The transformation of ICI
An ICI case study

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Page 1: Introduction

In the late twentieth century, major corporations in modern industrialised economies have recognised the need to add value to their products. Adding value means making the product more desirable and valuable to the consumer. Consumers want to buy those goods and services which best meet their wants and needs. Nowadays, these wants and needs are becoming increasingly sophisticated. Today's consumer, for example, does not want 'any old pair' of trainers - the consumer wants ones which incorporate the latest gimmicks and technologies and which, of course, carry a prestigious name. The intelligent organisation is therefore continually seeking new ways to add value in the production process in order to influence the buyer's perception of the product in a favourable way.

Ici 4 Diagram 1The main reason why it is important to add value is modern technology. Technology means it is relatively easy for producers throughout the world to manufacture and sell standard goods and services in bulk. Automated factories are now relatively easy to set up and modern communication and distribution networks have opened up many areas which, until recently were seen as distant and remote. It is therefore relatively easy to produce standard textiles, chemicals, engineering components or television sets and, most obviously, car prices reflect this. In order to keep ahead of the competition, it is now necessary to move beyond the standard unit of production - it is necessary to produce something that is a bit special. This is why companies that can add more value than their rivals are able to lead the field.

This case study focuses on how ICI, an intelligent, modern company, has altered the way in which it does business in order to create more value for customers. It examines the transformation of ICI and the rationale behind the company exiting commodity chemicals and moving into speciality chemicals. Traditionally, ICI was one of the world's biggest producers of basic industrial chemicals such as polyester, titanium dioxide and ammonia. It invented polythene and perspex. Today, it is a leading manufacturer of exciting new products such as snack flavourings, perfume fragrances and adhesive for microchips, as well as being the world's leading decorative paintmaker. By the end of 1998, most of the industrial chemicals division which, only ten years ago, accounted for more than two-thirds of ICI's business, will have been sold to other companies - taking most of the huge plants familiar to the skyline out of ICI's ownership.

  1. The vision of the new ICI is that it will have a spectrum of products, which stimulate the senses, whether of colour (paints), taste (food flavourings), smell (fragrances) or touch (polyurethane and acrylic materials).
  2. The result is a collection of consumer-related businesses stretching from Dulux paint, Cuprinol and Polyfilla, to personal care products, fragrances, flavourings and highly specialised adhesives.

ICI | The transformation of ICI