Analysis of Ten Trends Affecting the Organisation - Assignment Example

?SABIC Table of Contents Table of Contents 2 Company Profile 3 PEST Analysis 3 Political 3 Economic 4 Socio-Cultural 5 Technological 5 Analysis of Ten Trends Affecting the Organisation 6 Political Trends 6 Economic Trends 6 Socio-Cultural Trends 7 Technological Trends 8 Summary 8 References 9 Company Profile SABIC (Saudi Basic Industries Corporation) is a public company based on Saudi Arabia. It is headquartered at Riyadh, Saudi Arabia. The shares of the company are publicly traded in Tadawul. However Saudi government owns majority (70%) of its shares and the remaining shares are privately owned by the investors in different countries of the GCC (Gulf Cooperation Council) including Saudi Arabia. SABIC was founded in 1976 and operates globally in more than 44 countries in the world. The company is estimated to have more than 33,000 employees all over the world (Sabic.com, 2012). The organisational structure of SABIC includes a total of six different business units, namely Chemicals, Performance Chemicals, Polymers, Fertilizers, Innovative Plastics and Metals. All these business units are engaged in the production of four product types, namely Chemicals which includes Performance Chemicals, Fertilizers, Metals and Plastics which includes Innovative Plastics and Polymers (Companydatabase.org, 2009). For the year 2011, SABIC recorded a net profit equalling SR 29 billion and its annual turnover for the year was SR 129 billion. PEST Analysis Political The government of Saudi Arabia follows a system of monarchy. No political party is officially recognised in the country. Holy Quran is considered to be the constitution of Saudi Arabia and Sharia (Islamic Law) forms the basis for its governance. A central government has been developed by the kings of Saudi Arabia. A wide range of powers are concentrated in the hands of the king of Saudi Arabia. Political reforms have been initiated in the country with the formation of Shura or National Constitutive Council. The members of Shura have advisory powers regarding issues related to public interest. There has been a gradual expansion of the royally appointed Sharia over the past few years (US Department of State, 2011). No income taxes are imposed on Saudi nationals and foreigners working in the country. Only foreign investors are required to pay taxes on their net profit. However the Sura Council members are thinking of the proposal of taxing foreign expatriates. Economic Major economic activities are strongly controlled by the government of Saudi Arabia. Major revenue earnings are derived from the petroleum sector. Private sector growth is being encouraged in the country to promote diversification of economy and employment of Saudi nationals. The effort of diversification is concentrated on telecommunications, power generation, petrochemical sector and exploration of natural gas. There is an unemployment problem mainly because of lack of education and technical expertise amongst Saudi nationals and government is making concentrated efforts to address this issue. Foreign investment is being promoted in the country (CIA, 2012). Socio-Cultural Islam is the predominant religion in the country and Arabic is its official language. Saudi Arabia has a conservative cultural environment. Officially the country strictly adheres to the Islamic law and its Wahhabi interpretations. Cultural presentations are supposed to be in conformity with the ethical standards which are narrowly defined. Technological The country is experiencing rapid advancements in technology. Increased use of internet in business activities in the country. Growing advancements in e-Commerce and electronic service technologies (Al-Ghaith, Sanzogni, & Sandhu. 2010, p.1). Analysis of Ten Trends Affecting the Organisation Political Trends 1. The political environment of Saudi Arabia is quite stable. The country is devoid of any democratic system. National elections are not held in the country and political parties do not exist. Hence it has a positive impact on the business environment of SABIC and the company is required only to follow its stable policies. 2. The Royal Family of Saudi Arabia holds a considerable amount of authority regarding business developments in the country. No change has been observed in the economic policy followed by the royal family. However there has been a significant change in the government’s economic role. It is observed to make marked improvements in the country’s economic conditions. At the same it wants to hold on to the Islamic values of the society too. Now since SABIC is controlled by the government of Saudi Arabia, it do not possess any threat regarding this issue and is supposed to promote further growth of the company. 3. The government is thinking of imposing taxes on foreign expatriates. It can affect SABIC because lot of its employees are foreign nationals. Hence the company needs to be proactive regarding this issue. Economic Trends 1. Government of Saudi Arabia is supposed to have strong control over the economic activities being carried on in the country. This can have a positive impact on SABIC because it is a public company owned by the Saudi government. Hence the economic activities can be supposed to get aligned with the interest of the country. 2. Economic diversification is being promoted in the country and private sector growth is becoming prominent. This can adversely affect the growth of SABIC because it is a public company and the upcoming private companies in its industrial sector can pose a threat for taking away the sources of company revenues. Hence SABIC needs to develop and secure its competitive advantage over its competitors in order to have a sustainable growth of the company. 3. The government is encouraging foreign investments in the country. Hence SABIC should grab this opportunity and employ more foreign investments in the company to promote its growth. SABIC already operates globally in different parts of the world and needs to further extend its reach and strive to be the best company in the world. Socio-Cultural Trends 1. Muslims are predominant inhabitants of Saudi Arabia. The cultural environment in the country is quite conservative in nature. Hence SABIC needs to give importance to this issue and try to develop harmony within the employees and maintain a peaceful cultural environment within the company. 2. The Saudi people are quite aware of their rights as a consumer. SABIC is already involved in high quality products for its consumers and are required to maintain its standards. Technological Trends 1. Saudi Arabia is experiencing significant advancements in technology. SABIC should be aware of this fact and must avail advanced technological systems in its operational activities to help making the business sustainable in future. 2. With the increased use of internet in various business activities followed by other companies in the country and the world, SABIC is also required to promote online business activities. Summary SABIC is a well reputed and one of the largest companies in Saudi Arabia. It operates globally all around the world. The PEST analysis shows various trends and SABIC is required to respond and act positively towards these trends. The political scenario in he country is quite stable and the company is required to follow a stable policy. There has been a significant economic development in the country and privatisation is being encouraged. Hence SABIC is required to develop its economic advantage in the country. The socio-cultural activities and trends are not going to affect the company significantly. However, the SABIC needs to maintain a peaceful and interactive cultural environment within the company. The country is experiencing significant technological advancements. Hence SABIC is required to develop new technologies and promote online business activities in the company. References Al-Ghaith, W., Sanzogni, L., & Sandhu. K. (2010). Factors Influencing The Adoption And Usage Of Online Services In Saudi Arabia. EJISDC. 40(1). Retrieved from http://www.ejisdc.org/ojs2/index.php/ejisdc/article/viewFile/620/303. CIA. (2012). The World Factbook. Middle East: Saudi Arabia. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/sa.html. Companydatabse. (2009). Saudi Basic Industries Corporation. Retrieved from http://companydatabase.org/c/steel-works-blast-furnaces-rolling-mills-coke-ovens/expanded-metals-manufacturers/manufacturing-industrial-manufacturing/metals-steel/aluminum-sheet/manufacturing-iron/chemical-manufacturing/saudi-basic-industries-corporation.html. Sabic. (2012). Our Company. Retrieved from http://www.sabic.com/corporate/en/ourcompany/default.aspx. US Department of State. (2011). Background Note: Saudi Arabia. Retrieved from http://www.state.gov/r/pa/ei/bgn/3584.htm#political. Read More