This case tests a candidate's ability to structure a product launch problem, develop a pricing strategy based on value creation, and recognize both financial and non-financial benefits (particularly carbon credits). The case requires quantitative analysis of market size, cost structure, and profitability, combined with strategic thinking about competitive positioning and risk factors.
Your client is ChemCo, a global manufacturer of Chemical specialties based in the UK with profits of approximately $200M. Although Petrochemical solvents are necessary in paint formulators, they are a source of CO2 emissions, represent a safety hazard (they are flammable) and, also, a health hazard to operators and painters.
ChemCo has recently developed an innovative chemical ingredient that paint manufacturers can include in their formulations allowing them to eliminate all Petrochemical solvents from their formulation and replace them with water.
Chemco’s CEO has hired you to understand whether it is a good idea to proceed on commercializing the product.