RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

Week 6 Assignment: UNIT 6: Competition and Cooperation

Written Assignment (Unit 6), Bus 5117: Strategic Decision Making And Management

Master of Business Administration

University of the People

Instructor: Dr. Donna Pepper

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RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

The Assignment

After reading the case “Ventures in Salt: Compass Minerals International,” consider

strategic moves for this stand-alone firm. Analyze the market and, using specifics from the

case study, develop one cooperative and one competitive move. Select the most effective

choice and explain why it is the best option. Synthesize a tactic to support the move. How can

the tactic be implemented within the scope of the overall strategy? (Hint: Disruptive

innovation may be the best way to synthesize a tactic.)

Read the General Guidelines for Case Studies and the Case Study Rubric before beginning

this paper.

Submit at least a 3-4-page case analysis, (independent of the title page and reference page)

double-spaced in Times New Roman (or its equivalent) font which is no greater than 12

points in size. Paper and all citations should be in APA format.

Abstract

In this case study, we will analyze the strategic move by the firm “Compass Minerals

International.” Also, we will examine the market and develop both a cooperative and

competitive move strategy for the firm. Additionally, we will select the best strategic move and

tactic. Finally, we will explain how the tactic can be implemented to be within the strategy.

Keywords: case, move, strategic, management, tactic.

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RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

Introduction

In this case, Compass Minerals International (CMI) is a company that produces salt.

Salt is a mineral that can be found naturally and is a chemical compound of (NaCl) sodium

chloride. It can be found and mined as a form of a crystalline mineral is known as rock salt or

halite. Salt has a variety of usage, and according to the U.S. Geological Survey for 2019, salt

was used for highway deicing and accounted for about 43% of total salt consumed. Other

industries that use salt include the chemical industry accounted for about 37% of

total salt sales, with soda manufacturers being the primary consumers. The remaining

markets for salt were, in declining order of use, distributors, 9%; food processing, 4%;

agricultural, 3%. General industrial, 2%; and primary water treatment, 1%. The remaining

1% was other uses combined with exports. (U.S. Geological Survey, 2020)

For Compass Minerals International (CMI), Its success led it to be one of the few salt-

producing companies that went IPO as many competitors maintain their private ownership.

Before going to IPO, environmental concerns regarding the dangers that road deicing by salt

has on the environment; have led to the call for implantation of regulations on limiting the

use of salt; currently, there are no regulations on this matter. This possible change in the

industry might negatively impact Compass Minerals International's overall performance

(CMI), which depends on 40% of its revenue on road deicing. (Henderson, 2009). This

financial uncertainty and volatility of the salt industry can dent the company's performance,

primarily once it's up as an IPO.

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RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

The Market

According to the article, the United States, by 2000, had 66 establishments producing

salt and owned by 29 firms. The prices of salts fluctuate depending on the economics of scale

and mines. The prices were fixed and coordinated between both the mining industry and

business as cooperation between salt companies kept the price stable. Compass Minerals

International (CMI), profitability grew by 60%; in 1998 revenues $110,100,000 and grew to

$182,000,000 in 2003 (Henderson, 2009).

As stated before, road deicing by road maintenance contractors accounts for 40%

even though currently there is no regulation on road deicing via salt. Environmental

awareness has called for regulations on this due to its damage to vegetation, water, animals,

and the ecosystem. This possible change in the regulation of salt use in deicing can

negatively impact Compass Minerals International's overall performance (CMI).

The Cooperative Move

The cooperative move benefits all parties in the same industry via joint ventures and

strategic alliances, which lets each company share its experience, knowledge, and resources

to strengthening each cooperating member to face a common threat or take advantage of a

shared opportunity. The strategic alliance can provide a joint solution to the environmental

damage road deicing that is both environmentally friendly and protects the companies'

profitability, in response to a possible restrictive regulation that doesn’t have the companies’

profitability in mind. Another potential benefit for the strategic alliance is to exploit new

product categories and stabilize salt prices.

On the other hand, there is risk associated with the cooperative move, including loss of

industry secrets and sensitive information.

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RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

The Competitive Move

According to Ketchen and Short, there are five significant methodologies for

competitive move First-mover advantage, Disruptive innovation, Blue ocean strategy,

Footholds, and Bricolage. Compass Minerals International's blue ocean strategy seems the

best fit as it can develop new products in an uncontested market, like document storage and

disposal of nuclear waste. This will give Compass Minerals International an advantage over

its competitors. It is the only provider targeting the new market and has a lead and monopoly

in that industry till the other companies catch up. (Ketchen, 2012)

Compass Minerals International's possible strategy is disruptive innovation by

tackling road deicing issues and creating an eco-friendly alternative.

Competitive vs. Cooperative move

I believe that competitive moves, either disruptive innovation or blue ocean strategy

are the best options compared to cooperative moves. Even though cooperation via strategic

alliance might seem better, yet each member is still a competitor, profits will always sway the

stakeholders; with that notion, conflict may arise, and each member might lose sensitive

information. With competitive moves, Compass Minerals International (CMI) will innovate

and create new markets.

The Tactic

I would recommend that Compass Minerals International (CMI) invest in research

and development to either create a new product or create a new market with the current

products. Due to turmoil that the company might face once restrictive regulations are

implemented for road deicing, it would be best to either produce an eco-friendly product or

diversify its products and not depend heavily on road maintenance contractors.

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RUNNING HEAD: UNIT 6 COMPETITION AND COOPERATION

The Conclusion

Compass Mineral International (CMI) has been a very lucrative company and has

been successful in its industry. But for the company to gain the investors’ confidence and

increase the return to the stakeholders during the IPO, it needs to prove that it can withstand

the continuous changes and challenges the company will face, like the new regulations on

road deicing company’s profits heavily depend on. But venturing into either new products or

new markets via research and development can show its preparation and ability to adapt to

the ever-evolving industry and thus gain the investors' confidence.

References

• Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution.

• Henderson, R., Nanda, R. & Sterman, J. (2009). Ventures in Salt: Compass Minerals
International. MIT Sloan School of Management.
https://mitsloan.mit.edu/LearningEdge/strategy/VenturesInSalt/Pages/default.aspx

• U.S. Geological Survey. (2020, January). SALT. Mineral Commodity Summaries.