CASE 1.1 Great Lakes:Great Decisions: Jenny Mead, Andrew C. Wicks, Patricia H. W

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CASE 1.1 Great Lakes:Great Decisions: Jenny Mead, Andrew C. Wicks, Patricia H. Werhane University of Virginis, Darden School Foundation Hence gout and stone aflict the human race Hence laty jaundice with her saffrom face Palsy, with shaking head and tot'ring knees And bloated dropsy, the stounch set's disease Corporation. In 1948, CEO Charles Hale acquired the Michigan-based Great Lakes Chemical Corporation in an effoet to turn the company into a natural resources conglomerate. During the 1950%, Great lakes focused on A ROMAN POET'S DESCRIPTION OF LEAD into the bromine and chemical business. In 1958, Emerson Kampen, who would later become CEO, discovered that had great quantities of bromine-rich brine deposits. With this resource, Great Lakes became the top presence in the bromine business, eclipsing even Dow Chemial which sold its bromine basiness to Ethyl policy options she felt the company should parsue. There retail and industrial products and was particularly impor- POISONING Ellie Shannon, the divislon manager overseeing bromine production for the Indiana-based Great Lakes Chemical Corporation (Great Lakes), faced a thormy diemm n Arkansas i a matter of hours, she had to make a to the company's board of directors on which of three Corporation in 1986. Bromine was used in a variety of was ferce public opposition to the leaded additive that ats a fire-retardant additive in textiles and plastics Great Lakes produced via its subsidlary, Octel Associates In 1997, Octel was one of the few remaining produc Lakes developed and produced a variety of specialty ers of lead additives, which had long ago been banned in the United States and most developed countries, but tant as a fire-retardant additive in textiles and By the last decade of the twentieth century, Great chemical products for such applications as water treat- ment, specialty household cleaners, flame retardants scl used in many developing countries There was polymer stabilizers, fire suppressants, and performance worldwide pressure, particularly fromm ena- chemicals. Products included methyl bromide, used for ists, on Great Lakes to stop prodacing the lead additive However, ending production would have a buge negative impact on Great Lakes's profits and some negative effects agriculture; clear beine fluids for oil drilling bromine phosphoras-, and antimony-based Bame s specialtles for automotive com- would have a buge negative synergists; and fauorine ponent systems. Despite a plethora of prodacts, Great Lakes had its greatest success with Octel Associates, a tetracthyl lead (TEL) producer. After acquiring Octel Associates in 1989, it accounted for well over half of the company's total operating profit each year, even as its share of sales declined on countries that had not made the transition from leaded to unleaded gasoline for their cars and machinery. Great Lakes Chemical Corporation In the 1930s, Great Lakes was originally founded as an od Great Lakes never set out to be a lead additive and gas exploration company. McClanahan Oil Company. prodocer. The company acquired Octel Associates for It's name was later changed to Great Lakes Chemical its capacity to produce bromine. While Octel used that This case was prepared by Jenny Masd, Senior Ethica Research Assocne,Andew C Wicks, Associane Professor of Business Administraion Patricla H.Wechane Prsor of Business Ethics and R Edward Freeman, Els&Signe; Olson Prohesoor of usiness Administration, it was wrimen as a besis for clas discussion uther then to ustrats offective or inalective handing of an edministrative sibuation

Explanation / Answer

The cost leadership strategy would not work for Great Lakes in this case study because of the lack of competition in the industry and the higher capital cost required for plants. Leaded gasoline was found to be harmful to the public and most of the gasoline companies made a transition to unleaded gasoline except Great Lakes. Great lakes did not do the transition even after protest from environmentalists on production of lead additive produced via Octel associates, because the end of production would cause huge financial impact on company and other developing countries which do not transitioned to unleaded gasoline. Leaded products were banned by end of twentieth century due to harmful effects on public. Developing countries still used leaded gasoline and the there were no competitors for Great Lake because other major producers discontinued making tetra ethyl lead which is the additive for gasoline. Environmental factors, large capital cost involved in building plants and the unsavory publicity affected Great Lakes in making competitive advantage through cost leadership strategies.

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