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Rhne-Poulenc A and B case analysis I INTRODUCTION Rhne-Poulenc hereafter referred to as R-P is a French chemical company that was formed in 1928 after the merger of two separate companies that were established in the nineteenth century Socit Chimiques des Usines du Rhne a Lyons based chemicals company and Etablissements Poulenc-Frres a Paris based company specializing in pharmaceuticals Since its inception R-P has been involved in man-made fibers pharmaceuticals organic intermediates and fertilizers By the end of the 1930s R-P ranked among the largest French firms with most of its business concentrated in Europe R-P had 18 billion in sales in 1969 53 percent of which were generated in France and the remainder from other European countries During the 1970s R-Ps textile and fertilizer divisions were under attack by low-cost imports In addition they were adversely affected by higher petroleum costs As a result R-P began to shift its portfolio to chemicals and pharmaceuticals which were less prone to the ups and downs that plagued cyclical industries In 1980 Francois Mitterand was elected president of France His French socialist government started nationalizing several companies among them R-P Because of the French governments intervention and reorganization program R-P was able to divest itself of unprofitable units and in turn gain several profitable product lines As a result R-Ps portfolio and financial performance began to improve In 1986 R-P began to expand its businesses in America By the end of 1990 R-P had increased its presence in the US mainly through acquisitions The US accounted for 20 percent of R-Ps 1548 billion in total revenues This increased share of the US market helped R-P rank among the largest principle chemical manufacturers in the world 7th II INTERNAL STRENGTHS AND WEAKNESSES Internal weakness R-P was slow to recognize the importance of the chemical consumption market in the US When it finally realized the opportunities that were available R-P didnt possess the
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