In this edition, we review portfolio rationalization in 2014, examining the strategies that many chemical companies are using to divest their commodity-based assets and shift toward higher-margin specialties. We also review long-term opportunities for the African chemical industry and tax opportunities for chemical companies with the shale gas revolution.
Active portfolio management including divestitures is a powerful tool for addressing economic crises, but it should also be a part of a company’s ongoing strategy. A portfolio rationalization should be done at least once if not twice a year, factoring in recent shifts in the business landscape, regulatory developments, actions by competitors and adjustments in company business goals and requirements. Combined with other strategies, rationalization will help chemical companies maintain a competitive advantage in today’s ever-changing markets.
The economic potential for the African chemical industry is clear enough, with low costs for labor and materials, a relatively young and rapidly growing population, an expanding middle class, a rising demand for products and one of the fastest growing economies in the world. It has been a long-neglected continent within the dynamics of the global chemical industry. Significant challenges still remain – Africa consists of 54 countries with very different dynamics, such that developing a continental strategy is difficult. However, these challenges are no different to those faced by global chemical companies when they first entered China or India a generation ago. With nearly one-fifth of the world’s population, Africa is too big to be ignored.