Business Models in the Chemical Industry Amid a Changing Competitive Landscape

The market environment for chemical companies has changed dramatically during the last decades, especially considering the rise of emerging market players and, along with it, intensified competition. With Industry 4.0 knocking at the door, the pace of change is not expected to slow down. Thus, chemical companies more than ever before need to have a clear strategy in place. First, they have to decide which businesses they want to be in. Second, organizing those businesses according to their characteristics and strictly pursuing a business model will be decisive in creating and strengthening competitiveness. This article provides an overview of the basic business models used in the chemical industry and their success factors. The main business models are described in detail: basic chemicals, application-oriented solutions, and product innovation-driven specialties. Examples illustrate how these business models work. The corresponding success factors are highlighted: keeping a clear view of market realities, employing strict implementation, having a review system in place, and ensuring flexible back-end organization. If this can be achieved, several business models can be run successfully in one company, resulting in a style of business model management parallel to traditional portfolio management. Finally, the article assesses how Industry 4.0 will affect the chemical industry. The industry needs to continue to transform itself. Digital transformation will open significant opportunities for those who understand how best to apply it.