Business Strategy

Sun Chemical brand video

Five Forces Model

Threat of substitutes: Threat of substitutes occurs when companies within one industry are forced to compete with industries producing substitute products or services. Substitutes limit an industry's potential returns by placing a ceiling on the prices that firms within that industry can charge to make a profit. Sun Chemical has been leading the ink and pigment industry for over 100 years. Though they have a medium level of substitutes, the development of e-readers and other devices are soon to cause problems for the ink industry, much like the way people are first to search the internet for news rather than pick up a newspaper.

Bargaining power of customers: The bargaining power of customers is the ability of the customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Consolidation of ink companies allows Sun Chemical to increase their buying power across the market segments. Sun Chemical's primary customers, Smurfit-Stone Container, RR Donnelly, and Tetra Pack do not have many other ink companies to choose from, therefore the bargaining power of customers is relatively low.

Bargaining power of suppliers: The bargaining power of suppliers is the ability to influence the setting of prices. The more controlled the supply, the more power it has against the market. In this industry, the bargaining power of suppliers is strong primarily because it is largely dependent on the paper industry. Sun Chemical's major suppliers are BASF, Exxon, Easton Chemicals, San Joaquin Chemicals, and Sachtleben.  

Threat of new entrants: Threat of new entrants refers to the threat new competitors pose to an existing industry. Threat of new entry is low if products are differentiated, consumer switching costs are high, or brand names are well-known. The threat of entry to Sun Chemical is extremely low. There are very few to none new entrants coming into the industry for Sun Chemical.

Industry rivalry: Rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns, and service improvements. High rivalry limits the profitability of an industry. Sun Chemical's direct rivals are Flint, INX, Siegwerk, and Dupont. Because they are the leading company, industry rivalry is considered medium. For a complete listing of competitors, click here.



Competitive Strategy

Competitive strategy refers to how a company competes in a particular industry. It is concerned with how a company can gain a competitive advantage. Sun Chemical is focusing on industry-wide-differentiation, which produces a better product across the industry. They are focused on being the top company in the ink and pigment industry across the globe. A main competitive strategy of Sun Chemical's inventory system is that is keeps finished goods and raw material inventories at low levels so it reduces the cost of the company. Sun Chemical has locations across North America, Europe, and Latin America with headquarters in Parsippany, New Jersey. In Europe, they have 29 different locations ranging from Austria to Spain and Latin American countries, such as Argentina to Mexico with a wide variety of customers. At Sun Chemical, they have a responsibility to raise awareness about environmental issues, such as regulatory and consumer driven forces. They continue to develop methods to innovate products that are more sustainable from both an economic and environmental standpoint. They "strive to use manufacturing processes that demonstrate environmental excellence through lower waste generation, lower energy and water usage, and strong safety performance as measured by several key metrics: greenhouse gas emissions, energy and water consumption, carbon footprint, and safety records. The result of their efforts is the ability to provide customers with eco-efficiency and enhance the sustainability of their processes and end products (Reference 2)." Sun Chemical is dedicated to improving sustainability across the globe.

Sun Chemical CEO Rudi Lenz officially opens Frankfurt plant

"As the world's largest producer of inks, pigments and coatings, we are the materials leader in the graphic arts industry. As such, we are committed to lead in establishing analytical protocols and high operational and product performance for sustainability. The markets, in which we participate, with our influence, should strive to set a standard for resource efficiency, safety and environmental protection. At Sun Chemical, we are constantly looking for ways to make our customers profitable and responsible leaders." 

-- Rudi Lenz, President and CEO, Sun Chemical