The Davids of the Chemical Industry
It is a scenario repeated time and time again in the chemical industry: small chemical company is very successful in a market where it competes with the large, billion dollar chemical behemoth. Why is this? What is it that makes the small guy succeed in the big leagues? Why do the Davids of the chemical industry often relish the opportunity to compete with the industry's Goliaths? In the article that follows, we will discuss this in further detail.

Characteristics of the Successful Small Chemical Company - What is it that small chemical companies have that allows them to compete successfully against much larger competitors? Here are some factors:

Small chemical companies often do very well against industry Goliaths.

Superior Service - A small chemical company will often provide a higher level of service to its customers than its larger competitors. In a market where its products are not necessarily superior to those of its bigger rivals, the small chemical company can nevertheless distinguish itself by offering superior service.

More Customization - While many chemical companies of all sizes tailor their products to meet the specific needs of certain customers, typically the smaller chemical company will customize more than the larger company as potential sales volumes go down. As potential sales volumes go down, there is a point where many big companies choose not to play, and here, the small company can do very well off of the crumbs that the big company leaves behind.

Faster Decision Making - We have all seen examples of the stifling bureaucracy that can sometimes infect the large chemical company. How many approvals are needed for this or that? Can Marketing spend some time and effort introducing this new product to the marketplace? Can R&D come up with the modifications necessary to meet the customer's requirements? When will Manufacturing be able to schedule production of the product that my customer needs? In a small entrepreneurial chemical company, these questions don't come up. The small chemical company is nimble, can turn on a dime and has virtually no bureaucracy to slow down decision making. Thus, in a market where quick response time to customer needs is important, the small company can often run rings around its larger competitors.

=> The big question however is WHY? Why can a small chemical company compete effectively against the big chemical company? Why does a small company normally provide superior service, more customization and faster decision making? It would seem that the answer boils down to this: the small company is usually hungrier than the large company. When a small company is run by an individual who owns the business, the climate is much different than in a large company. The entrepreneurial atmosphere creates a different culture, a hungrier culture, that often gets lost as companies get larger and larger.

Big has its place - This is not to say that big chemical companies don't have their place. They obviously do. We have seen that small chemical companies can do certain things very well that big companies can't. By the same token, big chemical companies can do certain things very well which small companies can't. And so, the chemical industry will always have its Dows and DuPonts and Rohm & Haas's and it will always have scores of successful, small, nimble, entrepreneurial firms as well. There is a place for everyone at the table.