Cellux Notes

● Cellux is a company operating for 100 years in the business manufacturing and
converting adhesive tapes.
● They are a global company with the parent company being in Taiwan. The company
currently operates in 5 markets ( Taiwan,India China, Columbia, Brazil USA- only
paperwork and legal documents have been filed for this location)
● Competitors include Cremer, Scapa and Sicad and 3M -some cases competitors are also
customers in some markets.
● Small factories in China, namely those that deal with Alibaba.
● Advantages of Cellux -certification in the various industries (auto industry -Shoe making)
● Highly customizable product based on the customers need -able to adjust the quality and
on a case by case basis create a new product if needed.
● Another advantage Cellux produces its own adhesive instead of buying it from third-party
as a result better control over quality.
● Flexible by fulfilling smaller orders, pilot orders .

Entry strategy

● Should the company do direct B2B in the initial stages.

● Should the company use a joint venture?
● Partnered distribution
● What are other companies in the same industry doing.
● What would be the long term strategy?
● Building relationships.

Should the company import from Colombia - reason being US has a bilateral agreement with
Colombia.(three hour flight).
China to U.S has issues because of the anti -dumping laws -unlikely to use China .
 Cellux
Team # 314

Enock Obese Ghana [email protected]

Imran Noel Grenada [email protected]

Angie L. Cruz Peru [email protected]

George Obssi USA [email protected]

Chase Thomas USA [email protected]

Industry and Competition Analysis

Green - points answered -please feel free to add information.
Red-points not answered

Who are the main players in the industry?

Cellux is an international company that boasts of operating for 100 years. The company’s primary
function is to manufacture and convert adhesive tapes. According to transparency n.d., “the global
demand for adhesive tapes stood nearly US$ 62.5 Bn and is projected to reach over US$ 111.6Bn
by 2027”. The market for adhesive tapes seems to be experiencing sporadic and continuous
growth. The demand increase can be attributed to a few factors, namely the increased application
of adhesives in various industries such as furniture and car manufacturing. Instead of using
heavier and more expensive materials, companies are using adhesive products in their stead.

A segmented approach by region can view the adhesive tape market/industry.

The Asia Pacific region is currently the largest market and is expected to experience continuous
growth for the foreseeable future. The change attributed to the market is partly due to its large
population, trade between countries such as China and Indonesia, and the availability of raw
materials.
North America has been coined as an adult market and is among the key producers of adhesive
tapes.
Europe is another mature market with various manufacturing facilities housed within its borders,
namely Italy.
Africa and the Middle East are growing and attractive markets due to the influx of investment
into these regions by Multinational countries.

● The main competitors for Cellux Cremer, Scapa, Sicad and 3M.
● How do they operate? Where do they make and where do they sell their products?
● Products: What are their most successful products?
● What business model do they use? Do they rely on direct exporting, partner distributors,
local wholly owned subsidiaries or other forms of operation in the different markets?
Cellux deploys various business strategies to distribute their products to the various sectors in
which each product is used. Cellux manufacturers products in the packaging, protection,
industry, painting, automotive and other sectors of packaging. With the versatility of Cellux and
broad products line, Cellux is able to use both direct exporting, partnership distributions, and
direct to consumer through retail models.

How does your client compare to the competition in terms of product quality, price, distribution
network, and other aspects of business?

Cremer, at present, is the largest producer and distributor of surgery, first aid, treatment, and
hygiene products. The company is Brazilian-based and, as such, has 13 production plants
employing roughly 1800 employees. Cremer primarily focuses on three areas: the Healthcare
line, industry adhesive line, and plastic line.The healthcare line provides adhesive plasters,
gauze, and crepe bandages. The industry adhesive line comprises tapes mainly geared to the
footwear and electronic industry (auto industry). The plastic line produces plastic containers for
hospital adhesives and spools for the textile industry.

Sicad, also known as Sicad group, was founded in 1972 in Europe under the brand Eurocel. The
company is now known as the worldwide leader in the manufacturing of adhesive tapes. The
company provides polypropylene, PVC, and paper cloth using a range of adhesives such as
rubber, acrylic, and silicon (SICAD Group, n.d., para 1).The company is headquartered in Italy
and currently employs 700 personnel worldwide. Sicad boasts subsidiaries with sales and
manufacturing capacity in France, Croatia, Italy, South Africa, and Brazil.

3M- The company started its operations in Minnesota in 1902 in the mineral industry. The shift
was made to the adhesive industry providing products for businesses, hospitals, and schools. 3M
has operations in 70 countries and sells to roughly 200 countries worldwide, providing a catalog
of 60,000 products which includes personal protective equipment, laminates, and car care
products, to name a few. Offices and plants have locations in Singapore, Shanghai, Germany,
Brazil, and Colombia.
Scapa- is a global company that provides adhesive-based products for customers in the industrial
and healthcare industries. Scapa has branches in The United Kingdom, USA, Brazil, Malaysia,
and India.
Cellux is a company that has undoubtedly provided its customers with quality products
over the years, being in business for an entire century. The company is certified in various fields
(automotive and health and text tile industries). The quality is our product is comparable to those
of our competitors. It is highly customizable to meet the individual needs of the customer since
Cellux produces its adhesive instead of purchasing from a third party. A testament to the quality
of the products is that in some markets, 3M is one of its customers for certain adhesives and
tapes. Cellux can be more competitive in its ability to fulfill smaller (pilot orders) orders.
Concerning pricing, Cellux pricing is on par with the competition. However, based on the
adhesive in question, there are cases where the price may be above industry prices. Additional
information will be presented later on in the form of a SWOT analysis.

New market Selection

Cellux should expand its operations to the United States. According to Census. Gov “ the current
population 333,179,628 as of writing this document.

Market Entry Mode

PESTLE Analysis

Political

Tax and economic policies are a significant component of the business's success since they
directly impact the profit margins. Unlike some other countries, the United States tax laws are
generally relatively stable and easy to understand. Political stability- The U.S. is one of the most
stable countries in terms of stability. Political policies and elections usually take place without
any significant issues and pass through the relative processes as opposed to countries on the
opposite spectrum, namely communist countries.
Regarding trade regulations, currently, there is a free trade agreement between the U.S. and
Colombia which will serve highly beneficial to the company when importing from its
subsidiaries. Employment laws are a significant difference when compared to operations in other
facilities. In the U.S., much emphasis is placed on workers' rights. As a result, labor rates will be
higher.

Economic

The first variable to consider is interest rates on banking institutions' loans. Especially if Cellux
wants to invest as early as possible, the second issue is the exchange rate, which affects profits
and costs. Profits based on the currency's value at the time of the transaction can affect the
amount of money received. When ordering also, if the dollar is low more money will be needed
as opposed to if it is high compared to the other currency.

Recession is another issue that is of utmost importance to a firm's profitability and continued
success. During a recession, consumers buying power reduces, resulting in fewer profits and
more competition to remain relevant.

Social Factors

There is a myriad of social factors that Cellux has to be aware of in order to be successful in the
American market. Customer service is one of the essential aspects when it comes to social
factors. The bar has been set by companies such as Amazon and Walmart. Even though Cellux is
a B2B entity, the attitude translates over to the B2B environment. Companies tend to do business
with other entities that provide good service and whose products are up to standard.

The issue of quality assurance in the U.S. is critical due to cancel culture. Social media is very
present in the U.S., which results in any minor slip-up becoming a significant incident, resulting
in bad press for the company.

Similarly, another issue that would be considered, especially in the initial stages, is human
resources. The company must be careful in the hiring process to employ persons from various
ethnic backgrounds and not be seen as discriminatory.

Going green is a big deal in the U.S. across the board. There is a heavy emphasis on the use of
renewable forms of energy or clean energy. The company would have to consider this when
deciding how to set up plants, the vehicles used for transport- whether more electric or hybrid
options and the use of solar energy to reduce carbon footprint. The use of technology will be
further explained in the upcoming points. Among other factors, more efficient routes for drivers
and efficient logistics to reduce waste are vital factors to consider in all decision-making by the
company.
Technological factors

Cellux has to consider these factors, especially the quality of products and customer service.
Although technology is used for cost savings and to boost efficiency, it can also be detrimental if
there are issues in quality control. It only takes one bad interaction with a business or one poor
quality product to ruin a company's reputation. Ultimately extra funds would have to be
dedicated to PR to put the business in a so-called good light.

Technology in the U.S is massive. It affects operations as a whole. We can use technology to
improve and lower costs associated with all areas of production and distribution of the products.
In the U.S, many avenues can be used to gain data. The data can be purchased from third-party
organizations, which can then be used to find clients, inquire on demand, which products are
projected to sell in the upcoming months.

Even in logistics, technology is crucial. Global positioning allows for real-time tracking of
deliveries. A system also helps route trucks to areas with less fuel and less traffic, saving
companies thousands of dollars. Overall, Cellux has multiple routes to follow when it comes to
the use of technology.

Legal Factors

Some of these points were captured in previous sections. However, discrimination laws, as well
as health and safety, can be reinstated here, which is very important, especially in the U.S.
Special effort has to be made to ensure worker safety since the U.S. is more unionized than other
parts, especially those countries in the east. Also, during the hiring process, Cellux has to be
careful to employ persons from diverse ethnicities. The employee contract laws and import and
export laws would significantly affect the business's operations since the business is thinking of
importing directly from Colombia for the most part. The legal implications would be
straightforward. Regarding employment laws, the company has to factor in that workers usually
work a 40-hour work week and expect a more lucrative package than workforces in other
countries.

Environmental Factors

This ties in with Corporate Social Responsibility, which means the company should positively
affect the area of operations or host country. Most, if not all, of these points, were mentioned
before, but Cellux must make a legitimate effort to keep its carbon footprint low. Use alternative
means of energy, solar energy, and electric vehicles to the fleet. It ultimately keeps emissions
and negative impacts on the immediate environment to a minimum.
Pricing strategies

Pricing strategies are an integral part of a firm's success, significantly when expanding into a new
market. The premise is for Cellux to decide what positioning strategy it will use in the U.S. Does
the company want to be viewed on the more premium spectrum or on, the lower end to undercut
existing competitors, namely 3M manufacturing? Other factors include plans for expansion and
the added costs of logistics and shipping.

The first pricing recommendation would be a competitive pricing strategy since we would sell
similar products to 3M. It makes sense then to try to match their prices on products. The
approach will encourage customers to try the alternative. After all, with minor to no significant
price difference, potential customers will be more willing to try the products. Even if this
approach is not used on all the products sold by Cellux, we would advise this pricing strategy on
the brand's best sellers: packing tape, double-sided tissue tape, and PVC lane marking tape.

Competitive pricing may be more sustainable than the second recommendation, which would be
penetration pricing. However, Cellux has already proven in their other markets that they are
flexible in their orders and pricing. They had much success, namely in their Colombian and
Brazilian branches. Penetration pricing is essentially setting our prices for tape lower than the
competition. The main aim of this pricing strategy is to gain market share. However, we
recommend this form of pricing in the short term on the more popular products listed in the
competitive pricing. Once an adequate market share is acquired or brand recognition is achieved,
switching to competition would be recommended to increase profit margins and sustainability.

Dynamic pricing can be incorporated, especially where Amazon, Walmart, and these large
companies keep driving up the demand for packing tape. More and more small packages are
being shipped daily, and with continued logistics advancements, the demand will continue.
Recommendation to use this when the company is settled since this type or form of pricing is
expensive and has a higher learning curve requiring training for employees to use it properly.

Geography and Logistics

In the United States, each state mandates its own rules, regulations, tax code, and emission code.
With that in mind, it's vital to understand which states are more favorable for Cellux’s expansion.
Understanding that Cellux has strong products for the automotive, textile, furniture, and
packaging industries, selecting states that are heavily involved in such industries would be
beneficial for the expansion plans. In addition, it's critical to consider states that are close to port
cities as well as are tax-friendly to corporations. With the types of goods, Cellux produces it's
highly recommended that we consider the rust belt region; which is considered of cities and
states that are involved in manufacturing. Rust belt states include Indiana, Illinois, Michigan,
Missouri, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin. With that being said,
it's also important to consider states that are tax-friendly to corporations. According to the 2021
State Business Tax Climate, Indiana was ranked in the top 10 best business tax climates in the
US. This can be very beneficial for Cellux as being in a less regulatory environment can ease the
expansion plans into the US market. Figure 1 below displays the top 10 best and worst Business
Tax Climates

Figure 1

In addition to selecting cities and states in the rust belt that are business tax-friendly, it's also
important to consider the closest ports to the selected cities. The state that meets all three criteria,
is Indiana. Indiana is in the rust belt, is tax-friendly to businesses, and is near an international
port. With Indiana being 11 hours by ground from the nearest international (Port of New York)
and 2 hours away by air the distance is manageable, with the many other factors benefiting the
expansion into Indiana. Figure 2 below displays rust belt States and Cities in the US.

Figure 2
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