Walter Bürger-Kley, Stratley
Release Date: 2009-12-16
Stratley is a young and innovative management consultancy firm focussed on the chemical industry. Why was the company founded with this particular focus, and what is your competitive edge today?When we founded Stratley in May 2005, our aim was to create a unique combination of high-profile consultants with extremely experienced former top-managers from the chemical industry. The founders had already worked together for quite a long time, and the combined industry experience of our leadership team comprises almost 200 years. Since then, Stratley has proven its thought leadership by developing innovative solutions such as the Profit Navigator, the Industry Map or the Site Score Card.
The key issue in consulting is: how do you develop solutions that are actually implemented by the client? Our answer to this issue is to ensure that our client owns the solution. Ownership is achieved by working closely together on projects. Therefore our consulting approach is to create a client project team with very few consultants rather than a large consulting team with very few client contacts. Our experienced people are able to integrate quickly and smoothly in client teams. We help our clients to develop their own solutions. The best result is when the client says: “the consultants helped us, but it is our solution.” The results are solutions that can and will be implemented, not just studies on paper.
In 2005, when Stratley was founded, global economic growth was driving the development of the chemical industry. Has the financial and economic crisis had the same impact on Stratley as it had on your clients?
The impact of the financial crisis became obvious in August/September 2008 in the chemical industry when BASF was the first company to announce a reduction of production. Suddenly the demand from customers disappeared; companies would not receive a single order for weeks and production decreased by 10% to 50%. Today, the situation has stabilized and there is slow growth from a stable base. We had a tough time last year because our clients delayed projects. Some projects for which we had already signed contracts were even cancelled. In springtime we developed crisis management approaches that helped our clients to better cope with the challenging environment they were in. Thus we were able to win new projects again. We felt a tremendous uncertainty for a year but eventually we managed to navigate successfully through the crisis.
While Chancellor Merkel recently declared that the worst has yet to come for the German economy, China reported 8.9% economic growth in the third quarter. Stratley has been active in China since it was founded; does the current situation mean that you will increasingly focus on the Chinese market?
China has indeed asserted itself in an impressive way, coming out of the crisis very quickly and returning to the former high growth rates. Our highest level business contacts in major Chinese chemical companies tell us that they intend to take advantage of the crisis in Europe and America, for example by acquiring western companies. This will bring about opportunities for Stratley to support those companies. Therefore our business in China will grow.
Why would Chinese chemical companies work with Stratley while there are a range of other international consulting firms operating in China as well?
The Chief Executive for Greater China of a major chemical company once said: “I used to have a negative attitude towards consultants. But Stratley has a completely different way of working together with clients and that makes a real difference.” Our clients really like the way we work. Chinese chemical companies not only can profit very much from Stratley’s unique knowledge of the chemical industry and from our extensive management and consulting expertise. We also bring to the table our understanding of the German culture, the way German companies operate, and our ability to work in a Chinese environment.
In which areas do you identify the main opportunities to work with Chinese companies in the coming years as high end producers enter the international marketplace and low end producers raise their quality standards to compete with international players in the domestic market?
Our focus will be on supporting Chinese companies to become global and to live up to international standards when it comes to organizing and managing their extended activities. Chinese companies have developed so impressively that they are about to become truly global players. So far they have concentrated on the Chinese markets, but now it is time to look for international opportunities. And if you want to expand globally you have to think about acquiring foreign companies. The financial and economic crisis created a unique opportunity for Chinese companies to make acquisitions in Western Europe and North America where troubled chemical companies have become easier to take over. I predict that we will see some major acquisitions by Chinese companies in the Western world.
What are the main changes that these Chinese companies have to make to their organization and business strategy in order to be successful in Europe?
First, international expansion is a step-by-step process. Western companies needed decades to develop truly global businesses. Chinese companies can learn from their experience, but they nevertheless should think of defining a phased approach to becoming global.
Second, we know that more than 50 percent of all acquisitions turn out to be failures. Chinese companies might start with smaller targets in order to gain experience in managing acquisitions. In general, a very professional target selection and evaluation process must be in place beforehand. And when it comes to integration, they need to have a well devised plan to deal with cultural issues regarding management and workforce.
Third, Chinese companies must align their organization with international growth. Over the past decades many western chemical companies became global players. They started with minor overseas activities which were added to existing business units before eventually an international division was created. After several waves of reorganizations we have come to the current organization structures which are now usually based on global business groups. Managing such complex structures will be a challenge, too.
Finally, everyone should be aware that the markets in Europe and North America are highly competitive. Mastering the management methods that you need to survive in such markets is essential.
The Chinese market has much greater overall growth potential than the German market, what could Chinese companies gain, in addition to pure business volume, by entering the German market?
Assuming that Chinese companies enter the market through acquisitions, what is the benefit? Large German chemical companies are typically present in a hundred countries all over the world, so the Chinese company would gain access to these countries immediately and could use the sales organization of the German company. Another advantage would be the transfer of technology and management know how that a typical German chemical company possesses. This will have a positive impact on the growth in the domestic Chinese market, too. Gaining expert knowledge of products and markets in Europe and elsewhere is another factor. And do not forget the regulatory environment in Europe which requires in-depth knowledge of matters such as REACH, for example.
The Chinese government is tightening environmental regulations, how will this affect the industry and which contribution could companies such as Stratley make to the development of the Chinese chemical industry?
We are convinced that complying with environmental regulations can be an investment with high returns, if done in the right way. Chinese companies are in a favourable position: they can use a green-field approach in many cases while western companies are often burdened with legacy assets. Take chemical parks, for example, which can be designed with the objective of optimizing energy consumption and waste management. In such cases, German industry experience and technical expertise can be very helpful. Stratley has a strong track record in developing and optimizing chemical park models.
What are your expectations that you have for the role that Chinese companies will play in the development of the global chemical industry in the future?
Chinese chemical companies will become one of the major driving forces in the global chemical industry. I expect major Chinese chemical companies to grow very quickly, particularly through significant acquisitions of foreign competitors. They will become true global players within the next 5 – 8 years. These companies will probably trigger a faster consolidation and restructuring of the chemical industry in Europe and North America. Furthermore I expect that Chinese companies will build strong alliances with Middle Eastern raw material suppliers. As a result they will gain a very strong position in basic chemistry and petrochemicals, putting the remaining petrochemical industry in Europe under additional pressure.
How can Stratley contribute to and support the global expansion of Chinese chemical companies?
We would like to help Chinese chemical companies to master the management methods that international chemical players use to manage a global portfolio of businesses and to produce and market their products globally. When it comes to aggressive growth by acquisitions, Chinese companies will get used to base their investment decisions on a methodical assessment of opportunities in order to avoid sunk investments. The organization structure to manage a global business is another area of our expertise. In summary, there are three areas where we can make a contribution: support companies to expand globally, help them to manage a diverse portfolio of businesses across several regions and build or expand their international marketing capabilities.
As you stated, the financial and economic crisis provides a unique opportunity for Chinese companies to go global, which also mean that the time is now to strengthen your position in China. How big is the window of opportunity to establish Stratley as a key player in the Chinese market?
For Stratley, the window of opportunities remains open as long as the process of globalization continues for the Chinese chemical industry. The more the Chinese players go global, the more demand for our services will arise, because we offer a unique selling proposition with our expertise in chemical industry, our result driven consulting approach, and our ability to work in both worlds.
| Company: | Stratley |
| Position: | Member of Management Board |
| Country: | Germany |