Chemical Manufacturing Industry Essay Example | Topics and Well Written Essays - 3500 words

Chemical Manufacturing Industry - Essay Example The paper tells that to be able to earn good profit out of manufacturing chemicals, business owners are required to produce chemical products by bulk. Aside from the tight market competition within the chemical manufacturing industry, managers should be aware that the monetary requirement in the establishment of a high-volume chemical manufacturing plant is high. Within the chemical industry sector, the threat of a new entrant is moderate. Even though a potential new player could easily enter the industry, there are quite a lot of factors that could negatively influence their decision to enter the business. Although basic chemicals are usually not protected by intellectual property rights, the number of existing manufacturers within this sector is already high. Thus, it will lead to higher competition in market. With regards to specialty or fine chemicals, most of these items are protected by intellectual property rights (i.e. patent). Therefore, potential new players are prohibited to manufacture the same product. Aside from the large capital requirements, other factors that could make a potential business player refuse to enter the chemical manufacturing business is because potential new entrant is required to take advantage out of economies of scale. ‘Economies of scale’ is the secret behind a successful chemical manufacturing business. Since it would be very difficult on the part of a new entrant to immediately win the trust of large-scale buyers, economies of scale will not be that easy for new players to achieve.