Loctite Corporation: Industrial Products Group

1105 Words5 Pages
We recommend that Industrial Products Group (“IPG”) of Loctite Corporation should not launch Bond-A-Matic 2000 (“BAM”) in FY 1978. Instead, Loctite should allocate its limited resources to focus on growing its two profitable portfolios: anaerobics, and Cyanoacrylates (“CAs”). Introducing BAM will have negative impact on Loctite's: 1) resource allocations, 2) brand image, and 3) future income. We analyzed Loctite's current product portfolio, brand image, and target industry to justify our proposal. IPG Product Portfolio : The BCG Framework We analyzed IPG's product portfolio in light of the BCG's framework (Cash cow, Star, Question, Dog) and confirmed that Anaerobics was firm’s “Cash Cow”. Anaerobics, along with Cyanoacrylates (CAs) adhesive products, made up almost 70% of IPG's revenues. Plus, the company held 85% of market share in the North American anaerobic market in 1978. CAs were the firm's “Star” portfolio. The growth rate of CA sales outpaced that of the total adhesives market, growing 20% annually. The dispensing equipment were the firm's “Question Mark" portfolio. Although 30% of IPG sales were generated by the equipment sales and the Systems Division had built a reputation for high quality equipment, the profitability of equipments was still lower than the adhesive products. Figure 1. BCG Framework for Loctite's Products Star Cyanoacrylates(CAs) Question Mark Adhesive Dispensing Equipment Cash Cow Anaerobics Dog N/A IPG Product Portfolio : Monetary Resource Allocation The priority of resource allocation is to invest in “Cash Cow” and “Star” portfolios and invest the balance to “Question Mark” portfolio. IPG was already generating 70% of its profit from adhesives sales, while its equipment sales accounted for the remaining 30% of the profit. The adhesives market was growing much faster than equipment market. Based on the current profit

More about Loctite Corporation: Industrial Products Group

Open Document