SAUBI BASIC INDUSTRIES CORPORATION (SABIC)

SAUBI BASIC INDUSTRIES CORPORATION (SABIC)

Introduction

Saudi Basic Industries Corporation (SABIC) is a public manufacturing company in Saudi Arabia with its headquarters in Riyadh, Saudi. The company was founded in 1976, and the main reason why it was founded was to turn the by-products of oil into productive chemicals. According to …, SABIC is ranked second in the public list of companies in the Gulf Cooperation Council (GCC). GCC is a Trade bloc, and it is also known as The Cooperation Council for the Arab States of the Gulf. It is an economic and political organization that comprises all the Arabic States except for Iraq, and its capital is also located in Riyadh, Saudi.

SWOT Analysis of SABIC

A SWOT Analysis is an evaluation done by an individual, organization, or company to help them identify the internal weaknesses and strengths, as well as their external threats and opportunities, to survive competition in the market. The strength of SABIC is that first, it is among the top leading companies in the manufacture of fertilizers and chemicals. Again, it is the top-ranked company in the production of polyethylene and polypropylene globally. Its products are used in a variety of fields, for example, in the healthcare system, in packaging foodstuffs. And also, its fertilizers are used in farming. The company’s main strength is that it enjoys a strong position in the global market.

Additionally, SABIC has a strong distribution network globally. One of the weaknesses of SABIC is that the company depends highly on non-renewable raw materials. Moreover, since SABIC is a public company, 70% of its shares belong to the Saudi Arabian government. Hence, decisions in the company are made by the majority shareholder, which is the government. This affect the company because the government makes decisions according to their interests, rather than putting the interest of the company first.

The opportunities that can be of benefit to SABIC include since it is among the leading companies in the manufacture of fertilizers and chemicals, it enjoys an added advantage globally when it comes to marketing and selling their products. Thus, new companies don’t pose a significant threat to the company, and so SABIC has a window for expansion. Second, due to the availability of reliable raw materials and oil locally in Saudi Arabia, the company can enhance their productivity and competitiveness by ensuring that their products maintain low prices. One of the threats facing SABIC is competition from other companies like Reliance Industries Limited. Competition poses the threat of reduction in profit and also the reduction in the prices of their commodities. A reduction in profit means that the company will not sell a lot of its products, and this can cause losses to the company. In turn, it limits the company’s capability of growth. Secondly, the Middle East experiences a lot of wars that cause political instability. Instability generates a significant threat to the company as its operations are disrupted, causing a decline in economic growth. A political environment that is unstable causes slows down economic development as it limits investment opportunities by labor relations as well as destabilizing market operations. Additionally, low economic growth in some countries that the company has expanded its markets to like the USA impacts negatively on the firm as sales of their products is limited hence reducing the profits. Also, it affects the production ability of the company as production is reduced to avoid losses.

Challenges the company is facing in The United States OF America

SABIC faces political, economic, cultural, and legal challenges in the USA. Political challenges include political instability. The USA experiences political instability mostly during the election periods. During such times, the company is not able to make a lot of sales due to political unpredictability.

Additionally, decrease and increase taxes affect the growth of the firm. From an economic point of view, SABIC faces the challenge of growth due to the stunted economic growth in the USA. These are because first, the demand for vehicles and automobiles has reduced in china, causing a decline in sales for the company. The production of vehicles and automobiles highly depends on chemicals and plastic, with the reduced demand for these materials, the company is not able to attain its intended growth. Additionally, trade dispute relations have affected the economy not only in the USA but globally.

The legal challenges SABIC faces are that the USA has different legal laws compared to Saudi Arabia. In this regard, the company may face legal charges in foreign soil in which the judges are biased. In the USA, some judges prefer to use the United States judicial system while ruling cases. If in case the Saudi Arabia legal system is used, the ruling may be biased because the judge may not have all the information about the Saudi Arabia judicial system. The cultural challenge SABIC faces is that while operating in a foreign country, it is usually difficult to meet the demands of all the customers. Concerning this, the company should try and find out what the customers want as this helps in identifying the type of products in demand in the USA so that they can produce what is needed to avoid losses. In every country, employees have their rights, and therefore the management should try to learn those rights to prevent overworking the workers as this will affect their productivity. Additionally, they should pay the laborers well and frequently reward them as this will boost their motivation will, in turn, increase productivity.

Conclusion

To sum it up, from the above information, t is evident that SABIC is a global company as it not only operates in Saudi Arabia but also other countries in the world. Despite its glory, the firm also has its weaknesses and strengths, as seen in the SWOT analysis. From my point of view, the company should ensure that they maintain their standards to remain at the top of other companies. Additionally, they should try and solve their weaknesses to eliminate the threats the company is facing. Again, the company should try and deal with the challenges they face to avoid losses. If this is done, the company will have a promising future and remain among the top-ranked companies globally in the manufacture of chemicals and fertilizers.