This Report will measure the altering concern environment of a Brazilian Multinational Company, Braskem, over the last five old ages.
The chief focal point is to place, analyse and understand the chief points which have influenced the Micro and Macro concern environment of the company. In order to make this, some of import tools need to be considered. The Pestel analysis which gives the support to measure the external factors which can impact an organisation: political, economic, societal, technological, environmental and legal. SWOT analysis is another of import tool, which creates the knwoledge of what strenghts and weaknesses the company has to cover with chances and menaces created by ther external environment.
Business environment can be described as everything that to a certain extent impact the concern concatenation. Some factors which represent this are: employees, providers, consumers, rivals, cultural factors, GDP ( gross domestic merchandise ) , economic system of the state and so on.
In add-on, concern environment means everything that can act upon the concern determination devising, can be internal or external factor. The concern environment is besides a beginning of menaces, because companies can confront challenges every twenty-four hours: new rivals, new merchandises, new Torahs, new regulative demands or client can alter trade name, in other words, concern environment can be fatal for a company.
One good illustration is the print publish encyclopaedia Britannica. After 200 old ages of prosperity, it about went belly-up because of electronic encyclopaedias, such as Microsoft Encarta and Wikipedia. This illustrates the importance of directors analyzing carefully the concern environment in order to expect and forestall the possible environmental alterations ( Johnson et al, 2009 ) .
Macro-environment is the highest bed of the environment, which consists of wide external factors that can act upon the concern. On this instance, the PESTEL analysis is a utile tool to place these factors and this can be based on the analyses of future tendencies such as political, economic, societal environment ( green ) and legal. Using this tool, directors can place the cardinal drivers of alteration and this can be used to build the possible tendency future scenarios ( Johnson et al, 2009 ) .
Harmonizing to Worthington and Britton ( 2003 ) , most of concerns have the same activities, which is change overing inputs ( resources such as labour force, engineering, finance and stuffs ) in end products such as goods ( merchandises that can be touched such as nutrients, autos, and so on ) or services ( merchandises that can non be touched such as insure services ) . These activities can be used and influenced by companies in order to build their scheme.
On the other manus, companies are inserted in a macro-environment which represents all external forces which can impact them and which they can non command. Harmonizing to Lancaster ( 2008 ) , this environment is composed by closer factors such as providers, mediators and distributers ; and wider factors as cultural, legal, economic, and so on.
Sing that this macro environment is really complex and companies can non command it, its analysis is really of import. Companies need to place them and understand the negative impacts they can bring forth, therefore they can be prepared to minimise them ( Palmer and Hartley 2009 ) .
In order to make this, companies can utilize PESTEL analysis which involves Political, Economic, Technological, Environmental ( green ) and Legal facets.
Harmonizing to Palmer and Hartley ( 2009 ) , politicians are responsible to make and go through statute law to companies and on occasion some of them can direct impact some types of concerns, such as: client protection Torahs, employees protection Torahs, controls of pollution and so on. In add-on, harmonizing to Lancaster ( 2008 ) others political determinations as the work force instruction, wellness and environment, and even the economic system substructure can besides impact concerns operations.
Economic factors are really import for an organisation because it is straight related to GDP ( gross domestic merchandise ) , economic growing, unemployment rate, rising prices rate and so on. Any alteration in the economic system can impact concerns. One good illustration is the oil crisis which occurred during the Middle East War in 1973. The addition in the petroleum oil monetary value affected all the concatenation such as energy cost, oil-based natural stuff, plastic, man-made fibers and so on ( Lancaster 2008 ) .
This illustration indicates the importance of supervising the economic system, either nationally or internationally, in order to place possible chances and menaces.
Social and Cultural factors
The socio-cultural environment is perchance one of the most hard factors to analyze, sing that is based on people behaviour alterations, such as faith, values, precedences, attitudes, beliefs and societal alterations ( Lancaster, 2008 ) . On the other manus, Palmer and Hartley ( 2009 ) province that a important portion for concerns is to understand the cultural value of a society ; companies should be supervising this invariably to better correspond to clients wants and demands.
Companies can do usage of a demographic survey to place these tendencies and back up them to do determinations. It is a survey of characteristics of the population, such as size distribution, age distribution, genre, births and decease rates, instruction degree, penchants, belief and so on. One illustration is how transnational companies use this to place larger Centres where they can be established to ease their operations ( Campbell and Craig, 2005 ) .
Harmonizing to Lancaster ( 2008 ) , engineering is an import macro-environment factor which is presented in many merchandises that we use on our day-to-day unrecorded, as telecasting, reckoners, picture records, computing machines and so on. Companies play an of import function on bring forthing more engineerings due to this some of them has their ain research and development section or work in partnership with universities or research institutes, seeking to supply new merchandises or with better quality to clients.
One illustration is Braskem, as a consequence of its changeless development, the company was the first one to make a polythene made from vegetable natural stuff ( sugarcane ethyl alcohol ) , called Green polymer. It is a merchandise from 100 % renewable resource, and one of the most normally used in flexible packaging. In add-on, Brazil is one of the states which is puting more in bio economic system to replace oil merchandises base by renewable base such as saccharide and vegetable ( Biopact, 2010 ) .
This subject has been invariably increasing, particularly for multinationals, due to the demanding of societal duty activities and undertakings with focal point on the community and the environment. These corporations have an of import function on lending to the societal development ( Worthington and Britton 2009 ) .
Furthermore many companies, such as petrochemical industry, are surrounded by rigorous federal environmental Torahs, such as province and municipal, related to human wellness, grip and disposal of solids and risky waste, discharges of pollution in air and H2O. Often, in order to go to all these ordinances, companies need to put more and accordingly this can stand for an addition in monetary values ( Braskem, 2008 ) .
Braskem, in the last five old ages, has worked proactively to cut down environmental hazards and, as a consequence, it has improved its indices across the old ages. In its eco efficiency activities, they have focused on: reduction H2O ingestion, energy, coevals of wastewaters, production of residues solids and pastes. Furthermore, it is besides preoccupied with the society and develops undertakings in partnerships with the communities to better factors such as people instruction, quality of life, societal undertakings and so on ( Braskem, 2007 ) .
Companies should work harmonizing to the jurisprudence otherwise they can hold important impact on their concerns. Some Torahs are altering to protect clients ( municipal licenses, anti-monopoly Torahs ) ; employees ( minimal pay, workers safety ) and providers ( right of first publication and patent Torahs which favour concern investings ) . Some of them can act upon market construction and behavior ( Worthington and Britton 2009 ) .
Microenvironment, on the other manus, is the internal factors which by and large concern determinations are made. The internal environment is composed of assorted constituents such as employee, providers, client, and so on. Therefore, microenvironment can be divided in assorted little parts inside a company and each portion is highly of import for the concern ( University of Latvia ) .
Lancaster ( 2008 ) argues that one of the chief aims of selling is to go to the necessities of consumers. In order to accomplish this, companies can do usage of their internal resources and capablenesss, their microenvironment, over which they have control, and utilize this as a beginning of cognition to build the better scheme to fulfill costumiers ‘ demands.
In add-on, the microenvironment is easier to grok than the macroenvironment because it refers to everything that is portion of a company such as providers, employee and so on. Everything that is direct or indirect related to the company ( Palmer and Hartley, 2009 ) .
They are one of the most of import parts of the microenvironment. Companies need to concentrate on supervising possible alterations on consumers ‘ tendencies and on making an effectual relationship with them. In other words, companies need to be one measure in front, seeking to foretell consumers ‘ wants and demands and developing merchandises to go to these demands. Furthermore, companies must non concentrate merely on this simple theoretical account ( making a good merchandises to clients ) , but think beyond it ( Palmer and Hartley, 2009 ) .
They supply natural stuffs, goods and services that are transformed into value-added merchandise for clients. Suppliers are an of import component inside the microenvironment ( Palmer and Hartley, 2009 ) .
In order to this, Petrobras is the lone Brazilian provider of naphtha and supplied 61.1 % of the naphtha consumed by Braskem in 2007. This is non a good for concern because if the Petrobras has some job can act upon the direct the production, or even a job with the grapevines linking the Petrobras to Braskem, fire or natural catastrophe can be fatal for the concern. ( Braskem, 2008 )
They represent connexions between companies and clients. Some companies, chiefly big 1s, have some troubles to go to all concluding costumiers therefore they choose to sell their merchandises through mediators to be present even in little supermarkets. Some companies can neglect because they do non place this as an of import scheme ( Palmer and Hartley, 2009 ) .
In this thought, Braskem is a company that has gross revenues direct to clients and sells merchandises in Brazil through sole independent mediators, presently has seven mediators nevertheless three belong to a group of related companies ( Braskem, 2007 ) .
Companies need to maintain their eyes on their rivals, supervising them and seeking to foretell their following stairss. Furthermore, there are two different types of rivals: direct rival, which sells similar merchandises ; and indirect rival, which is more hard to place, because sometimes rivals can look in different signifiers. For illustration, who is the indirect rival for a film? Is it another film? A place rent film? ( Palmer and Hartley 2009 )
For case, in the instance of Brasken, for its rosin thermoplastic section, the chief direct rivals are:
YPF Sociedad Anonima
Companhia Petroquimica do Sul – COPESUL
Dow Chemical Company, The
Suzano Petroquimica SA
Monomeros Colombo Venezolanos
Mossi & A ; Ghisolfi SpA
( Datamonitor, 2009 )
Furthermore, based on the analysis of its concern environment, a company can finish this with a SWOT analysis. It can place what strengths has to maximise the chances and neutralize its menaces and failings. SWOT summarizes the chief issues which affect the company and which should compose its scheme. In add-on, this analysis is really utile when compared with its rivals.
SWOT is a strategic planning tool, used in direction and scheme preparation in order to place strength, failing, chances and menaces of a peculiar company. It is chiefly focal point is to analyze and understand the administration ‘s internal and external environment.
Strengths are considered internal positive factors within an organisation which can add value ; failings, on the other manus, are negative facets, which can interrupt the concern from accomplishing its ends. Opportunities are external factors which help concern and can stand for one possibility of geting competitory advantage if the company has the ability of placing them quicker than its rivals. Menaces are besides external factors but which can impact concerns operations negatively ( Campbell and Craig, 2005 ) .
SWOT analysis is used as a filter to obtain relevant information about the company in order to take appropriate actions. When a company understands the one-fourth points of a SWOT analysis, it can do better determination devisings. Strength factors can be used as a footing for building advantages, taking the chances ; failing can be seen as a challenge and used to rectify mistakes ( NetMBA, 2010 ) .
Braskem is a Brazilian Petrochemical cracker company. It was founded in 1972 with the name of COPENE. However, in 2002, after the acquisition of the company by Odebrecht Group, it became known for Braskem. Today it is among the 10 biggest and best petrochemical companies in the word. It is the third-largest manufacturer of rosin in America ( after US-based Dow Chemical and Dutch giant LyondellBasell ) and is the market leader in thermoplastics rosin, in Latin America, with 50 % of selling portion ( Brasken, 2007 ) .
The company concern operations are separated into four units: the basic petrochemicals, polyolefin, vinyl, and IQ Solucoes & A ; Quimica. Its production is distributed among 18 industrial workss in Brazil. Among its merchandises are: basic petrochemicals such as ethene, propene and benzine ; and the Thermoplastic section produces merchandises such as polypropene, polythene, PVC and others ( Datamonitor, 2009 )
Braskem has focused its resources on undertakings that can offer high returns in short term and besides which can assist it to make its aims. The investings for 2010 are around 1.1 billion, sing that the company wants to spread out its production capacity and do some decreases on protection programmes. Furthermore, Braskem remains aligned and committed to cut down fixed costs and disbursals in order to increase its fight in the market ( Braskem, 2009 ) .
Furthermore, during the last five old ages, Braskem has invested around R $ 7 billion to go one of the most successful petrochemical companies in the universe ( Data proctor, 2009 ) . In add-on, it has growing about 33 % per twelvemonth on net gross ( Braskem, 2007 )
Braskem suffered a great challenge during September 2008. The market was affected by an intense volatility in oil monetary values and exchange rates ; it besides had a lag in the universe economic activity, reflecting the discontinuance of recognition, decrease on demand therefore a tendency of economic downswing in major proportions. Due to this, the company tried to understate the consequence the crisis had on their operations and overall public presentation by increasing the effectivity of its operating capacity and to that consequence, guarantee better consequences and a smaller loss ( Braskem, 2009 ) .
Recently, Braskem made the acquisition of Quattor ( Brazil ) and Sunoco Chemicals ( USA ) . The Quattor acquisition represented the last big consolidation chance in the Brazilian petrochemical sector. Therefore, Braskem has an of import challenge of advancing the integrating of these new assets, squads and civilizations. It can take chance from this rich diverseness of experience and portions the best patterns and competences in each country ( Baskem, 2009 ) .
Companies associating to petrochemical industry have some hazard about the cyclical nature. Because the market is which Braskem compete is sensitive to alterations, in therefore this, cyclical nature can be affected by political, economic and so on in Brazil and for other states. This cyclicality natural can cut down the net gross revenues gross and gross border, because when the demand diminution, the company may cut down the merchandises monetary value to be competitory with market ( Braskem, 2008 ) .
The Brazilian petrochemical industry has progressively integrated with the planetary petrochemical for some grounds, increased demand in Brazil for petrochemical merchandises. Braskem set up the monetary values for merchandises in Brazil with mention in international market monetary values, making this, the net gross revenues gross and gross marker are progressively linked to planetary market ( Braskem, 2008 ) .
In the section of polyolefin, vinyl and other petrochemical merchandises, Braskem has competition in both domestic and international market, many of international rivals are big so Braskem and they have greater fiscal, fabrication, technological and selling resources. That makes a challenge for the company addition in this section ( Braskem, 2008 ) .
Braskem has a important rival in domestic market in the polythene market. Rio Polimeros S.A is a Brazilian petrochemical company and induction the operating in 2005, and they have a great capacity of production, in add-on, Suzano Petroquimica S.A and Solvay merely expanded the polypropene and polyvinylchloride ( PVC ) production. Because Doctor of Optometry increased of rival, can be hard to Braskem keep the domestic market portion in thermoplastic merchandises ( Braskem, 2008 ) .
Companies need to maintain looking for new challenges, ever concentrating on developing schemes which can let them to be better them their rivals. On this instance, Brasken should make the same and seek for a scheme to go the first company in the universe of rosin thermoplastic, selling merchandises with quality and diverseness, accomplishing clients ‘ penchant.
In order to be competitory, companies can compare its merchandises with the 1s from taking rivals. They can besides accomplish competitory advantage puting on its employees ; looking for joint ventures with other companies in different states so they can derive cognition from different markets ; seeking for operational efficiency and cost control ; seeking for new partnerships, measuring where there are greater chances for export.
There are many factors which affect the micro and macro concern environment of companies. They can take immediate actions with regard to internal factors and alter them when necessary ( such as production, selling scheme, etc. ) . However, companies can non move straight on external factors. But they can place them with appropriate clip in order to minimise their impact.
Many directors determination devising can be based on the usage of these tools and analysis therefore they can acquire a general overview of the company and facets which impact it such as political relations, Torahs and ordinances, economic system, environment, engineering and so on.
Due to high competition, it is more demanding the necessity of utilizing tools such as PESTEL or SWOT to develop a successful scheme and competitory with the market. Braskem has developed a assortment of schemes with focal point on clients, ever bring forthing quality merchandises for domestic and international market and it is ever making a great occupation for the benefit of the society, employees, and environment ( green ) .
Braskem is seeking to come in in the international market to set up such as a great company, but there are a batch of rivals in this section and the company to understate this factors is doing some acquisition in other state to understand the environment. On the other manus, the company should be cognizant in the domestic market, because some rival is turning fast and put in expand the production and development.