Porter’s 5 Forces Analysis:

BUYERS:
SUPPLIERS:
COMPETITORS:
SUBSTITUTE:
POTENTIAL ENTRANTS:
1. Competitive Rivalry:-medium

India allows 100% FDI investment in the organic/special chemicals industry.

This allows foreign firms to export chemicals to India at lower prices, thereby giving do
mestic players tough competition.

BASIC OF RIVALRY-
HIGH PRODUCT DIFFERENTIATION – product differentiation is low but the
method used to produce the product differs due to IPR(Intellectual property
rights), VOL has a Zero waste discharge process which makes it stand out as the
whole industry is looking for long term sustainable partner.
FIXED AND MARGINAL COSTS- VOL produces specialized chemical products,
which require state-of-the-art technology available only to a few in the world,
fixed costs are high but economies of scale play a major role over here as
marginal cost are significantly reduced.

INTENSITY OF RIVALRY
NUMEROUS OR BALANCED COMPETITORS- VOL has global oligopoly in the two
product(IBB and ATBS) segment that it manufacturers giving it the power to
dominate the market.
HIGH EXIT BARRIERS- Companies generally enter into long-term contracts with
their clients to combat the risk of creating a new relationship, creating high exit
barriers.
FAMILIARITY -

2. Threat of new Entrants:-MODERATE

CAPITAL REQUIREMENT- Huge capital requirements for investments in R&D and
personnel requirements possess high entry barriers along with patent protection.
ECONOMIES OF SCALE having the advantage of being in the industry since 1992
along with economies of scopes
ABSOLUTE COST ADVANTAGE – VOL is a cost leader in its industry with state of
art technology which are inimitable due to exclusive tie ups
PRODUCT DIFFERENTIATION
 LEGAL BARRIER the exclusive tie ups with production technology providers makes
it extremely difficult for new entrants to start production

3. Substitute Products:- LOW

The product manufactured by VOL are specialized chemicals used for specific
purpose.Products as such can not be replaced by special chemical specifications, 
which leads to customers being highly reluctant to adhere to their suppliers.

4. Bargaining Power of Suppliers: low

INDUSTRY NORM:. Raw material – IB, Acrylonitrile, Toluene, Propylene
CONCENTRATION OF SUPPLIERS
SWITCHING COST are low as a lot of supplier for major raw material are available
both locally and internationally, so switching cost are not that significant.
BACKWARD INTEGRATION into IB shall further negate the significance of supplier
bargaining
PRODUCT KNOWLEDGE
PRODUCT DIFFERENTIATION Inputs for a chemical plant cannot be easily
substituted and small chemical companies (like VOL) rely on supplies from larger
plants or petrochemical inputs. However, this is skew is compensated by the easy
availability of raw materials in both domestic and international markets

5. Bargaining Power of BUYERS: MEDIUM

The Company’s strong client list comprises brand-enhancing international and

domestic companies. Its product customization capability in the specialty
chemicals business has resulted in strong customer growth and satisfaction.

CURRENT SCENARIO-With the ongoing threat of coronavirus, since the

pharmaceutical industry may not import chemicals from China, and VOL being
the world market leader, their sales would not be hindered, but would increase
in effect. This gives VOL an advantage in terms of pricing and negotiating deals.
CONCENTRATION OF BUYERS- low, as VOL has 2 plants in Maharashtra but
supplies to 35 countries, scattered buyers cant leverage their strength as one
single buyer.
SWITCHING COST- For buyers the switching cost will be high as it would mean
finding new companies, creating new deals and also thinking about the logistics
and supply chain.