AKAMAI Corporation is a diversified producer of performance chemicals for the petroleum industry..... Flag AKAMAI Corporation is a diversified producer of performance chemicals for the petroleum industry. Performance chemicals are designed to meet rigid specifications to enhance the performance of a variety of end-use products. AKAMAI also produces plastics and aluminum products. The company is organized into three groups-Chemicals, Plastics, and Aluminum. To maintain growth, AKAMAI manages its various groups with the goal of maintaining a healthy mix of businesses in different life-cycle stages. New products must be in the pipeline, either in development or ready for commercial introduction to replace declining ones. Equally important is managing growing and mature products to extend their life cycle and maximize cash flow to support new product development, which requires substantial investment. The Chemicals Group has experienced dramatic growth and changing market conditions in the last three years, and AKAMAI has recently replaced the vice president of that group. Because of the importance of this group to overall corporate growth and profits, sales forecasts must be accurate. The Chemicals Group is managed by Gabriel Perez and is organized into three operating divisions-industrial intermediates made up of polymers and detergents, specialty chemicals, and bromine. The three divisions are managed by separate general managers who have product managers reporting to them. For the Industrial Intermediates Division, total polymer intermediates sales reached 62 billion pounds and sales are expected to exceed 75 billion pounds within the next year. The market for detergent intermediates, on the other hand, is mature and stable. The market has become increasingly competitive, with an annual growth of only about 3 percent. But AKAMAI is a leading competitor and has recently been gaining in market share. The Specialty Chemicals Division has a diverse product mix. The performance polymers market is the primary revenue-producing unit and is highly dependent on market conditions for crude oil. Agricultural chemicals are a growth market too, but they also are dependent on the crude oil market. The pharmaceuticals market is growing, and the company has a strong market position as the only domestic producer of the active ingredient for one of the best-selling over-the-counter analgesics. Performance of the Bromine Division is expected to be very good. The AKAMAI sales force has been successful in securing some major new accounts. The success has been achieved based on the company's favorable reputation as a quality producer of industrial chemicals and from an aggressive sales effort. In the past, sales forecasts were prepared by the general manager of each division based on a percentage increase determined by the vice president of the Chemicals Group. In approaching this task for the first time, new Group Vice President (VP) Perez believes improvements are necessary in the sales forecasting method. Because market conditions for each division are diverse, Perez believes different methods of forecasting should be considered for each of the three divisions. Group VP Perez began his market analyses with a review of sales data for each division. The Industrial Intermediates Division represents about 54 percent of sales, Specialty Chemicals about 39 percent, and Bromine the remaining 7 percent. Perez also examined sales data by year for each division to track market trends. Table 1 summarizes sales of the Industrial Intermediates Division by quarter for a ten-year period from 2004 to 2013. TABLE 1 INDUSTRIAL INTERMEDIATES DIVISION: SALES SUMMARY Quarter 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 54.2 55.2 56.0 59.9 63.4 65.2 68.3 68.2 71.4 79.8 2 53.2 56.1 59.0 61.6 63.8 67.4 71.2 73.1 88.7 100.2 3 54.2 56.1 58.1 59.0 62.5 64.1 67.5 74.1 87.4 95.8 4 53.5 55.2 57.1 59.6 59.9 63.4 66.8 73.2 73.7 84.4 Total 215.1 220.6 230.2 240.1 249.6 260.1 273.8 288.6 321.2 360.2 Relevant sales data for the Specialty Chemicals Division was available only for a six-year period because the division is relatively new and experiences somewhat unstable market conditions. Quarterly sales data are provided in Table 2 for 2008 through 2013. TABLE 2 SPECIALTY CHEMICALS DIVISION: SALES SUMMARY Quarter 2008 2009 2010 2011 2012 2013 1 11.0 15.0 22.7 29.6 34.9 43.3 2 14.0 15.1 23.8 31.3 41.7 52.7 3 11.5 16.3 20.7 31.5 40.3 50.7 4 13.5 14.2 21.9 32.2 36.6 45.2 Total 50.0 60.6 89.1 124.6 153.5 191.9 The Bromine Division is entering its third year in operation, so little sales history is available. Perez has therefore asked for input from the sales force as well as industry data from trade publications. Following is a summary of the sales and market conditions prepared for each division. Industrial Intermediates Division Recent increase in sales and market share for polymers Large number of competitors Many customers Strong, stable, mature market for detergent intermediaries No foreseeable significant market changes for detergents Extensive historical sales data Represents 54 percent of sales Specialty Chemicals Division Growth market Uncertain market conditions Highly dependent on crude oil market Represents 39 percent of sales Bromine Division New market No historical sales data Only a few key customers Small sales force Need for accurate forecast by product line Limited number of products Few competitors Case prepared by Christopher D. Hopkins, Clemson University. These Lesson Assignments should be prepared in Microsoft Word using the Times New Roman font, 12 point, single space, double space between paragraphs. Include the lesson question followed by your complete answer. Your answers should be evidenced from the course textbook and/or from professional sources not more than 3 years old. In general, Wikipedia is not a professionally-reviewed resource and should not be used as an assignment reference. You must cite your references so that readers can verify your conclusions, and easily determine what your work is, and what is paraphrased or taken directly from other sources. Be sure to properly site your sources, both in-text and with a reference list at the conclusion. If you use an online source to support your answers, you must provide a properly formatted link to the source. You should use APA citation format and make sure your sources are credible. Questions 1. What recommendations would you give Mr. Perez to develop more precise sales forecasts? 2. What forecasting methods would you use for each division, and why? Industrial Intermediates Division Specialty Chemicals Division Bromine Division