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<p align="justify">LyondellBasell Industries is a multinational chemical company incorporated in the Netherlands, with U.S. operations headquarters in Houston, Texas, and London, UK. It was formed in 200 by the merger of Basell and Lyondell (LyondellBasell, 2021). It is the largest plastics, chemicals, and refining company in the world. It produces materials and products that are key to advancing solutions â¯likeâ¯enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes. LyondellBasell sells products to more than 100 countries and is the world&#8217;s largest producer of polypropylene compounds and the largest licensor of polyolefin technologies (LyondellBasell, 2021). The company is the industry leader in Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by LyondellBasell in the chemical industry in the world.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The chemical industry has a fierce rivalry. The industry runners have global influence, and the economy of scale is high. It boosts the competition within the industry to be the market leader. The industry is growing steadily at the moment. It provides opportunities for companies to compete for a better share. The main rival of LyondellBasell is DuPont and ExxonMobil Chemical. These three are mid-tier companies compared with BASF, the industry runner as per revenue (Statista, 2021). The American multinational company ExxonMobil Chemical is the subsidiary of ExxonMobil generated a net income of $1.96 billion in 2020 (Statista, 2021). DuPont is an American-based rival. It reported annual revenue of $ $20.4 billion (Statista, 2021). LyondellBasell posted a net profit of $1.420 billion with a revenue of $27.753 billion (Fortune, 2021). The competition within the industry is increasing.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">Substitute products offer customers different choices and allow them options within the industry and beyond it to products that may fulfill a similar need (Luenendonk, 2019). The threat of substitution is low; it is because of the two main reasons. First, the industry scale LyondellBasell operates is concentrated, and there are few alternative products that good quality is available at the moment. Second, the chemical industry accounts for over 30% of greenhouse gas emissions (Brudermuller, 2020). The call for a more sustainable industry model is picking up voice. Quality of the product and switching cost is another main reason. The company is evolving with time. It has set the goal to reduce CO2 by 2030, decrease the dependency on fossil fuel and increase low carbon products (LyondellBasell, 2020). The overall threat of substitutes is low in the industrial gas industry.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">The higher capital investment in production and innovation makes it difficult for startups. The startups must come with innovative products and better costs to compete with the market leader. The scale of the economy at which this industry operates makes is a hindrance. It makes it harder for startups to sustain themselves in the market. The company is expanding its footprint and recently acquired multiple companies to increase its market share and product range (Goldsberry, 2018). The company is expanding its capacity by setting up new plants to meet the needs of the time. It invested $2.4 B on the largest propylene oxide and tertiary butyl alcohol (PO/TBA) plant in the world (LyondellBasell, 2021). The company is moving with time and using its resources to expand its business. The threat of the latest entrant against it is relatively low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The buyers of chemicals are usually integrated industries such as oil and refining, healthcare, electronics maker, and the chemical industry. It provides them bigger clientele and multiple channels to sell their products. Product quality, differentiation, and price can attract the buyer. The Bargaining Power of Buyers is high if the buyers are large; they can switch easily to another supplier who may be in numbers (Slater &; Olson, 2002). Usually, chemical buyers are bulk buyers, and their product depends on the chemical products. Therefore, it provides them a better bargaining chip. Product quality and differentiation can attract the buyer. LyondellBasell provides products to nearly every industry globally, which provides its edge in contract negotiating. All the factors mentioned above are the reason for low buying power in the industry.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">The supplier in the industry is the one who provides the production equipment for the industry and the human resources. The chemical industry is all over the world, and it has multiple suppliers. The production equipment is expensive and directly links with the quality of the product. The sector in which equipment is connected with the quality of the product and malfunction in it can cost huge losses (Porter, 1979). The supplier, in this case, became the backbone of the industry. The companies need their services for regular maintenance and up-gradation after purchasing the equipment. The Companies may want to switch to another supplier because the market is full of alternative suppliers. However, they can&#8217;t due to the cost of switching is too high. The majority of suppliers are future integrated with the companies. The supplier, in that case, holds moderate power in negotiating the deal.
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<h2 align="justify">References</h2>
<p style="text-align: left;" align="justify">Brudermuller, M. (2020). How to build a more climate-friendly chemical industry. Available at: https://www.weforum.org/agenda/2020/01/how-to-build-a-more-climate-friendly-chemical-industry/<br />
Fortune. (2021) LyondellBasell Industries. Available at: https://fortune.com/company/lyondellbasell-industries/global500/<br />
Goldsberry, C. (2018). LyondellBasell completes $2.25-billion acquisition of A. Schulman. Available at: https://www.plasticstoday.com/compounding/lyondellbasell-completes-225-billion-acquisition-schulman<br />
Luenendonk. M. (2019). Threat Of Substitutes &#8211; Porter’s Five Forces Model. Available at: https://www.cleverism.com/threat-of-substitutes-porters-five-forces-model/<br />
LyondellBasell. (2020). 2019 Sustainability Report. Available at: https://www.lyondellbasell.com/globalassets/sustainability/2019_sustainability_report.pdf<br />
LyondellBasell. (2021). 2000-2018 Available at: https://www.lyondellbasell.com/en/about-us/history/company-history-2000/<br />
LyondellBasell. (2021). PO/TBA Plant. Available at: https://www.lyondellbasell.com/en/sites/potba-plant/<br />
LyondellBasell. (2021). Who We Are. Available at: https://www.lyondellbasell.com/en/about-us/who-we-are/<br />
Porter., E. M (1979). How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Slater, Stanley &; Olson, Eric. (2002). A fresh look at industry and market analysis. Business Horizons. 45. 15-22. 10.1016/S0007-6813(02)80005-2.<br />
Statista. (2021) 2021 ranking of the global leading chemical companies based on revenue. Available at: https://www.statista.com/statistics/272704/top-10-chemical-companies-worldwide-based-on-revenue/<br />
Statista. (2021) DuPont&#8217;s revenue from 2015 to 2020. Available at: https://www.statista.com/statistics/267325/revenue-of-dupont/<br />
Statista. (2021) Net income of ExxonMobil&#8217;s Chemical division from 2001 to 2020. Available at: https://www.statista.com/statistics/264128/net-income-of-exxon-mobil-chemical-since-2001/</p>
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