Introduction

The Saudi Basic Industries Corporation (SABIC) is a Saudi manufacturing firm headquartered in Riyadh, Saudi Arabia. SABIC was founded in 1976 and ever since it has remained a successful and diverse manufacturing company. The primary focus of SABIC is the production of hydrocarbons. Owing to the diversity of the hydrocarbon products, they are categorized under petrochemicals. The business activities of SABIC are concentrated in manufacturing, marketing, and distribution products. The products are diverse and are grouped into four strategic business units. These units include; metals, Agro-nutrients, Specialties, and Petrochemicals in local, regional and international (global) markets. For the year ending 2016, SABIC had accumulated total revenue of $35.5 billion (Nawaz, 2015, p. 425-426). SABIC undoubtedly is ranked amongst the largest petrochemicals manufacturer globally, and it is the largest non-oil industrial company in the entire Middle East.

SWOT Analysis Using Micro and Macro-Environmental Forces

Strengths

High revenue and profitability is a microenvironmental force impacting SABIC. The success of SABIC can be attributed to the higher sales the company makes. The company a readily available domestic market and this helps the firm in making high-profit margins and generating more revenues. Again, SABIC has efficient and robust distribution channels. These strong distribution channels make the company have a global presence in all major global markets (Nawaz, 2015, p.433). The stable distribution is attributed to the company’s capable leadership. The management of SABIC relates well with the employees, and the employees are provided with opportunities for both personal and professional growth and development. Strong leadership within the company has made SABIC among the most influential market leaders in the production and manufacturer of both fertilizers and chemicals. Lastly, SABIC has a dedicated Human Resource. HR is the body that holds other organizational units together. Therefore a dedicated HR means that work is done with ease and simplicity. SABIC has a large customer base found in over 40 countries worldwide the company has provided employment opportunities for many people including Saudi nationals and foreigners (Nawaz, 2015, p.431).

Weaknesses

Internal weaknesses at times hamper the growth and success of SABIC. Poor management often generates disputes in the company. Conflict of interests becomes part and parcel of the company’s structure as a result of poor management. Poor management can lead to the downfall of any company no matter how successful it was back then. High loan facilities and weak supply chains are also internal weaknesses which affect the business in SABIC. Further, high dependence on non-renewable feedstocks is undermining the smooth running of the day-to-day business operations.

Threats

Fundamentally, threats are external factors which affect the operations of the company, and these factors are mostly outside of the company’s control. Threats hinder the growth and expansion of SABIC. Volatile energy pricing is a threat impacting the businesses undertaken by SABIC. Price volatility is the fluctuation experienced in energy pricing (Nawaz, 2015, p. 429). Storage levels, weather changes, and delivery constraints, as well as market information, are among the factors which contribute to the price volatility when it comes to energy products. Climate pricing is another eminent risk which threatens the stability of SABIC.

Opportunities

Just like threats, opportunities are external factors which are outside organizational control. High demand for SABIC’s product is an excellent opportunity for the company. High demand means that the products produced are of high quality and they are accepted all across the global market arena. High demand enables SABIC to make more sales, and the company earns profound revenue from the many sales made. New acquisitions are significant growth opportunities (Yam, 2016, n.p).  Growth in petrochemicals, Agro-nutrients, and specialties are considerable acquisition opportunities. Additionally, SABIC has made multiple investments in Africa and the United States. The US is a significant market and an innovation for transportation, medical devices, chemicals, and fertilizers. These investments are considered as substantial avenues which will propel the company’s growth to a heightened level.

Political, Economic, Cultural and Legal Challenges that SABIC Faces in Kenya

This analysis will focus on the challenges SABIC faces in Africa, Kenya to be specific.

Political

Kenya is a third world country faced with political disagreements. Being a democratic country, there are many political parties, and this entails that politicking is often evident. Again, Kenya is a hub for agricultural farmers, and this means that they need fertilizers for their products. However, some instances of political instability threaten the existence of foreign entities like SABIC in the local market (Sridhar et al., 2016, p. 220). Local companies are at times at war with foreign companies which produce fertilizers and petrochemicals. These wars of words pose a significant challenge to the stability and sustainability of SABIC.

Economic Challenges

The unstable market in Kenya impacts negatively on the business operations of SABIC. Low oil prices have to a great extent affected the company. With reduced oil prices, the company might make more sales; however the returns are minimal (Sridhar et al., 2016, p. 216). Low returns affect the generation of revenue, and therefore the profit margin is considerably small. The low oil price environment is affecting the economy of Kenya and that of SABIC as well. The economic system of Kenya is different when compared to Saudi’s economic systems. These two countries have two very distinct tax policies, and this affects the company.

Cultural Challenges

Kenya is among African countries with diverse cultural perspectives. Evidently, cultural issues can pose a considerable threat to a foreign company like SABIC. SABIC Kenya might decide to use humor in its promotional advertisements. However, the consumers in Kenya might perceive the messages differently unlike the consumers in foreign markets. To prevent such cultural challenges, SABIC needs to create cultural awareness while designing marketing strategies to be used for the global markets (Sridhar et al., 2017. p. 230)

Legal Challenges

SABIC Kenya has faced a few lawsuits. For instance the case of ELRC.C/921/2018 James Anthony Maingi Muriithi Vs. Sabic Kenya Limited (http://kenyalaw.org/kl/index.php?id=8536). Such lawsuits reflect poorly on the image of the company. Other lawsuits have been filed concerning workers strike (Yam, 2016, n.p). At times it becomes an uphill task for SABIC Kenya to completely avoid legal issues and as such, the company is instituting measures to insulate itself against unnecessary lawsuits.

In conclusion, SABIC has faced major problems not only in Kenya but also in Saudi Arabia and Japan. In Saudi, SABIC faced legal issues in terms of striking workers. The workers affiliated to SABIC sued the firm for exploitation. Again, in Japan, SABIC was hit with lawsuits as a result of producing innovative plastics. South Korean government banned SABIC from producing innovative plastics, and this necessitated the company to move such operations to India. In spite of these challenges, SABIC has managed to make known its international and global presence, and this has been beneficial to the firm (Nawaz, 2015 p. 415). SABIC has generated employment opportunities globally, and it makes use of the SWOT and PEST analysis to improve on areas which might be slowing the growth of SABIC.

References

http://kenyalaw.org/kl/index.php?id=8536

Nawaz, Z., 2015. Light alkane dehydrogenation to light olefin technologies: a comprehensive review. Reviews in Chemical Engineering, 31(5), pp.413-436. doi:10.4172/2472-0518.1000e102

Sridhar, R., Sachithanandam, V., Mageswaran, T., Purvaja, R., Ramesh, R., Senthil Vel, A. and Thirunavukkarasu, E., 2016. A Political, Economic, Social, Technological, Legal and Environmental (PESTLE) approach for assessment of coastal zone management practice in India. International Review of Public Administration, 21(3), pp.216-232. Retrieved April 6, 2019, from https://doi.org/10.1080/12294659.2016.1237091

Yam, Y., 2016. The influence of macro and micro-environmental factors on the consumption of mobile phones and marketing strategies.