Stafford Chemical, Inc. is a privately held company that produces a range of spe

Question

Stafford Chemical, Inc. is a privately held company that produces a range of specialty chemi- cals. Currently, its most important product line is paint pigments used by the automobile in- dustry. Stafford Chemical was founded more than 60 years ago by Phillip Stafford in a small town north of Cincinnati, Ohio, and is currently run by Phillip’s grandson, George Stafford. Stafford has more than 150 employees, and approximately three-quarters of them work on the shop floor. Stafford Chemical operates out of the same plant Phillip built when he founded the company; however, it has undergone several expansions over the years. Recently, a Japanese competitor of Stafford Chemical, Ozawa Industries, announced plans to expand its operations to the United States. Ozawa, a subsidiary of a large Japanese indus- trial company, decided to locate a new facility in the United States to better serve some of its customers: Japanese automobile manufacturers who have built assembly plants in the United States. The governor of Ohio has been particularly aggressive in trying to persuade Ozawa Indus- tries to locate in a new industrial park located about 30 miles from Stafford’s current plant. She has expressed a willingness to negotiate special tax rates, to subsidize workers’ training, and to expand the existing highway to meet Ozawa’s needs. In a recent newspaper article, she was quoted as saying: Making the concessions I have proposed to get Ozawa to locate within our state is a good business decision and a good investment in our state. The plant will provide high-paying jobs for 400 of our citizens. Furthermore, over the long run, the income taxes that these 400 individuals will pay will more than offset the concessions I have proposed. Since several other states have indicated a willingness to make similar concessions, it is unlikely that Ozawa would choose our state without them. George Stafford was outraged after being shown the governor’s comments. I can’t believe this. Stafford Chemical has operated in this state for over 60 years. I am the third generation of Staffords to run this business. Many of our employees’ parents and grandparents worked here. We have taken pride in being an exemplary corporate citizen. And now our governor wants to help one of our major competitors drive us out of business. How are we supposed to compete with such a large industrial giant? We should be the ones who are getting the tax break and help with workers’ training. Doesn’t 60 years of paying taxes and employing workers count for something? Where is the governor’s loyalty? It seems to me that the state should be loyal to its long-term citizens, the ones who care about the state and community they operate in—not some large industrial giant looking to save a buck.

1. Define the Problem (1-2 sentences)

2. Analyze the situation

3. Give 3 alternatives

4. Give 3 recommendations to solve the problem that are specific and actionable.

Explanation / Answer

The problem: Globalization has led to this current day scenario wherein Economies are now interdependent than ever before and therefore competitors can try and claim the share even if they are a foreign entity.

Situation analysis: This is a grave situation wherein the loyalty of a 60-year-old indigenous corporation should be considered before taking any decision. However, the governor's viewpoint cannot be neglected completely as new corporations mean more job avenues and more taxes for the state. The need of the hour is to strike a balance between protecting the in-house organizations while trying to create better options for the citizens and emphasizing on the development agenda. It is obvious for the Stafford's to be upset as the monopoly of the business will no more be in place as the market share will be divided because of the competition. One thing that Stafford's chemicals need to consider is that the competition is not always bad. Competition means an opportunity for growth too and optimum quality products coupled with good marketing will go a long way.

Alternatives :

1. Aggressive marketing plan to be ready in case of the competition arrives in the vicinity. There is always a good chance that some of the other competition will arrive. Therefore, one solution to it rather is ready with new ideas of thriving in the market and accept the challenge.

2. Seek Better avenues of business. We are not pretty sure as to how the company is doing in terms of revenue and overall business. But if the case may be, its time to seek and expand to other better avenues of business after thorough analysis.

3. Amalgamation can be one good option depending on the current market performance of the Stafford chemicals. When you already know that a firm can be a competitor of yours in coming days. Why not strike a deal and use your influence to your advantage. I am pretty sure that in return this Japanese Company would have something to offer. Maybe an efficient Japanese technology in return for the endorsements?

Recommendations

1. Highlight your concern to the Governor and hold talks of an Amicable decision. Afterall they will have to entertain your problems because they need a better tomorrow but not at the cost of the current job holders.

2. Chart out a strategic plan in case the competitors arrive. There should be a solid and aggressive rebranding to take on the competitor and to retain the market.

3. Take the local employee union by your side. Since Staffords have been their bread and butter or years, I am sure the locals will return the favor. Play the loyalty card.

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