Examine the Apex Chemical Case and Answer the Questions Provided

Given the limited information in this case, which product would you recommend that Apex commercialize? Why?

The product I would recommend that Apex commercialize would be Compound B-227

By using the 5C framework we can look at the steps taken to make the decision. During the first step in analyzing the company’s growth strategy, Apex does not typically make products just to be in a market segment to be popular. Here is one area that would not follow the typical Apex business model. In this instance though while the market for plastic oxidizers is growing, the type that Apex is making (stignones) is declining. In this instance in a market with a later stage product it would be in Apex’s best interest to abandon their current growth strategy of application innovation and embrace this new product. This can be seen as growing an existing platform by manufacturing a more desirable product.

Apex understands that the lifecycle of its stignone product is in the declining stage, but the overall market for the beta version of the plastic oxidizer is growing. When comparing this to a strategy to produce Compound A-115, it is more appealing to produce B-225 because the Compound A-115 market is stable at $10m. Because the products have similar margins, there is more potential revenue, and net profit in the B-225 market, because it continues to grow, and already has higher margins in this space ($40mm at 25% market share =$10mm) vs. a portion of a $10mm product with A-115. By using platform innovation during this growth stage to catch up to the market Apex can regain a competitive edge and capture some of the 10% annual decline in stignone sales by replacing them with beta sales.

In step 3 when identifying customer needs both current and future, Compound B-225 is the better choice; Customers have enough supply to meet demands with A-115. The current technology does the job and the market is stable. A breakthrough technology is not demanded by consumers, so there may be a...