sabic case
TRANSCRIPT
PART - I: INTRODUCTION
This study shows this experience with a complete study of improving the
competitiveness of Sabic against its competitors from a marketing
perspective.
PART – II: SAUDI BASIC INDUSTRIES CROP.
2.1 Sabic
In this section, the focus is paid to discuss the whole picture of Sabic and
how its subsidies work together to compete highly in the market and to stand
as one unit. Because of that, this section discusses four parts. The first one is
the history of Sabic. The second one is the companies working under Sabic.
The third one is the global planning for the corporation. Finally, the fourth
one is the current situation of Sabic.
History o Sabic was established in 1976.
o It was established to widen the economic base of Saudi Arabia and to use the oil wealth
of the Kingdom in petrochemical industries instead of selling it as row material.
o Sabic has petrochemical industries, fertilizers, iron and steel, aluminum, other
hydrocarbon-based industries, construction of projects for supplying Sabic with its needs
of raw materials and marketing of products inside Saudi Arabia and abroad.
o Every now and then Sabic is adding a new development to its organizations to increase
their potentials.
Global o Sabic used some alliance with others to penetrate the market.
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Planning o Because of the low cost production, Sabic can compete highly in these foreign markets
such as the European market and the American markets.
o The trade restrictions that face this expansion of Sabic's operation can be overcame by
the a number of treaties with the European countries and the TWO.
o Penetrating these markets will give Sabic the potential that it plans and look for.
Current
Situation
o The current situation of Sabic is to gain more knowledge and experience.
o That is because Sabic wants to compete in the global markets not from the price
prospective only but from the quality.
o This look is applicable because there have been established many training centers that
increased the potential of the workers, engineers and management of the different Sabic
companies.
Companies Under Sabic
Percentage of Sabic Name of Company
100% Arabian Petrochemicals Co. (PETROKEMYA)
Saudi Iron and Steel Co. (HADEED)
SABIC Industrial Investment Co.
SABIC Luxemburg
SABIC Asia Pacific,SABIC Antlizan
More than 50% Al-Jubail United Petrochemicals Co. (UNITED) 75%
2
National Chemical Fertilizers (Ibn Baytar) 71.5%
National Gases Co. (GAS) 70%
Saudi European Petrochemicals Co. (Ibn Zahr) 70%
Arabia Synthetic Fibers Co. (Ibn Rushd) 53.9%
50% Saudi Methanol Co. (AR-RAZI)
Al-Jubail Fertilizers Co. (SAMAD)
Saudi Yanbu Petrochemicals Co. (YANPET)
National Methanol Co. (Ibn Sina)
Saudi Petrochemicals Co. (SADAF)
Eastern Petrochemicals Co. (SHARQ)
Al-Jubail Petrochemicals Co. (KEMYA)
Less than 50% Saudi Arabian Fertilizers Co. (SAFCO) 42.99%.
2.2 Products
In 1983 Sabic started production of Methanol with a capacity of 600,000
tons/year. After 15 years, SABIC has now 15 plants, producing 40
petrochemical products, as well as metals and industrial gases. The total
design capacity of Sabic’s petrochemical plants is 21.5 million tons per year,
and the design capacity of the plants for metals and industrial gases are 2.9
3
million tons per year and 1.2 million tons per year respectively. (The Saudi
net)
Sabic produced 25.3 million metric tons of chemicals, fertilizers, plastic
resins, metals and gases in 1998, up from the previous year's total of 23.7
million metric tons. Of that amount, 19.4 million metric tons were marketed
worldwide. Sabic has embarked on a massive expansion program aimed at
increasing output to about 35 million tons by 2002. (The Saudi net)
The industry is also turning its attention to plants that manufacture higher
value-added intermediate products such as fiber intermediates, industrial
gases, and plastics. The plastics industry has seen tremendous growth. In
1993, SABIC produced 1.6 million metric tons of plastics; by 1998, plastics
production had grown to 2.6 million metric tons and is projected to grow to
over 4 million mt by 2003. (The Saudi net)
2.3 Market
One of the most important markets that the petrochemical industry looks to
fulfill is the local market. This is because of two things. First of all, there are
a lot of present industries that depend entirely on petrochemical products.
The second is that the petrochemical industry is opening the door for any
future industry that could depend on their products.
In addition to the local market, there are the international markets. There are
two main markets of the petrochemical industry. The first one is Europe
which is a promising one but because it has some industries, the Saudi
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products are facing some trade barrier from the European countries. The
second market is the one in Southeast Asian countries. This is the largest
market because of there are many plants and factories in these countries that
depend on the petrochemical products. Also, the petrochemical products in
these countries are small compared to their needs.
2.4 Organizational Chart
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PART – III: TECHNICAL STUDY
3.1 Introduction
In this chapter, the technical part consists of three parts. The first one is a
literature review which is about creating value and core competency,
porter’s five competitive forces, corporate social responsibility and the last
one is about the balance scorecard. After that, the analysis of Sabic is done
by using SWOT and Porter’s five forces. Finally, the discussion is presented
at the end.
3.2: Literature Review
7
3.2.1 Creating Value and Core Competency
One of the most important steps to make a successful business in highly
competitive environment is by creating value. When the industry
successfully creates real-value, then it will earn higher return than others.
Therefore, any decision must to support creating –real value. There are three
points that will create real-value for industries. These three points are as the
following:
1- Being different: the industry should have unique product, superior
reputation for service and/or quality and meeting and exceeding the
customers need.
2- Being hard to imitate: since competitors will mimic the industry, the
industry should be different from others. This can be done by being
the first in producing a certain product or service, having a better
location, having a brand name and building strong reputation.
3- Continuous improvement: the industry must continuously develop its
products and services and its core competency. (Innovation, 2005)
Core competency can be gained buy having these three points:
1. Potential access to a wide variety of markets - the core competency
must be capable of developing new products and services
2. A core competency must make a significant contribution to the
perceived benefits of the end product.
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3. Core Competencies should be difficult for competitors to imitate. In
many industries, such competencies are likely to be unique
(wikipedia, 2007)
3.2.2 Porter’s Five Competitive Forces
The industry should have the ability to compete locally, domically and
internationally. In order to reach this point, it should have the five
competitive forces that determine industry competition. These five forces are
as the following:
1- The threat of new entries
2- Bargaining power of buyer
3- Bargaining power of suppliers
4- Threat of substitute products of services
5- Rivalry among existing competition (Porter, 1990)
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In order to improve the position of the industry, the industry should have the
ability to compete and that lead to competitive advantages. Industries should
have competitive advantages which can be gained by:
1. Lower cost: design, produce and market a comparable product
better than other competitors.
2. Differentiation: the ability to provide unique and superior value
to the buyer in terms of products quality, special features, or
after sale services.
3. Competitive scope: the industry must be clear in terms of range
of products, distribution channels, the type of buyers it will
serves, the geographical area it will cover and the related
industries it will need. (Porter, 1990)
3.2.3 Corporate Social Responsibility (CSR)
In the past few years, there are many new concepts that have been
introduced in the world of business organizations. Most of these new
concepts are done for one of two purposes or both. The first one is to
differentiate the business from others and the second one is to face the
growing level of competition locally and internationally. One of these
old/new concepts that are revived is the corporate social responsibility
(CSR). (Pearce, 2003)
Globally, there are many corporations that are paying much attention for
corporate social responsibility. This is because these corporation feel that thy
have obligation towards their environment, society and stakeholders (Teach,
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2005). There are many types and because of that, they can be divided into
three types. These three types are as follows:
1. Generic social issues. This type doesn’t affect the business in any way
since it does not affect the business, suppliers, distributors or
customers.
2. Value chain impact. This type has a direct impact on the business and
it could affect the company positively or negatively.
3. Competitive context. These aspects of the social environment that
constrain the productivity of the business in its operating locations.
For example, when the business build hospitals, training centers or
schools, may affect the competitiveness of companies that depend on
the domestic workforce. (Alfonso, 2005)
One could ask, what is the real importance of corporate social
responsibility? Actually, the importance is strong enough to make many
corporations to seek program suiting this area. There are four important
points of CSR. These four points are as the following:
1. Reputation. The process of building the brand name is one of the most
important points that all corporations are looking for. By using CSR,
the building of the brand name becomes easy.
2. Retention and recruitment. All talented employees who have strong
experience look for position in such strong corporations. Therefore,
CSR attracts these talented people.
3. Operational efficiencies. CSR improves the utilization of materials
and it minimizes the wastes especially in cases when the pollution.
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4. Increased sales. People tend to buy from such organizations that have
CSR programs more than they do from their competitors. (Alfonso,
2005)
3.2.4 The Balanced Scorecard
The Balanced Scorecard is a strategic management tool that was formed in
1992 by Robert Kaplan and David Norton to measure performance and to
link strategies with short-run plans. (Ettore, 2005)
The reason for using the balanced score cards is because they show and
implement the organizational strategies, enabling to update the strategies
according to reality, enhancing communication (vertically and horizontally),
linking divisional goals with the organization’s goals and strategies, linking
short-run plans with long-run plans and linking performance evaluations and
measurement with long-term strategies. (Pineno, 2004)
Balanced scorecards are connected with these goals by four areas. The first
one is that balanced scorecards are able to translate the vision, communicate
and linking, business plans and feedback and learning. The importance of
using scorecards is that because it is one of the few managerial tools that can
be used to view performance in several areas simultaneously. This is a
difficult task because of the complexity of running the business these days
because of the strong competition that is raising everyday in all industries.
(Ettore, 2005)
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However, in order to use the balanced score cards, they must by fully known
by employees and managers in the organization. Even when the managers
understand the importance of measuring performance and finding methods
for linking the measurements with the strategies of the organization, the
employees should also have this knowledge. (Pineno, 2004)
3.3 Statement of the Problems
The competition that is growing in the petrochemical sector in the regional
and international markets has put strong pressure on Sabic to make strategies
for facing this competition. As noticed from the figure below, it is obvious
that the major petrochemical companies are merging to face the growing
competition in the international markets. Sabic represents a case in which it
depends on its resources. This merging will increase the market share of
these international companies and that will affect the market share of Sabic.
Therefore, the purpose of the research is to improve the competitiveness of
Sabic vs. International and regional petrochemical companies.
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3.4 Objectives
There are many products that Sabic produce which has been explained in the
previous part. Because my coop training program was done Urea unit, the
focus of this study is on the market of urea. Therefore, the objectives of this
study are as the following:
To evaluate Sabic petrochemical industry
To analyze the global market of Urea
To analyze the competition of
To analyze the performance of Sabic in face of its competitors
3.5 Methodology
14
The research is based on primary information that is collected from various
well-known articles and studies. In addition, the research will use the
analysis based on the Porter’s five competitive forces to evaluates the
competitiveness of Sabic in the Urea market.
3.6 Marketing Analysis
3.6.1. SWOT Analysis
INTERNALStrengths Weaknesses
Increasing the number of employment in Saudi Arabia
Supplying the local market of the raw materials
The petrochemical industry highly contributing to the
economy of Saudi Arabia: training and economic base.
The oil and gas production prices are low, and therefore,
the production of chemical products is cheaper than
others.
The quaintly of oil and gas in Saudi Arabia is huge and it
can use as feedstock for the petrochemical industry
processed by Sabic.
The location of Saudi Arabia is critical since it is near of
all of its major customers.
The location of the petrochemical industry helps in
supplying its customers. The location of Yanbu serves
Africa, Europe and the USA and the locations Jubail
services Asia and Australia.
This sector is using the latest techniques, concepts, tools
and requirements because it is flexible to adopt new
changes
• Governmental customers in the
importing countries.
• Financial difficulties and corruption
in some markets.
• Logistics.
• Production instability
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EXTERNALOpportunities Threats
Because of the high oil prices gained in the last four
years, the revenues can be used to make other industries
that support and improve the petrochemical industry in
Saudi Arabia.
There are many markets which Sabic has accessed can be
improved by differentiation strategies
There are many markets which Sabic has not accessed
It is true that Saudi Arabia can not exceeds the
production of oil as OPEC states, but the extra quantities
of oil can be used to produce better and cheaper
petrochemical industry
The petrochemical industry can be used as the basic for
other industries that suit the needs of the local, regional
and international markets.
The petrochemical industry attracts local, regional and
foreign investment and that will improve the overall
economy of Saudi Arabia and enhances the position of
the petrochemical industry.
There are many competitors of Sabic
in the area of petrochemical
industry. These competitors share
with Sabic much strength. An
example of these competitors is
Qatar.
There are many regional and
international competitors.
The human factor must be improved
in Sabic by applying the knowledge
management concept to improve the
HR.
The performance of Sabic is weak in
some countries and it can be
improved.
3.6.2. Market Segmentation & Market Share
Market segmentation starts from the observation that different subgroups or
segments of a market exhibit different consumption preferences and then
seeks to develop products or services which will match the needs of these
segments.
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Identifying the correct market segment for the product range in general and
for the individual product in particular is the biggest success. This can be
made possible when an authentic data of the offers and orders is available.
Also, this data can help us to think on the following basis:
- To look in to the possibilities and the growth of the business in
the areas need to be explored.
- To maintain the market share in the segments we are successful
in doing good business.
- To make overall strategy based on the market segments.
Sabic for its Urea products has segmented the market into six areas
according to the geographical locations. These locations are Australia, Far
East Asia, the Middle East, Africa, Europe and the USA.
17
Australia
As
18
SABIC'S UREA SHIPMENTS TOAUSTRALIA
11631093
1208 1234
1145 1150
280
120126
373
191273247
1311
10%31%17%23%
19%
10%24%
0
200
400
600
800
1000
1200
1400
QTY
: KM
T
SABIC QTYTOTAL IMPORTSSABIC SHARE
SABIC QTY 247 273 191 373 126 120 280
TOTAL IMPORTS 1311 1163 1093 1208 1234 1145 1150
SABIC SHARE 19% 23% 17% 31% 10% 10% 24%
2000 2001 2002 2003 2004 2005 2006
19
20
40
60
80
100
120
140
160
180
200
220
240
SUMMIT PIVOT INCITEC LTD ICITEC & PIVOT LTD HIFERT
SUMMIT 150 153 146 211 126 120 81
PIVOT 97 120 76
INCITEC LTD 45 42
ICITEC & PIVOT LTD 44
HIFERT 199
2000 2001 2002 2003 2004 2005 2006
SABI C'S UREA SHI PMENTS TO AUTRALI A
247 KMT 273 KMT191 KMT
373 KMT
126 KMT 120 KMT
280 KMT
New Zealand
Market consumption
Production SABIC market share
MAIN Competitors
600 KMT 260 KMT 81.5% MITCO &QAFCO
20
SABIC'S UREA SHIPMENTS TO NEW ZEALAND
184
238
194
339 346356
441
394
320
148
261
167169
95
129
194
82%
37%54%
66%50% 48%
52%49%
0
50
100
150
200
250
300
350
400
450
QTY
: KM
T
SABIC QTYTOTAL IMPORTSOUR SHARE
SABIC QTY 129 95 169 167 184 238 148 261
TOTAL IMPORTS 194 194 339 346 356 441 394 320
OUR SHARE 66% 49% 50% 48% 52% 54% 37% 82%
1999 2000 2001 2002 2003 2004 2005 2006
Thailand
Market consumption
Production SABIC market share
MAIN Competitors
1,500 KMT NONE 40.4% YARA MITCO PIC Helm (Egypt)
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20406080
100120140160180200220240260280300320340360380400420440460480500
Chia Tai TFMC Thai Mc Sumitai
Chia Tai 267 311 435 414 446 419 511
TFMC 187 179 48 16
Thai Mc 18 26 32 47 6 14
Sumitai 23 111 94 81
2000 2001 2002 2003 2004 2005 2006
SABI C'S UREA SHI PMENTS TO THAI LAND
454 KMT
508 KMT
509 KMT 485 KMT 604 KMT 519 KMT
607 KMT
Philippines
Market consumption
Production SABIC market share
MAIN Competitors
550 KMT NONNE 37.1 % YARA
22
20
40
60
80
100
120
140
160
180
200
220
240
SWIRE FARMIX TRAMO
SWIRE 133 174 143 69 50 164
FARMIX 10 40
TRAMO 93
2000 2001 2002 2003 2004 2005 2006
SABIC'S UREA SHIPMENTS TO PHL.
133 KMT
174 KMT
143 KMT
69 KMT
0 KMT
153 KMT
204 KMT
23
SABIC'S UREA SHIPMENTS TO PHL.
70
0
703
780
667693
550
159205
143174
13383
500
37%
23%0%
17%19% 18%
8%19%
0
100
200
300
400
500
600
700
800
900
QTY:
KM
T
SABIC QTYTOTAL IMPORTSOUR SHARE
SABIC QTY 83 133 174 143 70 0 159 205
TOTAL IMPORTS 500 703 931 780 916 667 693 550
OUR SHARE 17% 19% 19% 18% 8% 0% 23% 37%
1999 2000 2001 2002 2003 2004 2005 2006
South Korea
Market consumption
Production SABIC market share
MAIN Competitors
990 KMT 320 KMT 9.5% QAFCO CHINA
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SABIC'S UREA SHIPMENTS TO S.KOREA
853 38 17 26
49 66
522
467
675
771
656
834
700
62
500
9%
7%7%
2%8% 2%
3%10%
0
100
200
300
400
500
600
700
800
900
QTY
: KM
T
SABIC QTYTOTAL IMPORTSOUR SHARE
SABIC QTY 8 53 38 17 26 49 62 66
TOTAL IMPORTS 500 522 467 675 771 656 834 700
OUR SHARE 2% 10% 8% 2% 3% 7% 7% 9%
1999 2000 2001 2002 2003 2004 2005 2006
The Middles East
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The USA
Market consumption
Production SABIC market share
MAIN Competitors
10 KMT 5400 KMT 6% PIC QAFCO Central America
South Africa
Market consumption
Production SABIC market share
MAIN Competitors
475 KMT Nil 60 % Yara
2000 2001 2002 2003 2004 2005 2006
Sabic 140 146 195 250 337 221 287
Imports 510 467 715 485 587 474 475
Sabic Share
27% 31% 27% 52% 57% 47% 60%
26
0
100
200
300
400
500
600
700
800
2000 2001 2002 2003 2004 2005 2006
Sabic
Imports
East Africa
Market consumption
Production SABIC market share
MAIN Competitors
192 KMT Nil 20 % Qafco; FertilFSU
2000 2001 2002 2003 2004 2005 2006 (Est)
Sabic 10 34 45 55 12 39 32
Imports 107 60 92 60 79 192 147
Sabic Share
9% 57% 49% 92% 15% 20% 22%
27
0
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003 2004 2005 2006(Est)
Sabic
Imports
Europe
Market consumption
Production SABIC market share
MAIN Competitors
6.5 MMT 3.8 MMT 0 % Egypt , QafcoFSU, EU15
2000 2001 2002 2003 2004 2005 2006
Sabic 0 0 0 46 28 0 0
Imports 4.4 m 4.1 m 4 m 4.5 m 4 m 4 m 4.1 m
Sabic Share 0% 0% 0% 1% 1% 0% 0%
3.6.3. Channels of Distribution
Sabic has an international distribution network that enables it to reach all of
its major markets. All of the production of Sabic is transported by sea. The
logistics costs have been found to represent 30% of the cost of the material.
Therefore, the channel of distribution is a key factor in the Urea production.
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0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1 2 3 4 5 6 7
Sabic
Imports
3.6.4 Major Competition
For the Urea market, there are four types of major competitors. Of course
there are many other competitors, but these four are the major competitors of
Sabic. These competitors are as the following:
1- Black Sea
Country Quantity (KMT)
Sales Methods
Product Types
Russia 4450 SPOT P-UREA Ukraine 3600 SPOT P-UREA
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2- Egypt
Company Name Quantity (KMT)
Sales Methods
Product Types
EFC 1200 Traders G-UREAALEXFERT 600 Traders G-UREAHELWAN 600 Traders G-UREA
3- Arabian Gulf
Company Name Quantity (KMT)
Sales Methods
Product Types
PIC 1035 LTC/SPOT G-UREAGPIC 615 LTC/SPOT G-UREAQAFCO 2850 LTC/SPOT G&P UREAFERTIL 575 SPOT P-UREA
4- Malaysia
Company Name Quantity (KMT)
Sales Methods
Product Types
MITCO 1300 LTC/SPOT G-UREA
3.6.5. Customers
The customers of Sabic can be divided into six groups accruing to their
geographical locations. These six groups are as the following:
1- Australia Region:
Australia: it is divided into two regions: east/ south east & west
Australia
New Zealand
2- South East Asia
Thailand
Philippines
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South Korea
3- The Middle East
India
Pakistan
Sri Lanka
Bangladesh
Iran
Yemen
Jordan
4- USA
5- Africa
South Africa: Sudan
East Africa: Ethiopia
6- Europe
However, the need for Urea for global customer should be explained to see
the potentials of Sabic in the global markets and to know how it can invest
and improve its positions.
From the table below which show the Urea Supply/Demand Balance form
1994 to 2015, it is obvious that the potential of improvement is promising.
The need of Urea is not covered by suppliers and that gives Sabic an
opportunity to improve and increase its position in these markets.
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From another point of view, the figure below shows that the need for Urea
will increase in the coming years. It should be mentioned that after 2006, the
figures are expected by Sabic.
32
0
20
40
60
80
100
120
140
160
180
200
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
f
2007
f
2008
f
2009
f
2010
f
2011
f
2012
f
2013
f
2014
f
2015
f
75%
77%
79%
81%
83%
85%
87%
89%
91%
93%
95%
Capacity Production Operating Rate
3.7 Analyzing Performance
3.7.1. Discussion
Porter explains that there are five forces that determine industry
attractiveness and long-run industry profitability and competitions. In this
part, these five factors are applied to Sabic in the Urea market.
Threat of New Entrants
Since the petrochemical industry depends on two factors which are the
availability of the raw materials such as natural gas and oil and the funds for
investing, it is difficult for new entrants to enter this market. From another
point of view, the availability of oil and gas in Saudi Arabia in large
quantities, and the availabili8ty of funds from high oil prices,, enables Saudi
Arabia to invest heavily in this area more than other competitors. Therefore,
the barriers of the threats of new entrants are high.
Threat of Substitutes
It is true that there are many researches that are being made for replacing oil
by other alternatives, but the process is at its begging and all of the other
alternatives being developed are not viable. And even if this point is
reached, products such as Urea can not be replaced by other products
because of the characteristics of this material and because of the buyers’
willingness to have such a replacement.
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Bargaining Power of Suppliers
Sabic has a strength point in this because f the following. First, the raw
materials are taken directly from Saudi Arabia and the oil industry is owned
by the government. In addition, because of the nature of oil in Saudi Arabia,
it needs less cost to be processed.
Bargaining Power of Buyers
It is expected that the demand for Urea will increase in the coming years. In
addition, the customers can not have backward integration because of the
properties of the material. However, there are many competitions in the
market and they compete to have contracts from these customers. The
customers have been segmented by their geographical locations. The sub-
grouped are segmented according to their quantity of urea consumption. For
example, Far East Asia has the following customers: Australia, New
Zealand, Thailand, the Philippines, and South Korea. However, the sub
grouped is divided into three locations according to their consumption of
urea. These areas are South East Asian countries such as Thailand, the
Philippines and South Korea, Australia and New Zealand. Further, fort he
case of Australia, it is Sub-Sub divided to two regions: east/ south east &
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west Australia. Other customers are the Middle East, Africa, Europe and the
USA.
Intensity of Rivalry
There are many major and strong competitors of Sabic in the Urea product.
Some of these competitors have the same characteristics that Sabic has. In
addition, these competitors cover a wide geographical area. Each of them
can supply their near by customers with better logistics better than Sabic or
even similar to Sabic. In addition, there are many mergers between these
competitors and these mergers will affect the market share. For the Urea
market, there are four major competitors. These competitors are Black Sea
(Russia and Ukraine), Egypt (three locations) the Arabian Gulf (Qatar,
Kuwait, Iran) and Malaysia. For the case of the Black Sea, they produce P-
Urea. For the case of Egypt, it produces G-Urea. For the Arabian Gulf
Competitors, they produce both G and P Urea. Finally, Malaysia produces
G-Urea.
3.7.2. Results
Sabic is a strong company with strong bases. From the analysis above, it has
strong industry attractiveness and long-run industry profitability and
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competitions. However, the presence of competitors which are regional and
international reduces the effectiveness of Sabic in the international markets.
In order to improve the competitiveness of Sabic, there are some points that
should be made.
First of all, the company must ensure that it has the enough skilled and
talented workers who can improve the position of Sabic. Also, the strategy,
vision and mission and goals of the companies must be tied with the
performance of workers, employees, managers, department and firms of
Sabic. Applying the concept of Balance Scored Card will serve this purpose.
Moreover, taking the lead in the area of corporate social responsibility
(CSR) will build the brand name of the company and it will enable it to
reach better competition skills in front of the other competitors.
Furthermore, Sabic should look into increasing long term contract (one year
or more) sales over spot sales. The prices are based on one or a combination
of the fertilizer products and this will enable Sabic to benefit from its
existing customers. In order to satisfy the need of the customers in terms of
time, contract quantities should be distributed evenly thorough the year to
insure regular monthly lifting.
Because of the presence of competition, the logistics play a major role in the
Urea market. For example, because of the location of Egypt, Europe was
closed in front of Sabic because of this point. Therefore, logistics is the
backbone of success in the market. It is true that Sabic depend in traders
because there is no direct business, but this should changed in order to enter
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new markets or improve the position in existing market by improving the
logistics of Sabic.
PART – IV: CONCLUSION AND RECOMMENDATION
There are three points that considered as real weaknesses for Sabic. The first
one is the logistics. This important issue should be solved because it is
considered as the weakest point affecting Sabic’s operations in international
market. The second one is the instable production and this can be solved by
long term contractors. Finally, the third one is the internal environment in
which Sabic should improve the human resources by applying strong and
effective courses that will elevate the skills of these employees and manager
to fulfill their positions. It can be notices that the strongest competitors of
Sabic in the area of Urea are the competitors located in the Arabian Gulf.
They have the same strengths, opportunities, geographical characteristics
and economical and political properties. This makes them the strongest
competitors facing Sabic. One of the solutions is cooperation and integration
between these companies under the umbrella of the GCC. When the GCC is
functional, many of these problems will be solved automatically.
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6. Teach, Edward. “Two views of virtue: the corporate social responsibility movement is picking up steam. Should you worry about it?.” CFO: Magazine for Senior Financial Executives Dec 2005: 1-3. <http://www.findarticles.com/p/articles/mi_m3870/is_17_21/ai_n15999730/print>
8. <http://www.the-saudi.net/business-enter/economy.htm#Petrochemicals>
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9. Sabic Web Site
10. Sabic Internal Documents
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