Success in the chemicals industry in 2016 means the end of old habits

February 23, 2016

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The name of the game in the chemicals industry in 2015 was coherence. Activist investors honed in on the lack of compelling rationale in existing portfolios of target businesses, causing chemical companies to reconsider their product lines — sometimes as part of a merger or acquisition. Coupled with other headwinds facing the industry, chemicals executives should not expect the coming year to be any less challenging than the last few.

All this being said, PwC anticipates three issues will remain top of mind for the chemicals industry throughout the next 12 months.

First, business portfolio coherence. This trend is behind the surge of investment in the chemicals industry. Executives should prepare targeted, systematic, and dispassionate assessments of their businesses.

Second, next-generation productivity. Initiatives to separate excellence initiatives into individual corporate functions are now, generally speaking, reaching the point of diminishing returns. In some cases, they are even becoming counterproductive. The future is trending toward next-generation productivity, or an approach that adopts an end-to-end perspective of the business, from customer needs through company capabilities.

Third, digital transformation. Simply said, embracing digital transformation wholeheartedly is critical to bringing your business closer to its customers and, in turn, significant value in the years to come.

PwC’s 2016 Chemicals Industry Trends report sheds additional insight into these themes, and how chemical companies can turn these and other industry challenges into opportunities in the year ahead and beyond.

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