Founded in 1955 by Dr Emmett Brown, the Dreich Chemicals Group is a Scotland-based
multinational chemical company that focuses on the production of water treatment chemicals
(e.g., antifoams, disinfectants, and resin cleaners) and the provision of analytical services.
Dreich has business operations in North America, Europe, Asia, and Australia. Traditionally,
the company offered a range of products and services to various customer segments under
the umbrella of Dreich Chemicals. But in the early 2000s Dreich went through a re-structuring
process and as a result created two separate business units. Since then, the company sells
commodity chemicals under the Dreich Water Chemicals brand, where it offers customers
competitive prices and ‘no-frills’ standardized products sold over the internet. It also operates
a value-driven business model under the Dreich Solutions brand, where it targets customers
who expect customized, high-quality products, and sophisticated analytical services. To serve
these customers, the company has developed trusted relationships with large customers like
Swiss-based Nestlé and Dasani in Georgia, USA.
In recent years, the company has noted that customers increasingly struggle to pay for some
of its high-end products and services. At the same time, low-cost competitors are disrupting
the low-end of the market by offering commodity chemicals at prices below those of Dreich.
The company is, therefore, considering changing the way it does business, potentially going
back to the roots by integrating both of its units, while moving towards a new “performance
pay” model. As Marty McFly, CEO of the Dreich Chemicals Group, explains: “Instead of simply
selling our commodity or high-end products, this new model would allow customers to
purchase a desired result rather than the chemicals. On the other hand, staying connected to
the water treatment chemicals in use, would allow us as a company to optimize the water
treatment process of our customers around the world and present the opportunity to build a
large and valuable knowledge base that we can use to improve chemical use across our
customer base and charge for the service.” The proposed integration strategy would also
support one of Dreich’s new digital transformation projects on predictive maintenance, which
focuses on estimating risks of unwanted operating conditions and events. These predictions
enable demand-oriented planning of maintenance activities. With this explorative project,
Dreich aims to develop new, digital competencies that, in the future, can enable the company
to create new products and services that complement its traditional chemicals business.

Questions

While Dreich has successfully operated two businesses simultaneously for almost two
decades, it is now considering to bring its two businesses back together, eventually moving
back to its original historic structure, but with a different business model: “performance pay”.
Answer ALL questions. Questions carry equal marks. Word limit per question: 1,500
(+10%)

(1) Critically discuss the proposed integration strategy. In your discussion,
compare and contrast separation and integration and also analyse what
capabilities Dreich would require to keep separate or integrate the business
models.

(2) Critically discuss if Dreich should operate (1) a global business model, i.e., one
transferable to and applicable in other national settings, (2) a local business
model for each market it operates in, or (3) a hybrid between the two. In your
analysis, develop a strategy for implementing the solution you propose.

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