"Ben—I just want to say one word to you—just one word . . . plastics."
Unfortunately, the career advice offered to Benjamin Braddock in The Graduate wasn't as surefire as it sounded. Even in 1967, when the film came out, the chemical industry was neither as simple nor as lucrative as its cameo role suggested. Today, with more than 7,000 product lines and dozens of geographic markets, the business doesn't seem simple at all. So many strategies—or combinations of strategies—have been developed over the years for so many markets that industry analysts and executives struggle to understand what creates shareholder value.
In an effort to shed light on this question, we launched a study of the global chemical business, with its $1.6 trillion in revenues. Using a database that holds 40 years of financial and stock market data on 130 publicly traded chemical companies in Europe and the United States,1 we searched for links between strategy and the creation of value.
While previous performance is of course no guarantee of future returns, a careful look at the performance of chemical companies over the past three decades can help them understand their opportunities to create value in the years...