Great Lakes: Great Decisions. PESTEL General Lakes Chemical Corporation - Essay Example

? Great Lakes: Great Decisions Great Lakes: Great Decisions There are many different techniquesthat can be used to analyze the general environment in which an organization operates. The general or the macro environment analyzes the long term picture with respect to the operation performed by an organization. The PESTEL model is one of the most renowned models used for assessing the general environment of an organization. Hence it would be highly appropriate if PESTEL model is used to analyze the macro environment of General Lakes Chemical Corporation. PESTEL – General Lakes Chemical Corporation. Political The major political issue with General Lakes Chemical Corporation (GLCC) arises because of the company’s lead production via its subsidiary Octel Associates. Octel Associates, being a subsidiary to GLCC, produces many different chemical and one of their major products was Tetraethyl Lead (TEL). The issue with lead additives has been that the substance has been banned within the United States and other European countries because of its severe adverse affect. This ban has been imposed because of the extra pressure being mounted up by the environmentalist upon the governments. Hence as far as the political scenario is concerned, GLCC may not be in a good state politically because of ban being implemented upon the lead additives by the United States government. Economical As far as the finance is concerned, GLCC’s main share of profit comes up from Octel Associates production of lead additives, hence it can be said that lead additives had always been a favorite area for the whole organization because of the humongous profit being generated from it. Hence it would really unfruitful for GLCC to halt the production of TEL. As far as the developing countries are concerned, their economy relies heavily upon leaded petroleum, with Africa and the Middle East being the major users and because of this reason they may not want GLCC to close its operation as the developing companies may need time to evolve themselves towards the use of unleaded petroleum products. Finally it can be said that the company would ultimately be affected by halting the production of TEL with respect to a huge profit loss in the short-run but this can be brought back to normal in the long-run if the company follows proper procedures, Social/Demographic People all around the globe would have different perspective about the company’s current operation and the closure of these operations. The mixed emotions would include by some people, the people within the developed countries would strongly go against the production of TEL whilst many developing country’s population would favor the production because of their heavy usage of the product. Technological The Company itself does not face any technological issues. The only technological issue lies with the inability of the under developed countries to produce unleaded petroleum. The best way out in this scenario would be the GLCC can use it technological advancement and help the under developing countries with the production of unleaded petroleum, this as a result, would not only help the under developed countries to transition and it would also help GLCC to prosper and improve its global reputation in the long-run. Environmental/Geographic This is one of the largest issues that GLCC has to face. There has been severe pressure upon the company to halt the production of TEL. This immense pressure has been kept up because of the stern consequences of lead additives. Research showed that leaded gasoline resulted in harsh results for the people living within the environment with major cardiovascular as well as neurological setbacks for individuals. Children were considered to be more prone to the negative effects of leaded gasoline evaporating within the environment as compared to the adults. Finally the research concluded that lead was severely poisonous leading to a reduction in the IQ level of the children living in areas where leaded petroleum was used in abundance. All these serious issues would further enrage the environmentalists towards a protest against GLCC’s production of the substance TEL and eventually the company would succumb to their immense pressure. Legal As far as the legal aspect is considered, there is no such law over the production of TEL and other lead additives but the increasing pressure from the environmentalist would force the government to come up with a law sooner or later. Although there are no rules over the production of TEL, there are other legal acts that prohibit the use of leaded petroleum and gas both within the USA and the European Union; this as a result discourages GLCC to supply TEL within the USA and the European Union (Mead et al, 2008). Five Forces of Competition Model – Lead Additive Industry, USA The five major forces are as follows: Threat of New Entrants Although there are no barriers to entry within the lead additive industry, the industry within the USA has been a dying industry because of the negative flaws and issues that it carries and the threat of a new entrant is minimal. Although companies might try and enter the industry just for the fact that developing countries are still a major market that can be catered but this may rarely be the case as it would be really difficult to set up a new production plant where rigorous opposition is to be faced by the environmentalists within the USA. The Bargaining Power of Customers The bargaining power of customer within USA can be considered really high. This is because of the fact that unleaded petroleum is highly used within the country and besides that the government too has taken strong steps that the usage of lead petroleum be banned within the country. The Bargaining Power of Suppliers The bargaining power of suppliers is also quiet low with respect to lead as Octel Association gets its on raw material to produce the Lead additives that it has to produce. Competitive Rivalry The competitive rivalry for GLCC is calm and quiet as Octel Association is the only producer of lead additives within the USA. All the other competitors were either thrown out of the market by GLCC or they had to leave the lead industry because of the ban imposed on the lead additives. Threat From a Substitute Product Although GLCC has a market for lead additives in developing countries, the USA market has shut its door on the company’s face with the ban being imposed on the lead additives and that unleaded petroleum is preferred by customers within USA and the European Union. Unleaded Petroleum and other unleaded products are better substitutes for lead additives and lead petroleum (Mead et al, 2008). Competition The Great Lake Chemical Corporation faces competition different type of competition with respect to its differing operations. GLCC’s immediate competitors would include all the companies that would be researching, producing and distributing specialty chemicals. The immediate competitors for GLCC would be Dow Chemical Company. Dow Chemical Company also operates within the same market as operated by GLCC (except for lead additives). The impending competitors for GLCC would be all those firms that would be making up their way within the chemical industry and the invisible competitors for GLCC would be all those companies, individuals and the governments that would be opposing the lead additive production carried out by GLCC through its subsidiary Octel Associates (Mead et al, 2008). Strengths and Main abilities The basic strengths and the main abilities that Great Lake possesses include the great quantities of bromine rich brine deposits within Arkansas. All these huge deposits of bromine would always be a plus point for Great Lakes and would give them a competitive edge over its competitors such as Dow Chemical. The growing and enhancing market for bromine would be another factor that would add up to the strengths of Great Lakes as the company has excelled in producing bromine related products and it also hopes to increase its production capacity over the next few years. The ability to produce TEL would also be considered one of its main ability although the substance is getting banned. The market for TEL is good in developing countries and Octel Associates is able to give significant profit to Great Lakes and this profit can be used to improve the bromine related production areas for the company (Mead et al, 2008). References Mead, J.; Freeland, J. R.; Werhane, P. H.; Wicks, A. C. (2008). Great Lakes: Great Decisions. University of Virginia, Darden School Foundation. Read More