures high quality cords for PVC production PESTLE analysis The PEST analysis is an instrumental tool used for identifying the external threats and opportunities faced by an industry (Kotler, 2008). This tool divides the environment into four categories: Political, Economic, Socio cultural and Technological. Political Factors The corporate tax rate of India is presently 33.399 percent (KPMG, 2013) which indicates that companies wanting to go for further expansion would require penetrating with thoughtful consideration. The PVC producing companies would incur losses if they enter into the Indian markets. Economic Factors As mentioned before that the PVC chemical producers are highly dependent on the chorine producing, infrastructure and petrochemical industries. With the increase in the prices of the chemical and oil in India it has been observed that these industries have a better future prospect. These industries have better future prospects within 2013 and it will help in acceleration of the growth of the Indian PVC industry. Socio Economic Factors The increase in the income level of the Indian consumers have led to their buying of expensive residential complex buildings and this has also has led to the growing prosperity of the PVC chemical and chlorine industry. The Indian construction industry is expected to prosper within the upcoming five years and also be provided with financial aid from the government. Technological Factors The production of PVC chemical is largely dependent on the technological advancement of a particular nation (Lamb, Hair and McDaniel, 2011).This is because the processing, mixing and solution of the chemical requires advanced machinery, which can make it easily soluble and also requires financial assistance for the advanced machinery. Legal As per the legal requirements of the Indian government, the manufacturer needs to get the product approved from a certified chemical laboratory. This is a mandatory process as it ensures that customers are provided with high quality chemical products in the long end. Environmental Although, PVC manufacturing companies cannot curb down the side effects of the chemical it is mandatory for the companies to chlorinate the product for the safety of the employees in the production process. Moreover, highly chlorinated PVC chemical ensures the safety of the environment and its protection. Feasibility: Sustainability The main target of my business would be to deliver high quality chlorinated PVC chemical and distribute it to popular construction and petrochemical companies of Mumbai. Financials An estimated revenue and expense forecast of the upcoming five years based on the market expectations and for the foreseeable future (McMenamin, 2002). The business enterprise plans to develop a detailed financial strategy that includes the estimated revenue forecast and expense forecast which would help the company to keep its strategy feasible and accurate (U. S. Department of Labor, 2009). A marketing strategy which is supported by financial calculations helps the managers to focus on specific details like budget expense, budget allocation etc. The following calculation is done by taking into account all the monthly expenses that are required for providing child care services. The following calculation is done by taking per child expenses into consideration. Figure 1: Revenue Forecast From the above chart we can see that the as the production per ton increases so does the cost of production per ton. There are two types of revenue generation production per volume basis in this case. Production per ton of PVC chemical takes into consideration the machinery costs and other machinery expenses while the average revenue production per ton takes into consideration the industry growth, cost of chlorine and miscellaneous costs (Selman and Hershfield, 2000). Contribution Margin / Breakeven Point The main task of Building Block’s day care centre is to generate excessive revenue when the occupancy rate is higher. This can be achievable if the variable costs and fixed costs are evaluated carefully. The overall contribution production per ton of PVC chemical is $650 on a weekly basis. This proves that the breakeven point will reach in 43rd week of the year. The capital funding of the enterprise is taken 6.3 percent interest. The estimated total expenses per week are $76.9, $78.8 and $61.5 in the year 2013, 2014 and 2015 respectively. The estimated revenue per week is $4519, $4807 and $6250 in the year 2012, 2013 and 2014 respectively. The estimated revenue increases gradually because the interest and corporate rate become lower. These factors are taken as per assumptions. As we can observe due to increase in revenue and lower corporate and interest rate, the profit margin increases per week. Feasibility: Managerial Capabilities The managerial process has been decided after thoughtful consideration and requires a planned process to decide upon the managerial capabilities to be undertaken by the different managers. There would two departments that would be heading and guiding the team members at the manufacturing layouts and at the branch office. The managers at the manufacturing layout would look after the production process and quality management. Production process would involve looking after the bulk production of the chemical in large volumes and also the up gradation of the machinery production of these high quality machines. Production of large volumes would require also assistance and approval from the managers at the head offices. Apart from approval, the managers at the head offices would require monitoring the process and also check the internal quality control procedures to a large extent. Reference List Albaum, G., Duerr, E. and Strandskov, J., 2006. International marketing and export management. Noida: Pearson Education India. Bruton, G.D. and Ahlstrom, D., 2009. International management: Strategy and culture in the emerging world. London: Cengage Learning. Chaffey, D., Chadwick, F.E., Mayer, R. and Johnston, K., 2008. 3rd ed. Internet marketing: Strategy, implementation and practice. Noida: Pearson Education India. City of Chicago, 2013. Public Health Statistics. Available at: < https://data.cityofchicago.org/Health-Human-Services/Public-Health-Statistics-Births-and-birth-rates-in/4arr-givg > [Accessed 24 August 2013]. Griffin, R.W., 2011. Fundamentals of management. (6th ed). 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