Competitive Advantages of Germany

Competitive Advantages of GermanyAerosil is a feel silicon dioxide convergence actual in 1942 by Degussa AG in Germany. The scientific name of fumed silicon oxide is Colloidial Silicon Dioxide. It is pure silicon dioxide, made from vaporized silicon tetrachloride, oxidized in high-temperature flame with H2 and O2. add up amorphous nano-sized primary particle gives free flow to powder actuals. It gives thickening effect and thixotropy by dispersing to crystal line of point of intersections materials. Standard hydrophilic products argon made of primary particles from 7 nm to 40 nm, and besides these products argon surface modified to hydrophobic.As of September, 2007 what was Degussa is now the chemics line of products area of the bran- reinvigorated Evonik industries. Right from the start of the business activities for AEROSIL fumed silicon dioxide, Evonik followed Degussas philosophy for success to combine usance and progress. In 1942 an idea became reality. Degussa in vented the fumed silica as a replacement for carbon-black, which was manufactured from oil, to counteract the shortage of resources. At that time, the trade name AEROSIL was invented and protected.To twenty-four hours AEROSIL is a equivalent word for fumed silica and Evonik is globally present with more than carbon sales offices in 95 countries and over 1000 highly motivated employees. They experience eight product plants and applied engineering science laboratories in Germany, China, Japan, Thailand and the USA, enabling them to stay close to their customers.They are non only known for their drawn-out product line with its wide variety of grades, but are similarly market leaders with their highly alter quality and environmentally-conscious technologies.Without AEROSIL fumed silica many e reallyday things would no longer be conceivable. AEROSIL fumed silica is found, for example, in buildings with earthquake-proof foundations, in silicon sealants for bath tubs, in yacht o utput, as insulation material for Ceran compass tops, or in paints that without AEROSIL products would be difficult to use.They have over sixty years experience in this specialty field and are continually optimizing their product line and technical services with great flexibleness according to the needs of their customers.Evoniks close contacts with the industries that use their products, as well as to their suppliers, allow them to develop new innovative products for existing applications, as well as new applications for schematic products. Due to the continuous enlargement of Evoniks worldwide production capacities, they are able to supply their customers with the proper products in the desired quality and metre throughout the world. Close cooperation and partnership with the customers is sensation of Evoniks top priorities.gmIndustry HistoryThe shortage of cutting materials and resources on our planet has been a hotly debated topic for several decades. The black gold in i ncident inspired many to become active questioners. Degussa were also enthusiastic about the idea of one day finding a substitute for oil. This is why, in 1941, they began to develop a white filling material for the toil diligence as a substitute for industrial carbon black, which, up to then, could only be produced from oil. retributory twelve months on, having created high-temperature flame hydrolysis, they succeeded in producing the firstborn ultrafine-particle pyrogenic silica. Their vision became reality and the brand known as AEROSIL was born. dr, harryThis success story took its course, and in 1966, an chief(prenominal) foothold was established in Asia with the building of the Nippon Aerosil production plant in Yokkaichi, Japan. In 1976, the same spirit was taken westwards when the production of AEROSIL began at the new Degussa plant in Mobile, Alabama/USA. more than 60 years of experience, development and look have by now made AEROSIL the well-nigh frequently use b rand for the creation, modification and characterization of surface effects.Chemistry_by_Ekspertiza.jpgAPPLICATIONS OF AEROSILMore than 60 years of experience in the production, modification and application of fumed silica provide a sound infrastructure for continuously enhancing these products. Evonik strive to meet the increasing acquires of existing and new areas of application. Their objective is to full satisfy customers expectations now and in the future. AEROSIL experience Silica makes use of the smallest of things. The smallest particles of some AEROSIL grades measure no more than seven nanometers a human hair is 3,000 times thicker. So small, yet so great The small the particles, the greater their effect and range of applications.AEROSIL optimizes some reckons whish are given below paints and coatingscatalystsairbagssilicone sealants in the car, sanitary and electronics sectorssealing inserts, e.g. for covering crown corkprinting inkscreams, lotions, gelsdeodorantspa per proper(ip)ties chemical substance dowelsunsaturated polyester resins out of work bulbs and fluorescent tubestoners for photocopying machinessilicone profilesshoe solesputtydental composites2-component mortarmarine paintsstructure adhesives for the production of rotor coil blades in wind power plantsthe disability of active substances in tabletsThe advantages of AEROSIL fume Silica in antithetical industries Adhesives SealantsBatteriesFoodGlassPaints CoatingsPersonal CarePharmaceuticals, Plastics ,Silicones , TonersProduct LineAEROSIL is an extremely versatile product. In commit to find the AEROSIL grade with the right characteristics for the application, they have grouped the various AEROSIL types by Raw Material manner of Production. Not only are these, but also the behavior with water, whether hydrophilic or hydrophobic, crucial for the lowest application.AEROSIL grade could be found to solve difficulty in one of the following categoriesHydrophilic feel SilicaHydrop hobic Fumed SilicaFumed Mixed OxidesHydrophilic Fumed Metal Oxides picky Hydrophobic Silicas and Hydrophobic Metal OxidesSpecial Granulated Fumed SilicasDispersions free-enterp demonstrate(a)- abstract_clip_image010.jpgCompetitive StrategyTo decide the competitive strategy t here(predicate) are two deciding factors. These are industry structure and positioning deep down industry.Industry StructurePorters 5 forces analysisPorters 5 forces analysis is an analysis skeleton for industry analysis and business strategy development which was founded by by Michael E. Porter of Harvard Business School in 1979 . It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and accordingly attractiveness of a market. Attractiveness in this context refers to the overall industry profitability.untitledFigure 01 Porters fiver forces analysisPorters Five Forces include three forces from horizontal competition affright of subs titute products, the scourge of established rivals, and the threat of new entrants and two forces from vertical competition the bargaining power of suppliers, bargaining power of customersThe threat of substitute productsThe existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases. nevertheless there are no substitutes for fumed silica. Thats why there is no threat of substitute products.The threat of the entry of new competitorsAs the business of fumed silica is very lucrative thus, endpoints in many new entrants, which will effectively decrease profitability. But there are some barriers to enter this industry and those are given below The existence of barriers to entryIn 1942, Degussa invented the fumed silica as a replacement for carbon-black, that was manufactured from oil, to counteract the shortage of resources. At that time, the trade name AEROSIL was invented and protected. Today AEROSIL is a syn onym for fumed silica.Economies of product differencesWith a sales volume of nearly 1.8 million metric tons a year (2004), sales revenues of approximately 1,071 million (2005) and a staff of 530, Evonik is the largest chemical manufacturer at the Marl chemical substance plant.Capital requirements Due to heavy investment in setting up the plant and thw production process, a very few wants to enter to this industry.The intensity of competitive rivalry- For most industries, this is the major determinant of the competitiveness of the industry. matter of competitors There are only two substitute product for fumed silica and those are Cab-o-sil and HDK, these rivals make do in non-price dimensions such as innovation, marketing, etc.Exit barriers As the initial investment is high and the cost of swithiching to another(prenominal) manufacturing product is also very high, so the exit barrier is also high. Competitors are here to stay.Positioning Within IndustryAEROSIL grades of Evonik ha ve gained competitive advantages because of its cost leadership and the quality it offers.To compete inter disciplinely Evonik has adopted the global strategy approach driven by the principle think global, act local. Fumed silica grades are sold internationally under one brand, AEROSIL and one target audience, that is the business consumers.683px-Schematicy-atom.svg.pngPorters rhomb ModelGermany possesses comparative advantage in producing AEROSIL fumed silica. Germany has the ability to produce the AEROSIL fumed silica at a lower fortune cost. The comparative advantage of Germany in the production of fumed silica is exposit by the Maichael Porters Diamond Model as followedUntitled-1_clip_image002Figure 02 Porters Diamond modelFactor Conditions- refers to inputs used as factors of production such as labor, land, natural resources, capital and infrastructure. Porter argues that the key factors of production are created, not inherited. Specialized factors of production are skille d labor, capital and infrastructure.Human ResourcesWith over 82 million inhabitants, Germany is the most populous res publica in the European Union Germany has the best qualify workforce in Europe. supra all, the German chemical industry has traditionally regarded the training and continuous upgrading of employees qualifications as being very important. This is because a well trained workforce is the precondition for the operation of highly narrow down high-tech facilities, production of innovative chemical products, and high productivity. Well trained employees also mean fewer accidents with minimal downtimes as one result.The chemical parks lots have training centers on-site to ensure that employees theoretical and practical familiarity is kept up to date. Many chemical parks help companies located there to recruit qualified employees. A well qualified workforce and ongoing training are important factors. Another factor which contributes to the success of chemical companies b ased in Germany is the high degree of identification of employees with their company. Highly motivated, they remain airless to their companies, and staff turnover is low. The advantage employees gather valuable expertise and experience, which in turn ensures smooth operations and contributes to economic success. Employees high degree of identification with their companies also involves the stable and consensus-oriented partnership which characterizes the relationship between chemical companies and trade unions in Germany. The result speaks for itself Germany is the country with the lowest number of strikes in Europe. But the main problem from Germanys point of view is that the cost of labor and sore materials are very high. And that is the reason why German industries mainly shifted their manufacturing plants to the countries where labor is cheaper. They have a market all over the world. The people who are engaged, any directly or indirectly in this industry account for approxima tely 27 percent of the contribute work force and produce more than 14 percent of Germanys total manufacturing output.Physical ResourcesThe main raw material for fumed silica Most of the countrys products are in engineering, especially in automobiles, machinery, metals, and chemical goods. Germany is the star(p) producer of wind turbines and solar power technology in the world.Knowledge resourcesIt is very important for a country to have a RD sectors and specialized institution so that they can provide more specialized knowledge for them. Germany has very good and sophisticated research centers that are essential to do extensive research to innovate new product. And that is the reason why they are famous world wide.Infrastructure- With its central position in Europe, Germany is an important transportation hub. This is reflected in its dense and modern transportation networks. Probably most famous is the extensive motorway (Autobahn) network that ranks worldwide third largest in its total length and features a lack of drape speed limits on the majority of routes. Shipyard_at_dawn_by_le_feu.jpgDemand ConditionsPorter argues that a sophisticated domestic market is an important element to producing competitiveness. Firms that face a sophisticated domestic market are likely to sell maestro products because the market demands high quality and a close proximity to such consumers enables the firm to better agnise the needs and desires of the customers. The issues that affect demand conditionsSophisticated and demanding purchasersThe home market of the Germanys chemical product demand very high quality product. High Product Quality is the essential prerequisite for their business success. One attempt is the global quality management system for AEROSIL products, which monitors and supports production.The Product Safety department maintains product registration and the bread and butter MSDS, safety-specific and toxicological data to ensure the safe and legal use o f our products.Anticipatory buyers needGerman chemic industries saw that their demand in the home market is enormous. They saw the scope for more demands in the other markets of the world. German chemical industry itself is in their different manufacturing units some the world. They are expanding their demand for chemical in the whole world.Related Supporting IndustryPorter also argues that a set of strong tie in and supporting industries is important to the competitiveness of firms. This includes suppliers and related industries. German Chemical industry also needs to have close relationship, joint innovation with suppliers, complementary products, sharing same technology with their related and supported industries to bring its competitive advantage.Close Relationshipasdf.jpgEvonik is an active partner of the most important transaction platforms in the chemical industry. In close cooperation with ELEMICA they have built up connections to their customers on the base of the Chem XML standards. ELEMICA is the platform for the raw material providers to the chemical industry and CC-Chemplorer, the purchasing platform for engineering goods and consumption material.VMI Vendor SystemVMI is a further step to improve customer convenience. Mostly with silos and tanks the supplier takes care that a customer never lacks raw material. mod sensor technology is capable to communicate directly with the ERP-system of the supplier. Together with their IT-partners they are prepared to design and creature the appropriate connection.Firms Strategy, Structure RivalryIn Porters study, it is found that the dynamism and pressure created by a spirited local industry was perhaps the single most important stimulus to innovation and upgrading in an industry-a result that held independent of country size. domesticated rivalry provides an essential motivation for firms to make the investments and take the risks necessary to beget competitive advantage. Domestic rivalry is more imp ortant than competition with foreign firms because proximity speeds information and improves incentives to compete. Domestic competition negates basic factor advantages and forces firms to develop higher order (more sophisticated) and ultimately more sustainable advantages. In the chemical industry of Germany there exists an environment featuring a strong supply chain management, sophisticated demand from the domestic users, and an intensely competitive neighborhood with companies like BASF, Industries, Wacker Chemie.Sources of Creating Competitive Advantagesertyre.jpgIt has gained competitive advantages due to several reasons and those are discussed belowNew TechnologyDegussa invented the fumed silica in a substitute of carbon black. So AEROSIL has the competitive advantages as the inventor of fumed silica.Shifting Buyer Needs from Carbon Black to Fumed SilicaAs a replacement of carbon black, fumed silica has been used by the industries. The buyer needs had been shifted to the fume d silica from carbon black.Input Cost or AvailabilityThe raw materials requisite for producing fumed silica is locally produced. Evonik is an active partner of the most important transaction platforms in the chemical industry. In close cooperation with ELEMICA they have built up connections to their customers on the base of the ChemXML standards. ELEMICA is the platform for the raw material providers to the chemical industry and CC-Chemplorer, the purchasing platform for engineering goods and consumption material.Strength_Is_Weakness_by_crazeemunkee0105.jpgSWOT AnalysisA stare of the internal and orthogonal environment is an important part of the strtegic planning process. Environmental factors internal to the firm unremarkably can be class as strngths(S) or weakness(W), and those external to the firm can be classified as oppertunities (O), or threats(T). Such analysis of the strategic environment is refered to as a SWOT analysis.The strengths , weaknesses, opportunity and thre ats for AEROSILStrengthsEvoniks strengths in producing AEROSIL fumed silica are its resources and capabilities that can be used as a basis for developing the competitive advantage. The strengths includePatentStrong Brand Name- AEROSILGood reputation among customersExclusive adit to the natural resourcesExtensive distribution channelWeaknessThe absence of certain strengths results in weaknesses for Evonik. As it enjoys an advantage of huge production capacity and a large manufacturing plant, but it may result into weakness as it employs a large pull of capital. It also prevents the firm from reacting quickly to the changes in strategic planning.OpportunityThe external environmental analysis may reveal certain new opportunity for profit and ingathering. The opportunity for Evoniks AEROSIL fumed silica includesArrival of new technology from the continuous researchRemoval of international trade barriers sparing integrationsThreatsChanges in the external factors may result into threats for the firm and those areEntry of new competitor launching of new substitute productwerwer.jpgPest AnalysisPEST analysis stands for semipolitical, Economic, Social, and Technological analysis and describes a framework of macro environmental factors used in the environmental scanning component of strategic management. It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework.Political AnalysisPolitical function is a very significant external factor for the development of an industr y. It is only through proper policies of the government added with incentives, subsidies and promotions that an industry can flourish. In Germany, government has taken several initiatives to promote the chemical industry. German chemical industry is doing very well in a global arena because they are acquire support from their favorable government policies and terms conditions for increasing their productivity and constant innovativeness. Following reasons influence in this regardPolitical stabilityLegal framework for contract enforcementIntellectual property protection raft regulations tariffsFavored trading partnersPricing regulationsTaxation tax rates and incentivesWage legislation minimum rent and overtimeEconomic AnalysisThe economic analysis is often used as a generic wine orientation tool, finding out where an organization or product is in the context of what is misfortune after-school(prenominal) that will at some point effect what is fortuity inside an organization .The home economy situation is very vital to the growth of the industry. Economic factors affect the purchasing power of potential customers and the firms cost of capital. Germany is the largest national economy in Europe and the third largest by nominal GDP ($3.22 trillion) in the world and also ranked fifth by GDP. This is a very stable and favorable economic condition for a country to be internationally competitive.Following reasons influence in this regardGovernment intervention in the free marketComparative advantages of host countryExchange rates stability of host country currencyEfficiency of financial marketsInfrastructure qualitySkill level of workforceEconomic growth rateUnemployment rateInflation rateInterest ratesSocial AnalysisThe kindly analysis is used as a generic orientation tool, finding out where an organization or product is in the context of what is happening outside that will at some point effect what is happening inside an organization. The analysis headings are a framework for reviewing a situation, and can also be used to review a strategy or position, direction of a company. German Chemical industry constantly looks at the social factors to manufacture products. These factors affect customer needs and the size of potential markets. Some social factors includehealth consciousnesspopulation growth rateage distributioncareer attitudes stress on safetyDemographicsClass structureEducationCultureAttitudesLeisure interestsTechnology AnalysisThe technological analysis is often used within a strategic SWOT analysis. The technology analysis is often used as a generic orientation tool, finding out where an organization or product is in the context of what is happening outside that will at some point effect what is happening inside an organization.Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions German Chemical industry is doing well because their country has re sources of high technology. Some technological factors includeResearch using (RD) activityautomationtechnology incentivesrate of technological changeRecent technological developmentsTechnologys impact on product offeringImpact on cost structureSustaining Competitive Advantagesustain.jpgAs Evonik has created competitive advantages in producing AEROSIL fumed silica, it has quite a few factors to sustain competitive advantage.Nature of Sources of Competitive Advantage- Higher format AdvantageThe advantages that Evonik possess for AEROSIL fumed silica is hard to replicate by the competitors. As Evonik possesses the exclusive right to produce AEROSIL fumed silica, no other can produce the exact fumed silica grades that we produce. exit of Distinct Sources of AdvantagesExtensive World Dealer NetworkOnly AEROSIL products are offered from eight production sites distributed around the globe, supported by applied technology, research, commercial and technical service offices on three conti nents. This has established us as a committed service provider and competent advisor.AEROSIL production plants, technical service centers, research centers and commercial and technical service offices are located in Europe, North America and Asia with more than 100 sales offices in 95 countries to serve customworldwidehttp//www.aerosil.com/pub/NR/rdonlyres/2C62F50C-39FB-47B9-9F1F-82C9FAB46A6C/0/aerosilLocations.gifBrand NameAEROSIL has become the synonym for fumed silica. So, Evonik enjoysthe strength from the brand name itself.Technical ServiceWhile typical inquiries can be answered by the local sales staff and distributors, a highly qualified technical consultancy service is also available to their customers. To this end, they support their customers by maintaining a network of experienced applied technology experts specialized in key industries on three continents.Constant Improvement UpgradingResearch is the future. Or more precisely enthronisation in the future. The work of scientists today forms the basis for the business successes of tomorrow. This principle is nothing new for AEROSIL products. It has been an established tradition for more than 60 years now. The outstanding research and development departments have made them one of the most frequently sought after contacts worldwide for the generation, modification and characterization of pyrogenic oxides, as well as for the performance effects they bring.1941Development of high-temperature hydrolysis for the production of pyrogenic silica1942Development of the first industrial production process in Rheinfelden, awarding of the first patent1943AEROSIL is registered as a trademark for Degussas pyrogenic silica1953Production of aluminum oxides using the AEROSIL method1954Production of pyrogenic titanium oxides1963Commercial production of the first hydrophobic types, AEROSIL R 972 and AEROSIL R 9741986Development of a further chemical after treatment technology hydrophobizing method completed. AEROSIL R 805, R 812 and R 202 launched1992Launch of the first structure-modified hydrophobic product AEROSIL R 8200 first fully-integrated production location for AEROSIL in Waterford, USA.32423.jpgRecommendationEvonik should not necessarily watch the more lucrative opportunities sooner it may have a better chance of developing competitive advantages by identify a fit between strengths and upcoming opportunities. In order to overcome the threats from the external environment, it should get prepared itself to pursue a compelling opportunity.2. Format and StyleThe format and style of the final report is similar to that require of a technical paper with the following requirementCover rogueMicrosoft Office Word A4 page setup1.5 line spacingPoint 12 Times New Roman font1 inch page margin