American Cyanamid Case
To: American Cyanamid
From: Darryl Fry
Subject: Chemical Division Restructuring
The chemical division in American Cyanamid has been decreasing in sales, profit, and revenue due to the inefficiency of the management structure and the too broad of focus on selling/manufacturing products outside of the core businesses. The chemical division thought to acquire new businesses based on the fact that the core businesses were unable to produce results and their growth potential was minimal. Therefore, they spent money buying products such as melamine, acrylonitrile, electronic chemicals, solar cells, etc. However, sales and profit in these newly bought products was either a hit or miss. Acrylonitrile went down by 20% to $37 million. On the other hand, engineering materials went up 3% to $100 million. Although some of these new products are going up, we can try to focusing more of our attention to those specific products that are doing the best for us. This means that we have to get rid of products such as acrylonitrile that aren’t performing as well and there is low demand for. This plan, however, doesn’t suggest getting rid of all products that aren’t doing well; just those that aren’t high in demand and aren’t making that much money. Then, amplify our focus on developing those that have the potential to make more money for the company. For example, focusing more of our attention toward the carbide products and acrylic fiber operation because those are the chemical division’s key products and make a lot of money would be more beneficial for us than expanding more and buying other businesses or products. There are some problems that arise when trying to get rid of some products and focusing on the core products. The acrylic fiber products, although made the most sales in 1990, has poor long-term growth potential. Furthermore, the company believed that the other core products had poor growth potential. However, we haven’t maximized our marketing and sales
From: Darryl Fry
Subject: Chemical Division Restructuring
The chemical division in American Cyanamid has been decreasing in sales, profit, and revenue due to the inefficiency of the management structure and the too broad of focus on selling/manufacturing products outside of the core businesses. The chemical division thought to acquire new businesses based on the fact that the core businesses were unable to produce results and their growth potential was minimal. Therefore, they spent money buying products such as melamine, acrylonitrile, electronic chemicals, solar cells, etc. However, sales and profit in these newly bought products was either a hit or miss. Acrylonitrile went down by 20% to $37 million. On the other hand, engineering materials went up 3% to $100 million. Although some of these new products are going up, we can try to focusing more of our attention to those specific products that are doing the best for us. This means that we have to get rid of products such as acrylonitrile that aren’t performing as well and there is low demand for. This plan, however, doesn’t suggest getting rid of all products that aren’t doing well; just those that aren’t high in demand and aren’t making that much money. Then, amplify our focus on developing those that have the potential to make more money for the company. For example, focusing more of our attention toward the carbide products and acrylic fiber operation because those are the chemical division’s key products and make a lot of money would be more beneficial for us than expanding more and buying other businesses or products. There are some problems that arise when trying to get rid of some products and focusing on the core products. The acrylic fiber products, although made the most sales in 1990, has poor long-term growth potential. Furthermore, the company believed that the other core products had poor growth potential. However, we haven’t maximized our marketing and sales