ANALYSIS Methanex Developing strategy in a commodity industry

This strategy will be financed by retained earnings and new capital sources. The company can also roll out a strategy to control the raw materials in the industry. This is aimed at controlling the supply of natural gas, a raw material in manufacture of methane. New production plants will be built in new exploration sites as research will be intensified to increase demand and market share for Methanex.The methanol industry is marked with price fluctuation due to various factors in the commodity market. First, there are shortages that occur from time to time due to the fact that methanol cannot be stored. Political and social factors are other causes of price fluctuation of methanol. Competition is among the factors that ensure market sustainability. Methanex is the largest player in the industry competing against Methanol Holdings Trinidad Limited, the biggest competitor. Other players in the industry include Sabic, Mitsubishi Gas Chemical and Malaysian Petronas. Entry into the industry is free although small firms find it difficult to join the industry due to domination by large firm firms in terms of market share and raw materials. From the case study description, the methanol industry market can be described as an oligopoly. There are few firms in the industry where some firms are price and quantity leaders. As depicted in the industry’s price curve, methanol’s production costs and price are directly related to those of crude oil. The external environment analysis has been summarized in Exhibit 1.Market leadership is one of the opportunities in the methanol industry that can be pursued by any firm to its advantage. Price is a major determinant in demand and supply of any commodity in the market. Being in a position to influence the market prices places a company in a good position in the industry as prices changes do not affects its operations. Being able to determine