Granite Industries, Inc.
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Granite is in their fourth year of operation. The business has been well received and marketing is critical to their continued success. Granite offers a wide range of chemicals to three different customer groups. The basic market need is for innovative, quality chemicals and formulas that are reliably delivered at reasonable rates.
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Granite possess good information about the market and knows a great deal about the common attributes of the different customers. Granite will leverage this information to better understand who is served, their specific needs, and how Granite can better communicate with them.
Granite Industries is serving their customers with specialty industrial chemicals. The chemicals provided will consistently be of high quality and are not widely available. Granite Industries seeks to fulfill the following benefits that are important to their customers:
The chemical industry is characterized by a wide variety of companies ranging in size from the large companies such as DuPont and Monsanto to smaller specialty firms such as ours. The companies are generally organized by either end-use markets or product technology. In the past decade there has been a general trend in the industry to change emphasis from chemicals to biotechnology and pharmaceuticals. The cost of product development and the need to operate factories at high levels of capacity have caused chemical companies of every size to outsource parts of the chemical and manufacturing processes. This has created opportunities for smaller companies to create and occupy niches in development and contract manufacturing. The outsource industry providers occupy a market segment commonly identified as custom and toll manufacturers.
The trend of outsourcing components or ingredients of the final product has occurred for the last seven to nine years. Granite has seen no indicators to indicate that this trend will change anytime soon.
With the proliferation of smaller companies producing chemicals for larger companies, or more complex products, there has been a 8% industry growth rate for subcontracting. As the capital market has been dealing with the recent Internet and capital fallout, capital has become more scarce, particularly venture capital. The industry growth rate is forecasted to continue to grow at the current rate.
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities facing Granite Industries.
In the mainstream business, channels are critical to volume. Manufacturers and distributors with impact in the international chemical market desperately need specialty and toll manufacturers like Granite to meet the demand. There are many specialty manufacturers, all of whom seem to have carved out a specific niche of expertise, and upon whom these major manufacturers depend for products. In competition, it seems that the line is drawn at the level of quality performance. Granite has achieved that level and is recognized for a high standard of quality performance. Companies who would seem to be competitors have subcontracted production to Granite because they do not have the ability to supply that level of quality.
Granite has achieved another milestone in the industry by developing certain formulations that they estimate would cost another firm $450,000 to duplicate. The Creatine Monohydrate formulation and process is one of them. Granite Industries has the only process in the world that can produce this supplement in liquid form. It is extremely important that the opportunity is seized and exclusive marketing for this product begins.
Creatine Monohydrate. This is a dietary supplement commonly used by athletes to improve strength, endurance, and muscle mass. Creatine has become the most popular body building supplement in use today. It is sold in many forms through health food stores, drug stores, and discount chains. The leading producers of Creatine are in Europe, and only a few recently in the United States. The distribution system is complex, with manufacturers selling through a layered system. Granite has developed a Creatine-based drink that is one-of-a-kind. Granite hopes to begin marketing the product in 2004. Sales potential is well over $1 million per year.
Kelate Cu. This is a specialty product used in cosmetics. It is distributed through Distributor A by special arrangement. Their largest customers are Estee Lauder and Revlon. Sales of this product are forecasted to be between $140,000 and $175,000 per year.
Melasyn 100. This is a synthetic form of natural melanin. It is used as a pigment for vitiligo preparation and as a self tanning agent. It is water soluble, which makes it easy to formulate in cosmetic preparations. Granite is working with Customer A to supply this product to Distributor A. Sales are projected to be at $250,000 in 2003.
G-REZ DB. This is a specialty coating material used on industrial buffing pads. Granite has developed this product at the request of the Customer C and sales could reach $300,000 in 2003.
Becrosan 2128A. This is a corrosion inhibitor with a bright future. Similar chemistry has been very successful in Europe for several years. Granite has manufactured this product on a toll arrangement for Customer B at a level of $65,000 per year. With marketing, the potential is estimated to be $260,000.
Ion Exchange Resins. Granite provides a toll drying service for Customer D at a level of $35,000 per year.
Recrystallized Flavoring Product A. This is a crude Flavor A extract. Granite purifies the extract into an edible grade flavoring using our proprietary recrystallization process. It is then used in both food and tobacco industries. Granite Industries has teamed up with Distributor B, the world's largest distributor of Flavor A, to develop the process. Broker A is the broker. Estimated sales based on current demand levels are $75,000.
Note: Other company names and financial information has been removed from this sample plan to protect confidential and proprietary information.
The following variables are the keys to success:
The critical issues that Granite faces are:
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