This Report will evaluate the changing business environment of a Brazilian Multinational Company, Braskem, over the last five years.
The main focus is to identify, analyze and understand the main points which have influenced the Micro and Macro business environment of the company. In order to do this, some important tools need to be considered. The Pestel analysis which gives the support to evaluate the external factors which can impact an organization: political, economic, social, technological, environmental and legal. SWOT analysis is another important tool, which creates the knwoledge of what Strenghts and Weakness the company has to deal with opportunities and threats created by ther external environment.
Business managers should be able to read the environment and understand how the aspects can be influence the business today but how will influence in the future business.
Business environment means the entire external factor that can be influencing in the business decision. This factor can be such as forces of economic,
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Business environment can be definition such as everything that is part of the chain of businesses, some factors that make up the business environment are: employees, suppliers, consumers, competitors, cultural factors, GDP (gross domestic product), economy of the country and so on.
Braskem is a Brazilian Petrochemical cracker and thermoplastics company, the company business operation are separated into four units: The basic petrochemicals, polyolefin, vinyl, and IQ Solucoes & Quimica.
Braskem is between the 10 biggest and the best petrochemical companies in the whole word. And it is the third-largest producer resin in the America (after US-based Dow Chemical and Dutch giant LyondellBasell) and is the market leader in Latin America with 50% of marketing share in thermoplastics resin (annual report 2007).
Braskem is a company controlled by the Odebrecht Group, in the last five years Braskem has invested around R$ 7 billion to became one of the most successful petrochemical companies in the world. Today, over than 4700 member are directly employed at Braskem's 18 industrial plants (Data monitor, XXXX).
The company produce products such as ethylene, propylene, benzene, polyethylene, polyvinylchloride (PVC) and so on.
Furthermore, Braskem over the last five years has growth approximately around 33% annually in net revenue.
Braskem eh a company that is focusing in resources on projects that can offering high returns in short term and some projects that can help the company reach the goal are some examples of such as investments for 2010 is around 1.1 billion, as the company plans to expand its production capacity and make some stops on protection programming beyond the more Braskem remains aligned and committed to reduce fixed costs and expenses in order to increase their competitiveness in the market.
During the 2007, Braskem has confronted the spike naphtha prices on the international market around 20% and the appreciation of the Brazilian currency against the US currency around 17%. A commercial effective Braskem strategy and programs making the company more effectiveness and competitive increasing the operating capacity ensuring reliability has garnered positive results. (annual report 2007).
Annual report 2007
Besides, Braskem develop projects in partnerships with the communities to improve factors such as people education, quality of life, social projects and so on. These are some projects that Braskem has taking to improve and harmonization the whole society (annual report 2007).
MAJOR PRODUCTS AND SERVICES
Braskem is an integrated petrochemical cracker and thermoplastics producer. The company's key
products include the following:
Polyethylene therephtalat (PET)
According to Worthington and Britton (2003), most of business has the same activities, which is converting inputs (resources such as labour force, technology, finance and materials) in outputs such as goods (products that can be touched such as foods, cars, and so on) or services (products that cannot be touched such as insure services). These activities can be used and influenced by companies in order to construct their strategy.
Always on Time
Marked to Standard
On the other hand, companies are inserted in a macro-environment, which represents all external forces which can impact them and which they cannot control. According to Lancaster (2008), this environment is composed by closer factors such as suppliers, intermediaries and distributors; and wider factors as cultural, legal, economic, and so on.
Considering that this macro environment is very complex and companies cannot control it, its analysis is very important. Companies need to identify them and understand the negative impacts they can produce, therefore they can be prepared to minimize them (Palmer and Hartley 2009).
In order to do this, companies can use Pestel analysis which involves xxxxxxxx, one tool developed by xxxxx.
Political environment (Rever isso - como diferencia de legal)
According to Palmer and Hartley (2009), politicians are responsible to create and pass legislation to companies and occasionally some of them can direct affect some types of business, such as: customer protection laws, employees protection laws, controls of pollution and so on. In addition, According to Lancaster (2008) others political decisions as the workforce education, health and environment, and even the economy infrastructure can also affect businesses operations. Ilustrar com a Braskem.
Economic factors are very import for an organization because it is directly related to GDP (gross domestic product), economic growth, unemployment rate, inflation rate and so on. Any change in the economy can affect business. One good example is the oil crisis which occurred during the Middle East War in 1973. The increase in the crude oil price affected all the chain such as energy cost, oil-based raw material, plastic, synthetic fibres and so on (Lancaster 2008).
This example indicates the importance of monitoring the economy, either nationally or internationally, in order to identify possible opportunities and threats
Social and Cultural Environment
The socio-cultural environment is possibly one of the most difficult factors to analyse, considering that is based on people behaviour changes, such as religion, values, priorities, attitudes, beliefs and social changes (Lancaster 2008). On the other hand, Palmer and Hartley (2009) state that a crucial part for businesses is to understand the cultural value of a society; companies should be monitoring this constantly to better correspond to customers wants and needs.
Companies can make use of a demographic study to identify these trends and support them to make decisions. It is a study of features of the population, such as size distribution, age distribution, genre, births and death rates, education level, preferences, belief and so on. One example is how multinational companies use this to identify larger centres where they can be established to facilitate their operations (Campbell and Craig 2005).
According to Lancaster (2008) Technology is an import macro-environment factor which is presented in many products that we use on our daily live, as television, calculators, video records, computers and so on. Companies play an important role on generating more technologies due to this some of them has their own research and development department or working in conjunction with universities, research institutes always be providing a good and new products to customers.
In order to this, Braskem is a company in constant development in technology and results of this, was the first company to create the polyethylene made form a vegetable raw material (sugarcane ethanol) a product 100% renewable resource, this product as called Green polymer and this resin it is one of the most commonly used in flexible packaging, in addition, Brazil is one of countries who is more investing in bioeconomy that is replace products oil base to renewable base such as carbohydrate and vegetable.
This is a topical that increasingly every day more principal in multinationals companies because influence in business behaviour, socially responsible, communities and the natural environment. Worthington and Britton (2009) explicar melhor
In the last five years, Braskem has obtained excellent results in terms of prevention of environmental risks, each year further enhancing the indices. Eco efficiency was major highlights of the reduction of water consumption, energy, and with the generation of effluents, and production of residues solids and pastes. (Annula 2007)
On the other hand, companies in the petrochemical industry are surrounded by strict federal environmental laws such as state and municipal related to human health, handling and disposal of solid and hazardous waste and discharges of pollution in air and water. Often to attend to all the regulations are necessary many investments and increasing the price of labour force. (20-F 1 bakform20f2007.htm FORM 20-F 2007)
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Companies should work following the law otherwise the companies will be suffering a significant impact on the business. Some law are created to protect the customer (municipal licences, anti-monopoly laws), employee (minimum wage laws, worker safety laws) and suppliers (copyright and patent laws, laws that favour business investiment). Sometimes some kind of law influence market structure and behaviour. Worthington and Britton (2009)
Lancaster (2008) argues that one of the main objectives of marketing is to attend the necessities of consumers. In order to achieve this, companies can make use of their internal resources and capabilities, their micro-environment, which they have control and use this as a base of knowledge to construct the better strategies to satisfy costumers' needs.
In addition that, the microenvironment it is easier to understand than macro environment because is referring to everything that is part of a company such as suppliers or employee whether indirectly or directly related to the company, besides that whole chain of production has a large impact on businesses, moreover, it is extreme interest to both the company and the employee be part of the stakeholder. Below is some example being that compose the microenvironment: (Adrian Palmer and Bob Hartley, 2009)
Consumers are one of the most important parts of the microenvironment. Companies' precision always is focused on monitoring the possible consumer changes tendencies and try to create a good effective relationship with them. In other words companies should be attention and try to understand what clients are looking to stay one step ahead to development a product to gratify. Moreover, companies must not focus only in this simple model (to create a good products to customer), but think beyond it. Because consumers often do not know what they are really needed and fit the company develop the perfect for them. (Adrian Palmer and Bob Hartley, 2009)
Suppliers supply raw material, goods and services that are transformed into value-added to product for customer. Suppliers are very important for a microenvironment (Adrian Palmer and Bob Hartley, 2009)
Intermediaries are the connection between companies and customer, large companies generally find it some difficult to attender the every final consumer, so they choose to sell their products through intermediaries because they can be more capable in distant places and small supermarkets. Some companies suffered because they failed in work together with intermediaries. (Adrian Palmer and Bob Hartley, 2009)
In addition, Braskem is a company that use a lot of intermediaries the principals is:
When the business is highly competitive, Companies should keep their eyes on competitors and trying to understand what will be the next steps of them. Furthermore, exist two different types of competitor; the first one is Direct competitor is that sell the similar products and the second is the Indirect competitor this is a highly difficult to know who is. Because sometimes competitor can appear in different forms For example, who is the indirect competitor for a cinema? Is it another cinema? A home rent movie? (Adrian Palmer and Bob Hartley, 2009)
However, in resin thermoplastic the principle type of competitor is the direct, that is:
YPF Sociedad Anonima
Companhia Petroquimica do Sul - COPESUL
Dow Chemical Company, The
Suzano Petroquimica SA
Monomeros Colombo Venezolanos
Mossi & Ghisolfi SpA
SWOT is a strategic planning tool, used in management and strategy formation in order help to identic the Strength, Weakness, Opportunities and Threats of a particular company. Which is the mainly focus is analysis and understand of an organisation's internal and external environment.
Strengths are considered positive and internal factors within an organization that can add value and weaknesses are also considered internal factors but are negative characteristics, are factors crucial to achieve the goals. Opportunities are external factors that are of great helpful because if the company is able to identify business opportunities and to progress with competence will achieve the targets easily. Furthermore, threats are external factors as well, and that can be directly affecting the indices of the company because they can get share marketing.
Organisation and business environment - second edition (David Campbell and Tom Craig) - Elsevier Butterworth-heinemann - Burlington - 2005
When is analysed the internal and externs factors of a firm is generated a high amount of information, then the SWOT analysis is used such as a filter to obtain only relevant information in order to take the agreed actions correct. When a company understands the quarter points of the SWOT it can make better use of them. Strength factors can be used as a basis for construction of advantages, weakness factors can be used to correct the errors, always drawing the opportunities and approach the threats such as a challenge.
There are many factors that affect the micro and macro business environment, some internal factors the company can take immediate action and reverse (such as production, marketing strategy, etc.) and other factors companies cannot do many things to reverse the situation, which are the external factors (competitors, suppliers, etc.). Mostly managers taking decision based upon factors such as Pestel tool, that can get an general overview of the company such as points political, economic, technological and environmental laws and so on.
Always keep looking for new challenges; always focus on to become the first company in the world of resin thermoplastic, selling products with quality and diversity, reaching customer focus. Constantly be comparing the products of leading competitors and also comparing the employers satisfaction with the mainly competitors, seeking new joint ventures with other companies in different countries to constantly be known in all markets and always gaining expertise in all aspects, and always worrying about the environment and atmosphere that nowadays is one of major factor of company. Searching always efficiency operational and cost control, and seeking new partnerships, assessing where the greatest opportunities for export.