Global Immersion- Shanghai Company Overview Air Products SWOT Analysis of Air Products and Chemicals Questions:

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1 Air Products Team 2 SWOT Analysis of Air Products and Chemicals: 1 * Well positioned in growth markets * Diverse customer base,... pricing power * Track record of corporate responsibility * Growth markets, such as hydrogen fuel cells * Continued expansion in industrial supply Firm Data (2012): 2 * Revenues - $9.9B * Net Income - $1.1B * Assets (Current) - $17.4B ($3.6B) * Quick Ratio: 1.2 * Long-term debt: $5.1B Competitor Comparison: 3 Dow Chemical Company * Revenues - $56.8B * Net Income - $0.8B * Assets (Current) - $69.6B ($23.7B) * Quick Ratio: 2.1 * Long-term debt: $19.9B E. I. du Pont de Nemours and Company * Revenues - $35.0B * Net Income - $2.5B * Assets (Current) - $49.7B ($21.2B) * Quick Ratio: 1.6 * Long-term debt: $10.5B * High debt levels * Volume in major gases and electronics down due to recession * Rising energy costs * Severance of access to rare raw materials Employees 18,900+ Global Operations China, throughout Asia, Europe, locations in Mid. East, Africa, S. Am. Major Business Lines supplies to Chemicals, Energy, Metal, Transportation, Healthcare Employees 49,500+ Global Operations China, moderate presence in Asia, Europe, South America Major Business Lines supplies to Chemicals, Energy, Transportation, Healthcare, Water Employees 60,000+ Global Operations substantial presence on all 6 populated continents Major Business Lines supplies to Chemicals, Construction, Agriculture, Electronics, Food, Packaging, Plastics Questions: 1. What are some key steps Air Products has taken to become successful in China? 2. What competitive advantages do locations in China provide Air Products relative to its locations in other countries? 3. Is Air Products array of locations primary a risk-mitigation strategy or a function of its array of products? 4. What is the size of the Chinese market for the goods Air Products is producing here? 5. How does Air Products pursue its value of corporate responsibility in China? 6. How does Air Products fit in to the local business community of Shanghai? 7. Has Air Products had to adjust in response to a Chinese shortage of skilled labor? 8. Has the quick recovery of the Chinese market helped offset the slow recovery elsewhere? 9. What are Air Products main goals in China going forward? 1 All quotes and concepts taken from: 2 Financials from Yahoo! Finance, others from company websites 3 Financials from Yahoo! Finance, others from company websites 1

2 Dell Inc. Team 3 Company Background: Dell, the third largest PC vendor in the world, has aggressively expanded its services and operations outside of the United States for the past decade. With its well-designed supply chain network and effective distribution channels, Dell has provided its customers with a unique shopping experience which can be described as customizable products, affordable pricing, and direct delivery method. Due to changes in the PC market and intense competition, Dell has rapidly lost its competitive advantage to the innovative products such as tablets and smart phone. On February 5 th, Dell announced that the company was going to become private and it was bought out by its founder and CEO, Michael Dell and private equity investment firm, Silver Lake Partners. 4 Dell in China: In 1999, Dell opened its own manufacturing plant in Xiamen, China. Since then China has always been a strategic location for Dell to enlarge its business in the Asian market. Along with manufacturing plant in Penang, Malaysia, these two facilities assemble 95% of Dell Notebooks. According to the company s annual report, Dell owns 24 business units locally, including - branch offices in Shanghai, Beijing, Chengdu, Dalian, Guangzhou, and Hangzhou. The company is currently focusing on developing high- and medium- priced products since the president of Dell s Asia division, Amit Midha, believes that it is crucial to continue providing value-added products instead of low value products to customers, because It is not a unit game. 5 (Attachment: Dell Financial) Local Challenges: Intense competition among the two biggest PC makers: HP and Lenovo. (Appendix A) Unpredictable future growth and the risk of switching business strategy from been a PC manufacturer to a technology solutions provider. Due to the recent privatization, Dell might not have enough resources to make any significant investments in new products or business segments for its global operations Major Competitors: Hewlett-Packard is the world s leading PC manufacturer since Like Dell, it provides electronic products, software, technology solutions and services to individual consumers as well as to small- and medium sized businesses and large enterprises. 6 In China, HP is competing intensively with the local PC giant, Lenovo, for the leader position. As of 2013, HP holds 17% of the worldwide PC market share compared to 15.9% for Lenovo. (Appendix B) 4 Reuters: Dell To Go Private in Landmark $24.4 Billion Deal Feb. 05, Bloomberg News, Dell s China Sales Should Rebound This Quarter, Asia Chief Says Oct. 26, Yahoo Finance: Company Profile Hewlett-Packard. Feb. 15,

3 Lenovo, a Chinese technology firm established in 1984 with $25,000. In 2005, Lenovo acquired IBM s PC business which helped the company gain PC market share and expand its businesses globally. With its Protect and Attack strategy, Lenovo secures its two main revenue sources corporate PC sales and the Chinese market, which account for about 45% of its total revenues. 7 SWOT Analysis: Strengths: Dell has strong brand recognition and customer loyalty China has attractive low-cost manufacturing capabilities Weaknesses: Dell has not been successful in competing with competitors in the low-end PC market Opportunities: China is a high growth market as people from rural areas move into cities they will purchase new computers. Only about 20% of China s population owns a computer. Expansion into other Asian countries such as Japan, Korea and Taiwan Threats: There is intense local and foreign competition in the PC market. Lenovo has attempted to boost its brand recognition and has even adopted Dell s direct sales model Intellectual property could be at risk Questions: 1) How did the 2011 Tsunami in Japan affect your global supply chain operations? 2) Have contingency plans been created since 2011 to deal with natural disasters that could affect your global supply chain operations in the future? 3) Do you think that the company going private will have an effect on the way you currently run business in China? 4) Do you have any plans to make greater inroads into the low-end PC market here in China? 5) What are the greatest obstacles you face in doing business in China? 6) How is Dell positioning itself in China to satisfy consumer demand for tablets and smartphones? 7) Have you experienced any consumer demands that are unique to the Chinese market? 7 The Economist, How Did Lenovo Become The World s Biggest Computer Company Jan. 12,

4 Appendix A Appendix B Source: Rob Minto, What Does Lenovo Want to Be? Financial Times Jan. 30,

5 Attachment: Dell Financial Data Source: Dell Annual Report

6 Caterpillar Team 4 1. Caterpillar is a large conglomerate that manufactures a wide range of products. Their main products are related to the construction and mining industries. These include tractors, loaders, excavators, tunnel boring equipment, among other heavy machinery. CAT also produces diesel and natural gas engines as well as industrial gas turbines. Caterpillar s 5 year revenues are found in Exhibit 1, and its 5 year net incomes in Exhibit 2. At the end of fiscal year 2012, Caterpillar held $89.36 billion in assets and currently has a market capitalization of $62.57 billion. Caterpillar employs 125,351 individuals on a full time basis. The company has been led by CEO Douglas R. Oberhelman since Caterpillar has three top competitors; Komatsu, CNH Global, and Volvo. Komatsu which means little pine tree is the world s number two maker of large construction equipment after Caterpillar. Komatsu builds and sells building and mining equipment, from bulldozers and wheel loaders to dump trucks and debris crushers. Komatsu also produces industrial machinery, such as laser-cutting tools, wire saws, and sheet-metal presses. 8 Being Headquartered in Japan Komatsu is closer in location than Caterpillar. CNH Global is quartered in Amsterdam. CNH Global (Case New Holland) is one of the world's largest makers of agricultural combines and tractors (by sales volume). Its machinery, some 540 models, includes hay balers, and forage and specialty harvesting and auxiliary equipment for both crop and livestock farms. CNH also builds light-industrial and heavy construction equipment, such as dozers, crawler and wheeled excavators, graders, and telehandlers, for building, quarrying, and demolition jobs. 9 CNH Global has over 40 manufacturing facilities and it sells in 170 countries. Lastly Volvo is the largest makers of trucks, buses, and construction equipment. It also has controlling interesting is Mack Trucks in America and Renault Trucks in Europe making it an extremely integrated company. Below are the comparative figures of these companies titled table Caterpillar (CAT) makes construction and mining machinery along with other industrial products. They both sell and rent their equipment in over 180 countries across the globe. Despite taking a hit during the recession due to the downturn in construction, CAT has seen rising profits and has acquired several companies to help expand its reach. Already doing 65% of its business outside North America, CAT continues to expand its global presence, including in China where it invested $300MM in a new manufacturing facility. CAT s strong market position gives it increased leverage in bargaining. Its strong brand portfolio and global presence position it well for continued growth and prosperity. However, after a downturn during the recession CAT has taken on considerable debt, especially with its acquisitions and overseas development in recent years. These overseas investments provide CAT the opportunity to increase its presence in developing nations like China and India. With China s continued infrastructure investment, CAT is positioned well to provide the 8 Hoovers 9 Hoovers 6

7 needed equipment to supply China s rapid growth and development. Despite these opportunities, CAT faces continued threats from a slow recovery in the housing markets and in increased environmental regulations that will slow the pace of construction, especially in developed nations with stricter standards. Finally, while their broad international presence is a self-hedge, CAT is still vulnerable to credit and monetary issues in several markets, and would be hard hit by another global financial crisis, especially with its own financing wing. Questions Management Corp level What would be the future of CAT in China after Zhengzhou Siwei accounting fraud? How often unfortunate incidents such as accidents happen here? How are goals for this job set? What areas of the company are growing? What are the biggest challenges facing your company? What are the company s future plans and goals? What has led to your company s success? Employee experience at work What is a typical day/week like for a person in this position? Which parts of your job are most challenging? Do co-workers socialize together? What is the length of the training program/period? What areas of the company would you like to see strengthened? What do you like most about your company? Product manufactured What is your minimum production run? What activities are routinely performed in this job? What new technological advances do you feel are essential to be competitive? 7

8 Exhibit 1 - Revenues in Billions : $70 $60 $50 $40 $30 $51.32 $32.40 $42.59 $60.14 $65.88 $20 $10 $ Exhibit 2 - Net Income in Billions : $6 $5 $4.93 $5.68 $4 $3.56 $3 $2.70 $2 $1 $0 $

9 Table 1: Competitive Figures in millions Competition Revenues Gross Profits Assets Komatsu $ 1,981, $ 540, $ 2,105, CNH Global 19,185 $ 4, $ 23, Volvo $ 310, $ 75, $ 172, Figure 1: SWOT Matrix for Caterpillar Strengths Weaknesses Strong brand Market Leader Considerable Debt from investments and acquisitions Global Presence Diversified portfolio Opportunities Threats Growth in China and other developing nations Strategic acquisitions to diversify Increased competition Environmental regulations Global monetary fluctuations Credit market crisis 9

10 Dupont Team 2 Company and Competitor Research These figures represent these company's global figures as financial figures were not disaggregated by China based operations.* Company/Median Name* Revenue Profit Margin Assets Total Employees DuPont B 7.96% 49.7 B Dow Chemical B 2.08% 69.4 B 54,000 Business Funtion Chemicals, Food, Protection, Sustainability Chemicals, Basic Materials BASF SE B 6.52% 79.4 B 113,452 Chemicals Global Operation Latin American, North America, Europe, Middle East, Asia Pacific, Africa Latin American, North America, Europe, Middle East, Asia/ Asia Pacific, Africa Asia Pacific, Europe, Africa, North America, South America SWOT Analysis Strengths: - Broad business portfolio and heavy spending on R&D for continuous innovation - Geographically diversified, which continues to help the company grow despite impacts of slowdown in any other country Opportunity: - Entering into emerging economies in Asia with aggressive marketing and pricing strategy to develop a strong foothold - Expanding India and China market - Growing solar energy market - Expansion of animal health solutions - Increasing demand for biofuels Weaknesses: - Stagnant market shares due to stiff competition in relatively stagnant economies - Lower operating margin compared to competitors o DuPont: ~7.7%; Industry: 8.9% Threats: - Protection of intellectual property rights, especially for a company with large investments in R&D - Risks with conducting business outside the US - Environmental regulations - Litigation issues 10

11 Questions 1. What has or is DuPont doing to encourage innovation? 2. How would you describe DuPont s management style? 3. What are some current trends within the industry? 4. Can you shine more light on DuPont sustainability? 5. What has been some of DuPont s greatest challenges? 6. How does DuPont tailor product offerings to the China market? 7. How does DuPont demonstrate a sense of pride in its employees? Can you help us understand what it looks for in return? 8. How do operations in China differ from those in other counties? 11