Ciba-Geigy Case Study Summary

Introduction: The case focuses on the portfolio planning at Ciba-Geigy. Its evolution from an intuitive based system to a portfolio oriented system. It further takes us through the dilemma involved in the Newport investment.

Ciba-Giegy Ltd is Switzerland’s top chemical and pharmaceutical company which has diversified its business and has adopted portfolio planning as a means of corporate strategic planning. They followed a disciplined approach to portfolio guidelines having allowed only exceptional cases to violate the norms. The investment plan made by Pigments division head, Mr Peter Schutz would violate the portfolio norms. Mr. Schutz was sure that even though Ciba had experienced losses in revenue in this division, it can contribute a

In addition to that, Ciba might lose its client base as they are unwilling to share the environmental upgrade costs. Pigments belong to the core business portfolio of Ciba; therefore, resource allocation won’t get much preference. Hence, this option isn’t that viable

2. Limited Investment:

This includes reorganizing and modernizing production. It seems to be a viable option as the cost (USD $100 million) is low as compared to the first option (USD $ 140 million) and Ciba won’t even lose its client base due to increase in the environment related costs.

3. Closing the facility:

This option includes relocation to Europe or moving production to Alabama. Divesting this segment doesn’t seem to be a viable option as the Pigments market enjoyed significant market being the core business of Ciba. Another reason is that Ciba is the second largest employer in Delaware so closing the facility will render the workers jobless and might send a wrong signal to the market. In addition to that, there can be other businesses which are closely related to this facility and will suffer if it 's closed.

Therefore, Ciba should go with the limited investment