Case applichem hbr

8 August 2016

Applichem is a company that offers high product customization. Indeed, they provide solutions to specific customer problems, and then refine the product and process to arrive at a product with broader application. They created a product that was widely used: Release-ease. This product enabled the customers to clean easily the mold at the end of the process, which was a bottleneck in the former line. In 1982 the market research team expected little increase in the demand during the next five years. The sales and profit were strong through 1982.

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However Applichem has done little focused research on the product or process after 1953. There are several versions of Release-ease among regions. The different markets have peculiar particularities. Competition is harder in Europe where the quality and product specifications are more closely monitored. Customers usually consume the product within one year of purchase, and they buy the Release-ease powder in bags of 50 kilograms. In the US customers use the product as long as 3 years after manufacture and purchase the powder in bags of many sizes from ? kilograms. In Japan, Applichem was the only company whose product had been approved by the Japanese regulators, even if some imported products could be sold by other companies. Applichem’s main competitor is a US-based company that only owns one plant in Luxembourg but had strong sales in Europe. A third company was competing on the shares in the US. However, Applichem owned by far the largest part of the market share and had a reputation because the company held the patent on the oldest version of Release-ease.

Comparison of the 4 plants In Table 1 below, it is possible to see the capacity utilization and yield of the plants. All the plants seem to have excess capacity, so there doesn’t seem to have any need of implementing additional capacity. The average yield is taken from Exhibit 3, and we can see that both plants of Gary and Mexico could use their capacity more efficiently. For Gary, the yield is quite low for a plant of this size. It might be due to the number of product families (19) produced at the plant compared to the others.

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