Sabic Company Evaluation - Case Study Example

Author’s [Name] University’s [Name] History of the Company Introduction In 1976 the was increasing waste of oil by products in Saudi Arabia as A result there was aroyal declaration to set up a company to deal with the waste. Therefore, SABIC was founded to convert oil by-product into useful polymers, fertilizers, and chemicals. The declaration came to be after the government was trying to reduce the waste that occurred during oil processing (OECD Publishing). The products to be recycled are those that were made out of oil waste which would otherwise be directed to the rivers and pollute the environment. The first chairman of this organization was Ghazi Abdul Rahman Al Gosaibi. This was the minister of industry and electricity during the time of the founding, and the chief executive officer was Abdul Aziz Bin Abdullah Al Zamil. After the founding of SABIC small fishing villages like Jubail, Yanbu was transformed into modern cities due to the revenue and the employment that was created by the company (OECD Publishing). The company has received tremendous changes and expansion. In 1985 the company's production was 6.7million tons; five years later the company production rose to 14 million tons and recently in the 2003 had reached 43 metric tons. Lately, in 2012 the company produced over 65million tons (Al-Amine). SABIC has offered employment to over 40,000 people round the globe. Also, the company has 60 manufacturing plant of polymers in 40 countries. The manufacturing network of the enterprise in Saudi consist of 18 partners. (General Books LLC). SABIC is also an affiliate in three regional ventures headquartered in Bahrain. The company is a key producer methanol, MTBE, and polyethylene. SABIC wholly owns the Saudi iron and steel company, based in AL-Jubal. They are one of the world biggest fully stable producers of plastics (General Books LLC). SABIC (Saudi Arabia Basic Industries Corporation) is a distinguished industrialized company, active in metal production, fertilizers industrial polymers, and chemicals and intermediates (Duprez and Cavani). It is ranked second global producer of ethylene glycol producer. However, in years to come, the company is anticipated to topmost list considering the new projects underway. The largest public company in Saudi Arabia is SABIC. Furthermore, 70% of the shares are owned by the government, others are Private investors from Saudi Arabia and other countries of the UAE. Also, it is ranked as the biggest company in the entire Middle East (Oxford Business Group.). Company's operations , SABIC grew to be the second largest diversified producer of chemical in 2010 (OECD Publishing). Nevertheless, in 2014, SABIC was ranked fourth globally among the companies that produce chemicals. In Terms, Corporation, the company, was ranked as the 205th largest corporation in the world. When the company was measured all over its branches in 2014, it became the 96th largest corporation in the world with sales revenue of $ 51.4 billion and assets extending to $90.4 billion SABIC headquarters are based at Riyadh and has interests in 18 partner companies, which range from full ownership to important contract awarding and team building participation (SABIC Company)). After business restructuring in 2015, the company started the absorption of the commodity chemicals produced under the innovative plastics into the chemicals and polymers. Alongside, specialty was created to cater for remainder of the innovative plastics, goods that did not fall under the umbrella of chemicals and polymers (Duprez and Cavani). The company had the plan to cease all the products that failed to fall under the umbrella of the specialty created, and they were to cease in the market by January 1st this year. Again, that change was followed by relocation of the performance chemicals portfolio into chemicals SBUs. The main business units after restructuring are chemicals, polymers, fertilizers metals and specialties, and manufacturing. Alongside this change, the company also announced that the headquarters of the plastics production will be closed. Also, the SABIC regional headquarters for the Americans were relocated to Houston TX. In July 2002, the company commenced operations in Europe and set up one of the biggest plants after the procurement of the petrochemicals commercial of Dutch group DSM (Duprez and Cavani). The Europe plant is very efficient as it produces over 2million tons of polymers as well as over 5 million tons of the fundamental chemicals like potassium, sodium, etc. SABIC Europe employs over 3000 thousand employees (Alzalabani). The two plants in Europe are based at Geleen in Netherlands as well as Gelsenkirchen in Germany. After this two plants had been set up in Europe, the company was ranked 11th largest petrochemicals company globally. The two plants in Europe indicates that with time the company has the intent to expand and be a worldwide global company (SABIC Company)). SABIC SHARES The company's shares are faring well in the stock exchange market of Saudi .In 2004 value of SABIC share increased by 170 % and the net profit also increased by 112% from 2003 to 2004 (OECD Publishing).Consequently, in the following year, SABIC was the middle east biggest and most money-making company listed non-oil company, regarding market capitalization. At the same time, categorized, 331 globally. Again, the second largest manufacturer of ethylene glycol, polyethylene, The same year Fortune Global 500 gave an A corporate rating for being the world prevalent manufacturer of polymers and Persian Gulf region's major steel industry (Alzalabani). Additionally, Bloomberg categorized SABIC 13th regarding market capitalization. To further boost the expansion power, the company established the SABIC SUKUK, which is an Islamic bond, it is estimated that the company bond range between SAR 1 billion and SAR 3billion which is approximate US$1.6 billion (SABIC). Further activities in shares of a company were in Jan 2007 when Huntsman Corporation plants in the UK were took over by SABIC. Again, the monetary value transferred in this deal was significant too (Alzalabani). The company had a widespread interconnected system of sales and logistic centers besides three petrochemical manufacture sites in Europe. The following year SABIC produced 7.5 million metric tons of the petrochemical, this was chiefly for the European marketplace. Also, in 2009 SABIC received an agreement from the administration of China to start plants and set up companies in the countries so as to gain the foot in the world fastest –growing chemicals market. To further boost the expansion of the company, SABIC acquired another company General Electric's plastics division for a deal worth US$ 21 billion including the company liabilities (Al-Amine). Following, the company launched the SABIC Innovative Plastics that they closed later after restructuring. Net profits of SABIC in 2008 reached SAR 22billion; total assets stood at SAR 272 billion. During the end of the year 2008, the revenues of the enterprise stood at $40billion.The primarily consolidated reports of September net income for the year was SAR 17 billion equated to net income of SAR 14billion in the same period of the previous year ,thus on showing an increasing trend (SABIC). SABIC MANAGEMENT SABIC is rated as one of the most rapid and articulate industrialization development of 21st century. The enterprise has proved beyond doubt that it is categorically one of the biggest corporation in the world. Nonetheless, such tremendous success cannot be attained with comics there are laid certain guidelines that are followed to realize such success. Below are management strategies, employees' treatment strategic management as well as methodologies employed by the enterprise (Al-Amine). Use of strategic plans To start with the companies vision is clearly defined as well as compete and achievable. That is, to become the world leader in chemicals, with a focus on providing quality products and services through improvement as well as expansion into the fresh market and maximizing shareholders value. Subsequently, in 2012 the company launched a strategic initiative that projected to make SABIC a more worldwide and market facing company. The strategic plan was to be driven by differentiation of solutions in sectors like transport, construction, electronics, and packing. In this strategy, the company acknowledges the development of competitive sources of a substitute feedstock globally (Alzalabani). Again, the company lays underscores on specialty chemicals derived from naphtha and other associated heavy feedstock. SABIC's objective is to grow its universal presence, with a concentration on hastily evolving and emerging economies, while continuing its role in progressing the industrialization. Firstly, Use of meridium that is a software used for performance management. Meridium software was signed in 2006, Saudi Business Meridium partner has helped the company to implement the software to work in the company. SABIC encompasses on of the biggest meridium corporate executions and most inclusive in the Middle East. With increasing antagonism SABIC recognize the necessity of applying a dependability program to maximize profit. Consequently, the SABIC total Reliability program STRP4 was instigated (OECD Publishing). The program aimed at achieving maximum success of asserts. To add weight on training employees and relying on consultation services, meridium is giving an arrangement of software and services like risk-based inspection, cause analysis, reliability analytics, production incident tracking and implementation and training services. SABIC'S choice of meriduim has been highly appreciated and has already made the company perform many activities with the measure that is standard and scientific. Again, a lot of profit is realized after implementation of this soft wares. Again, soft wares constitutes of an incorporated set of services that provides, e-business, system incorporation, project management (SABIC Company) . At the same time, these services are keenly monitored to encounter the specific customer requirements, and company flourishes on providing value-added customer service and business profits through its well advanced knowledgeable capital (SABIC Company). Technological innovations At SABIC, the organization has always tried to be the world furthermost innovative body as their innovation is the driving energy in every undertaking in the company (SABIC Company)). At the same time, change is highly regarded and one of the primary mechanism in the company. For SABIC, innovation is a journey in the endless revolution of ideas to real-world answer. Again, for the company innovation is the chief contributor to SABIC's business growth. Consequently, the company works carefully with the strategic management units to aid in improving their manufacturing procedures and come up with innovative technologies. Subsequently, these new technologies reinforce the technical knowledge and gives great competition edge, and allowing customers to help the quality and the sustainability of the company's product (SABIC Company)). Technology centers Research is the main tool used by the company for sustainable growth and development and also support the competition in the market. With such an idea SABIC has significant research hubs worldwide. SABIC has 19 Technology and Innovation facilities in Saudi Arabia, U.S.A Netherlands, India, Japan, and Korea. The facilities are excellently facilitated with resources to gather new technologies on the ground (Oxford Business Group.). Again, the hubs contain up to date machines to enable research as well as the implementation of the research. This universal presence is a significant boost as it allows the company to tap into some of the world finest technologists to shape the future of the company (SABIC Company)). Also, the presence promotes the possibility to meet the fast changing requirement in the dynamic world of technology. The enterprise endlessly seeks to improve technology, presentations, and solution so as to cope with progressively sophisticated marketplace that is looking for cool designs, improved functionality as well as greater sustainability. The commitment of the company lies in customers' satisfaction, a deeper understanding of the industry needs and regional challenge. Since identifying that, the company is continually involved in translating those prerequisites into innovative resolutions that distinctively statement their requirements, relying on innovation, genuine and collaboration as its core features. SABIC regularly endeavors to achieve a profound understanding of its customers and their business. Also, the company owns a network of global research and technology centers that are exclusive for creative minds, cultivate ideas, and technical knowledge (SABIC Company). SABIC has primarily invested in the technology, as they foresee great opportunities for innovation. Thereby, they work with best universities, international research centers, and other technology-oriented entities to develop research capacities to ensure the company remains at the forefront of technology (General Books LLC). Additionally, the strategic partnership with the front runners of the technology allows the exchange of technology ideas between the company researchers and specialist in academics in basic and applied studying fields of chemistry material science, practical engineering, systematic and application technology. Again, for innovations and are beyond immediate plans of an individual business unit, the company runs innovation programs to research critical topics energy and advanced materials. The subjects are taught in universities at their expense as well as giving students scholarship when they major in those topics (SABIC). Also, there are research topics that are underway this are nonconventional solar energy related reactions , flexible microchip technology materials, Hydrogen reactions and nuclear reactions, CO2 as a reactant, production of H2. These programs are currently sponsored by SABIC in various world class university. The primary purpose of the programs is creating a base for ever expanding SABIC existing activities and constructing future business (SABIC). The presence of the prerequisites of identifying problems and finding equal to the task methodology is a huge boost for a success of the company. Again strong management, as well as the chairman, being a prince, is an added advantage for the success of the enterprise. SABIC is a parastatal as most of the shares are controlled by the government. Consequently, the firm arguably gets funding whenever the need arises (Al-Amine). Again, the goods produced by the company has set market in the Middle East, Europe, Africa, Asia, and Australia. The Market is definite because there is less competition globally as well as the companies producing such products are not regional but just based locally. At the same time, this companies cannot produce masses thereby is hard to get contracts or tenders from the businesses or countries who want to buy the goods. Such factors give the company mileage to the company as compared to the competitors. At the same time, the management of the company is zero tolerance to corruption (Al-Amine) Regarding the recruiting process, the company only recruit the employees who are not qualified but also capable of working as a team. It's worth noting that the firm does not recruit only from Saudi Arabia but also from any other race as long as an individual meets the qualification (General Books LLC). References Read More