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CASE12_Henkel - Blue Ocean Strategy at Henkel INTRODUCTION...

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Blue Ocean Strategy at Henkel INTRODUCTION After reviewing the current business situation and anticipated conditions in the domestic consumer market, Andreas Welsch's marketing executives have decided to launch a "Blue Ocean" strategy in response to the compelling strategic challenges facing Henkel Adhesives Technologies. As the sector represents 43% of Henkel's total revenues, senior management is pressing for the group to immediately produce a viable strategy and implementation plan. To retain its leading market position, the operational unit needs a long-term approach to combat intense rivalry for domestic share. Inventing creative ideas for new markets and customers requires Welsch to follow the strategic analysis process and answer the following questions. What potential strategies are revealed by aligning Henkel's internal strengths and weaknesses with existing opportunities and threats in the external environment? What actions should be taken by the company to better satisfy customer needs and improve its business-level strategy? What role do the following factors play in helping Henkel meet its organizational objectives? > International Expansion > Innovation > Market Research What implementation measures can be recommended to maximize the success of suggested strategies? Success will be ensured not only by identifying untapped market space for Henkel to gain, but by establishing a strategy which leverages and builds upon the company's strengths to pursue opportunities which will secure long-term market dominance and yield profitable results. ANALYSIS General Environment Despite the fact that Henkel Adhesives Technologies has essentially no influence over external environmental conditions, several variables in the general environment have a direct impact on the company's performance and prospects for future success. For instance, the percentage of homeowners in Germany is lower than in any other European country. Although the 1989 national reunification created a fertile business environment into the 1990's, current trends in building, material use, birth rate, and population age are having unfavorable effects on the company's domestic situation. Blue Ocean Strategy at Henkel - 1
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Blue Ocean Strategy at Henkel Economic factors, including price instability and financial market crises, shape consumer concerns and buying behavior. Even though market conditions are stagnant, foreign interests remain attracted to the business climate of Germany. Industry Environment The household, office, and industrial adhesives industry in Germany is experiencing slow market growth. Demand is slipping, raw material prices are exerting downward pressure on margins, and existing products are saturating the market. Excess industry capacity and the entry of new foreign competition are also negatively impacting industry profitability. Product lines are becoming less distinguishable by unique features, while the discounted pricing segment represents the industry's only area of growth. As a result, rivalry among competing firms is increasing in intensity.
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