Economic Contributions of SABIC in Saudi Arabia - Research Proposal Example

Name: Tutor: Institution: Date: ECONOMIC CONTRIBUTIONS OF SABIC COMPANY TO THE SAUDI GOVERNMENT BY (STUDENT NAME) A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF BUSINESS FOR THE PARTIAL FULFILMENT OF MASTERS IN BUSINESS ADMINISTRATION DECLARATION I declare that this proposal is my original work and has not been presented in any other university/institution for consideration of any certification. This research proposal has been complemented by referenced source duly acknowledged. Where text, data (including spoken words) graphics, pictures or tables have been borrowed from other sources, including the internet, these are specifically accredited and references cited using current Harvard system and in accordance with anti-plagiarism regulations. Signature…………………………. Date……………… Student’s name Supervisors’ declaration This proposal has been submitted for appraisal with our approval as University Supervisors. Signature………………………………… Date…………………… TABLE OF CONTENT ABSTRACT The purpose of this study is to determine the economic contributions of SABIC in Saudi Arabia. The study specifically considers Riyadh since it is the headquarter of the company with a population of 7 million people. The study is a descriptive survey. Stratified sampling will be used to obtain the target population and simple random sampling will be used to obtain the required sample for the study. The two instruments that will be utilized in this study include questionnaires and interview schedules. Collected data will be processed and analyzed both qualitatively and quantitatively according to the objectives of the study using statistical tools like SPSS. CHAPTER ONE 1.0 INTRODUCTION This chapter describes the background of the study, statement of the problem, purpose of the study, limitations of the study and definition of operational terms. 1.1 BACKGROUND SABIC is an abbreviation for Saudi Basic Industries Corporation which is Saudi Arabia's major non-oil company; it mainly deals with the production of; chemicals, plastics, fertilizers and metals. The company was established in 1976. The duty for Sustainability at SABIC is given to the Sustainability committee, which is chaired by the CEO and includes executives from the strategic business units (SBUs). Together, the committee members make sure that sustainability is incorporated throughout the company’s business and as a result, high level approach towards sustainability in all regions, businesses are steady, throughout its operations. The Sustainability committee is responsible for setting up the company’s sustainability vision, climate change policies, and goals and is accountable for the performance alongside sustainability metrics.  SABIC is one of the world's top makers of polyethylene and polypropylene. The Saudi Arabia government is the majority shareholder in the company with approximately 70% shares while the remaining 30% shares are publicly traded. SABIC operates under the principle that the success of the business mainly depends on customer satisfaction, it is for this reason that the management work hard to understand the customers changing needs in order to produce the correct product at the right time. The information below highlights the financial performance of the company. Yearly revenue, SR 132.8 billion. Net earnings, SR 17.84 billion. Tonnage produced, 72.2 MMT. RATIOS 2015 2016 EBIT margin 19.3% 20.16% EBITDA margin 29.86% 32.45% Net Debt to EBITDA* 0.10 0.98 Total Liabilities/Total Assets 36.06% 33.63% Total Debt/Equity 45.09% 40.14% Book value per share (SR) 53.97 54.35 Current ratio 2.74 2.64 Trade receivables in days 47.75 54.38 Product inventory in days 85.59 91.82 * including short-term investments with maturities > 3 months REVENUES EBITDA NET INCOME TOTAL ASSETS https://www.sabic.com/en/investors/performance-financial-highlights. Corporation Governance policies. Like any other business, SABIC has policies that govern its operations in order for it to realize its set objectives. Dividends distribution policy The Corporation dividends distribution; is based on a number of controls considering the net dividend the company attains, amount of money circulating in the business and the allocation policy as determined in the company laws. In case of allocation within the company, company interests and net dividends, cash flow and allocation are considered. Cash sharing is done with a suggestion from Board of Directors to the Corporation, in agreement with all associated set of laws. Conflict of benefit policy The company alleged that supervision of its activities and decision-making ought to be based on pure monetary bases and the positions allocation is based on value and competence. To that result, the company will avoid any clash of interests that may have collision on the monetary bases of managing the company and decision making. In case a clash of welfare is exposed, the company will manage it so that it will not affect the decision making process. Non-circulation policy Article 33 of registration act states; a set of laws that are issued by Capital Market Authority stating that Board members, senior executives or any related party are forbidden from any kind of business with any company monetary papers during any of these two periods: i) Fifteen days preceding the ending of the yearly quarter pending the day to declare and announce company’s financial report. ii) Thirty days towards the end of the fiscal year till the day to declare and announce company’s financial report. Information no-disclosure policy In regards to the company disclosure policy; the company should be familiar with and put up with the privacy and rules on information non-disclosure set as well as control for particular and personal information at the state where such information is composed, processed and used. Also, know and put up with company’s instructions in this regard. 2. The company should collect process and use personal information for legal work purposes only. Make sure abiding completely through all conditions and necessities related to the treatment personal information. 1.3 purpose of the study The purpose of this study is to understand the working of the SABIC Company including its contributions to the economy. 1.4 research objectives The objectives of this study are; i)to understand the socio-cultural impacts of SABIC Company to the citizens of Saudi Arabia. ii) to determine the economic contributions of SABIC Company to the Saudi Arabia government. iii) to understand the general working of the company considering it has branches in over fifteen nations in the world. 1.5 research questions 1. How have the activities of the SABIC Company contributed to the socio-cultural changes in Saudi Arabia? 2. What are the economic contributions of SABIC to the Saudi Arabia government? 3. How does SABIC control its activities among all its branches? 1.6 significance of the study It is hoped that from this study, the researcher will be able to answer the questions above in order to better understand the role that SABIC Company plays in the economic sector. CHAPTER TWO LITERATURE REVIEW 2.0 INTRODUCTION The main concern of this study is to determine the economic, socio-economic contributions of SABIC Company. In this chapter, the researcher also discusses both the conceptual and empirical framework. 2.1 Socio-cultural impacts of SABIC Company In 2011, SABIC contributed the following; 2% towards GDP, input in the private sector was about 9% in terms of GDP, and its input to the industrial non-oil sector GDP was 34% (Issue: 2, pp.48-61, https://doi.org/10.1108/10569210480000179) According to Al-Mady, the CEO, the responsibility of manufacturing, continue to be intensely fixed in Saudi Arabia’s continuing economic policies. “SABIC has at all times taken a realistic move towards together with the policies of the management to make sure that the preferred receptiveness to the needs of the country and its people,” he said. In order to generate employment opportunities for the nationals of Saudi, Al-Mady said, “SABIC takes the procedure of employing locals with capacity critically. I am happy to say that more than half of SABIC’s worldwide employees are based in Saudi Arabia. In addition, we have taken measures beyond our manufacturing units to localize jobs. We are operating with our contractors to capitalize on their employment of capable Saudis. In close partnership with local associates in government, SABIC has also developed a plan to engage and train around 4900 Saudi high school leavers to take up a wide variety of manufacturing and office support positions in SABIC.” To stress on the significance of education to create jobs, Al-Mady said the company’s internal guidance program at its plants hold up Saudi Arabia’s national efforts to restrict industrial jobs. SABIC also has a motivated plan to yearly hire high school alumnae with high potential. We coach them systematically in manufacturing operations before we deploy them in our plants in Saudi Arabia. 2.2 ECONOMY CONTRIBUTION The importance of any business in an economy is earning government revenue through GDP. SABIC Company contributes highly toward economic growth in Saudi Arabia. 2.3 EMPIRICAL FRAMEWORK This study empirically examines the relationship linking profitability and liquidity, as calculated by present ratio and cash gap on a model of combined stock companies in Saudi Arabia. 2.4 ORGANIZATIONAL BENEFITS A huge percentage of the success of any business is contributed to by its organizational structure. SABIC Company is considered to be very successful due to the huge number of people who depend on its products. The company branches in over has branches in over fifteen states worldwide. This success is due to the organization of the company and also the management of the company. The company has leaders who know what they are doing in terms of leadership and investment. 2.4 Conceptual framework The conceptual framework is guided by the objectives of the study. Independent variables Extraneous variables dependent var Socio-cultural impacts currency fluctuations Economic contributions SABIC COMPANY Organizational benefits CHAPTER THREE 3.1 RESEARCH METHODOLOGY This is a system of clear rules and procedures upon which research is based and against which the search for knowledge is evaluated. 3.1 INTRODUCTION This chapter deals with; research design, model specification, description and measurement of variables, the study area, target population, sampling techniques and sample size, data type and source, research instruments, reliability and how valid the instruments are, data collection and analysis. 3.2 RESEARCH DESIGN Research design is the outline used to come up with answers to the research problem. Descriptive research design studies are applicable in a research where the researcher seeks to collect information regarding people’s attitudes, opinions, habits or any social issues. It involves the measurement, classification, analysis, comparison and interpretation of data. This method of research was used by the researcher to determine the contributions of SABIC to the economy. 3.3 MODEL SPECIFICATION This is the description of the process by which the dependent variable is generated by the independent variables. Thus, it encompasses the choice of independent and dependent variables as well as the functional form connecting the independent variables to the dependent variable. Independent variables Socio-cultural (Q) Revenue (R) Organizational function (O) Dependent variable Economic contributions (GDP) Y Errors (E) Y = f ( Q,R,O) + E 3.4 STUDY AREA This research will be conducted in Saudi Arabia, in the city of Riyadh which is the capital of Saudi Arabia and also the biggest city in the Saudi, is home to over 7 million people. Most of these people solely depend on SABIC in terms of employment. 3.5 TARGET POPULATION According to Brenda (2009), a target population is the whole set of units for which the research data is to be used to make inferences. For this study, the researcher will consider a target population of 150,000 individuals. 3.6 SAMPLING TECHNIQUES AND SAMPLE SIZE According to COCHRAN, W. (2007), a sample is a small part of the population whose characteristics are studied to obtain information about the entire population. For this study, the researcher will consider a sample of 50000 which is 33.33% of the target population. In this study, the researcher will use stratified sampling to select the target population and simple random sampling to obtain the required sample. 3.7 DATA TYPE AND SOURCE The type of data that will be used for this study is quantitative data obtained from published materials and the company’s records. 3.8 DATA COLLECTION INSTRUMENTS A data collection instrument is a tool used by the researcher to gather and measure information on the variables of interest. For this study, the researcher will use questionnaires and interviews due to the following reasons; i) They both save on time. ii) Interviews are flexible iii) In questionnaires, confidentiality is upheld. 3.8.1 VALIDITY OF THE RESEARCH INSTRUMENT According to Khan and Best (2003), an instrument is considered to be valid when it measures what it claims to measure. The validity of the research instrument is determined by the accuracy of the data collected. 3.8.2 RELIABILITY OF THE INSTRUMENT Reliability measures the degree of accuracy in the measurement that an instrument measures. The researcher will consider the method to determine the reliability of the research instrument. 3.9 DATA COLLECTION Data collection is the process of obtaining and measuring information on the variables of interest, in a standard orderly way that will allow the researcher to answer the stated research questions and be able to assess the outcome of the research. The researcher will consider interviews and questionnaires to collect the required data for the study. There are two main sources of data; primary and secondary sources. Primary data: this is the information that is obtained directly from the respondents by the use of interviews, questionnaires, case studies and observations. Secondary data: in this case data is not collected directly by the user since it involves gathering data that has already been collected by someone else mainly from published resources and the company’s internal sources such as the company records. 4.0 ETHICAL ISSUES Ethics is a point of view for deciding how to act and for analyzing difficult problems and issues. It is important for the researcher to stick to ethical norms since; norms promote the aims of the research for instance avoidance of errors, ethical principles encourage the morals that are essential to collaboratively work for example accountability, ethical norms in research help in building public support for the research. Due to this reasons, it is important for the researcher to observe ethical issues in the area of study and also be as sincere as possible with the respondent in order to get t6he correct information required for the study. REFERENCES Abuzar M.A. Eljelly, (2004) "Liquidity ‐ profitability tradeoff: An empirical investigation in an emerging market", International Journal of Commerce and Management, Vol. 14 Issue: 2, pp.48-61, https://doi.org/10.1108/10569210480000179 COCHRAN, W. (2007). SAMPLING TECHNIQUES. 1st ed. [S.l.]: WILEY INDIA. McKeown, B. and Thomas, D. (2013). Q methodology. 1st ed. Newbury Park-Beverly Hills-London-New Delhi: Sage. Sabic invests in Saudi firm. (2006). Focus on Surfactants, 2006(7), p.2. Saudi Arabia: ExxonMobil & Sabic – carbon black. (2016). Focus on Pigments, 2016(1), p.5. Read More