The success and development of any organization rely on the management and leadership of the organization. Committed staff help organizations rise to the required standards. An organization which wants to grow in a diversity of aspects should have a projection of future dynamics and plans that they need to put in place for effective operation and service delivery. This is the reason why planning is critical in different organizations across the globe. The middle east is a complex market in different sectors and operation in a country such as the Kingdom of Saudi Arabia requires an organization to have well-formulated goals, objectives, and vision to help the organization to succeed. Strategic planning should incorporate different dynamics in the way a company operates, the expected changes in the industry, the resources the organization has, and the number of players in the market that offer competition.
SABIC is a diversified manufacturing company located in Saudi Arabia with its headquarters located in Riyadh. 70% of the shares of the company are owned by the Public Investment Fund of Saudi Arabia while the other proportion goes to private investors. The company deals with petrochemicals, fertilizers, metals, industrial chemicals, and industrial polymers. SABIC is the largest manufacturing company in the entire Middle East, and the Saudi government brags of the success of this great company. Most of the private investors in the company are from Saudi Arabia while the rest come from the six-nation Gulf Cooperation Council. SABIC is the fourth largest polyethylene producer in the world, and this indicates the size of the company in both geographical size and the operations that the company is involved in. The company is also the leading producer of fertilizers in the world. SABIC employs more than 35,000 employees according to the report by the company in 2017. The net revenue of the company is USD 40 billion annually, and these are the reasons why the company requires strategic planning and management to assist in policy planning and implementation in the future.
Strategic planning and management of SABIC require a keen analysis of the market coverage for the organization to understand the policies which can be put into place for sustainability. The market coverage of the company is vast with over 50 countries doing business directly with the company. The mission of SABIC is to be the leading producer of quality products and services through innovation and operational excellence while at the same time sustaining maximum value for the stakeholders of the company. This indicates the commitment of the company towards ensuring that the products and services offered in the company are of high quality and their impact on the world and the stakeholders is felt — the company deals in products which are essential in different sectors of the economy such as the manufacturing and agricultural sectors.
Environmental issues/ recommendations
Strategic planning in the manufacturing sector requires an organization such as SABIC to be sensitive to the environment. Environmental sustainability is an emerging issue in the world today and manufacturing should programme in such a way that the wastes from different processes are recycled and treated before they are released into the environment to impact the world positively. According to the quality assurance team of the company, the 2020 vision of the organization has been to have eco-friendly processes to join the world in fostering sustainable environmental development. The major stakeholders of the company including the government of Saudi Arabia have shown their concern in coming up with innovative solutions to the environmental issues by reducing or controlling the levels of both airs, and water pollution. Most of the chemicals utilized in SABIC are poisonous, and they should be ell managed to avoid environmental pollution.
Innovation is a major concern of the company and SABIC is working on increasing the impact of innovative technologies to reduce pollution. Water management technologies should be put in place to ensure that waste water is treated before being released into the water. All the SABIC affiliates globally are required to meet the environmental regulatory requirements so that the practices which are adopted in the company and its affiliates are acceptable. The company recognizes the importance of the water resource and is committed to ensuring that more reduced water usage practices are put in place in the company for water conservation.
Most of the goals of the company cannot be achieved without innovation and SABIC should be committed to creating an innovative culture among its employees. Innovation, however, requires substantial financial investments to meet the costs associated with the plan. The company should, therefore, plow back some of its profits to fund innovative plans or seek funding from interested stakeholders such as the government of Saudi Arabia. Innovative minds should be cultivated in the organization for an increased output of innovative ideas.
Air emissions should also be checked in the future. The company routinely reviews the waste management strategies which are used to treat gaseous emissions. The company has been working with different waste treatment and transportation partners, and this is aimed at increasing the compliance and effectiveness of the organization’s waste-management strategies. Residual materials should be well observed, and if they have a negative impact on the environment, they should be well disposed of. Soil and groundwater are other affected areas of the environment by the operations in the manufacturing sector and measures to reduce the soil, and groundwater pollution should be put in place.
SABIC is a global organization which should have a well-formulated marketing strategy to increase the sales of the company’s products and increases sustainability. Petrochemical marketing is a critical strategy that is likely to improve the market coverage of the organization and SABIC should come up with an ambitious plan to ensure that the petrochemical industry reaps fruit (Ramady). Having worked in the organization for a long time and in different departments, my recommendation to the organization is to have a market analysis to understand various dynamics which need effective policies. There are many competitors from different developed countries such as China and the US which operate in the same manufacturing market and SABIC should focus on maximizing production and marketing different products such as fertilizers to consumers. Market study helps an organization to develop a more client-based framework for providing the services that customers need promptly. Since SABIC has a greater market share in the Arab world, the organization can integrate its businesses and access other markets such as Africa, and Latin America where manufacturing has not been developed well.
The marketing strategy which should be used by SABIC should be in line with the vision of the organization which is to be the preferred world leader in chemicals. Stable organizational structures are essential in developing the market to fit the needs and objectives of SABIC. The measure of the company’s performance indicates that shortly, SABIC will be the leading producer and distributor of chemicals in the world. The external environment of the company is vital in the development of the required technology that can increase marketing competence. SABIC should use an effective administrative strategy to develop the market into a sustainable and production-based one. The business policies of the organization are essential, and they should be revised to provide more innovative approaches to service delivery. There are many modern marketing strategies such as the use of the internet in marketing different products. SABIC should improve the technology base to communicate with more customers, and this is likely to improve the business activities in the organization.
Expansion and diversification strategies
These are essential recommendations which SABIC should put into place to increase the operations of the organization. To start with, the expansion will entail many issues. The organization needs to expand the way of doing business by product expansion for the sake of meeting more customers. Demand and supply dynamics are essential to understanding in this issue, and for the sake of business operations’ expansion, SABIC management should put into place a pilot plan to study the expected changes in the organization and what needs to be amended. Expansion of product lines can help meet the different customer needs, and this will require innovation (Praveen Kumar and Hema). The company should come up with a new line of products such as foo-based chemicals and products and manufacture these products to meet the rising demand for food products primarily in the Middle East. Expansion of product lines also will improve the economy of the Kingdom of Saudi Arabia by reducing over-dependence on other nations for food materials. There are different market boundaries which have increased demand for metals and SABIC should meet the demand for these markets. Technology improvement is critical in this development, and the company needs to come up with innovations to produce these new lines of products.
Diversification, on the other hand, will entail product categorization to invite more demand for different goods and services. The products produced by the organization needs to be diversified in such a way that they can be used in different ways without requiring additional changes. For instance, the fertilizers produced by SABIC should serve a diversity of purposes in different climatic and soil conditions to have a greater possibility of selling. According to the latest trends in industrialization, manufacturing companies are developing goods which have multiple uses and SABIC should not be left behind in this development.
Diversification requires SABIC to cooperate with other firms in the international market to make possible developments and changes in the way of manufacturing products. The company can open other overseas subsidiaries in regions such as Africa to reduce the transportation costs of its products to these regions. The European market is open to collaboration with other institutions in different sectors to provide a lasting solution to some issues such as entrepreneurship and service delivery to people to improve the living standards of people.
One of the objectives of SABIC is to have a good technological base which would aid in the production of different products such as fertilizers. Innovation in the 21st century has revolutionized the manufacturing sector the most manufacturing companies in the world are having a new experience of manufacturing which has a positive impact on the production of various goods. SABIC specialized in producing different lines of products such as chemicals which need proper handling to avoid accidents and to ensure the required purity is maintained (Niblock). The company should come up with innovative ideas on what needs to be done to improve the technological development in manufacturing. A major event in technology is the way most operations in the company have been automated to ensure that production runs smoothly with less supervision.
Additionally, robots have been introduced to the world of manufacturing and SABIC should follow the footsteps of some of the leading organizations in the world such as Apple which has revolutionized production through the use of robots. The robots make few mistakes in production unlike human labor, and they are cheaper to maintain. Most of the people who work in the company are not well skilled in performing various operations and functions, and the company should come up with more technology-based strategies of performing various operations in the manufacturing sector.
However, technology requires large financial investments to adopt, and since the company has a high turnover rate, it can meet the costs related to mechanization and the development of technology. SABIC is one of the companies which operate in the manufacturing sector which has a relatively good technological approach of doing things, and the management of the organization should ensure that the technology that is available has been developed into more user-friendly methods. Sophisticated manufacturing systems are critical in developing the organization’s manufacturing, and this is likely to impact on the business activities of the organization positively.
Technology can also be used in other sectors in manufacturing and SABIC should be able to mechanize 95% of its operations by the end of 2020 according to Gulf News. Other systems which require an input of technology include business transactions and recycling of different materials (Moon Sub Choi and Joonsung Won). The greatest achievement that technology will achieve is increasing the volume of production to meet the needs of the market, and this will mean that the profitability ratios of the organization will go up. Innovation is important in the development and adoption of various technology schemes, and the organization should hire more innovative personnel to help the organization with the innovation and technology issues. The current workforce can also be trained to understand technology more to assist SABIC to create more opportunities both locally and internationally.
Corporate Social Responsibility
SABIC is a big organization which attracts massive interest from different governments and organizations in the world. The organization should be a good example to other small-scale organizations by playing a significant role in the social responsibility of the societies in which it operates. SABIC is so crucial to the Saudi Arabian people and government through various developments the company provides to the home market. Even if SABIC operates in more than 50 countries around the world, its heart is in Saudi Arabia, and the people in the kingdom have been feeling the impact of this organization for many years. Since the organization has been in operation for over four decades, it has directly and indirectly impacted in the lives of millions of Saudi nationals. The organization employs more than 35,000 people directly, and this has improved their standards of living.
Corporate Social Responsibility of SABIC should be given a new dimension by ensuring the organization’s activities are of importance to people. The organization should be involved more in activities of social development such as the development of schools and health centers both in Saudi Arabia and other countries (Katanani). This can be achieved through cooperation with other stakeholders such as governments and Non-Governmental Organizations. The social responsibility of an organization improves life by positively impacting on people’s lives. The organization should also create more jobs both locally and internationally. The organization has been offering many Saudi nationals jobs through the program that as recently developed. People in different fields such as Chemistry, Engineering, Economics, and marketing are employed by the organization every year, and this program will improve the living standards of people. Since SABIC is also directly involved in exportations, many people depend on these operations for a living. Social responsibility also entails ensuring that the environment in which the organization operates in is friendly to human life. Waste treatment is crucial in improving the accountability of the organization towards impacting positively in people’s lives.
Evaluation of the strategic plan
Since strategic planning requires employees and the management of a firm are working towards the set goals while keeping in mind the organizational priorities, the success of SABIC requires timely analysis of the company’s vision by ensuring the set goals and projections are relevant to the specific industry. Since the vision of the company has been clarified, the relevant information about how the organization can attain success in the manufacturing sector are essential. Strategy implementation is the most challenging step in strategic planning. The strategies which are critical in the success of an organization should be prioritized during the implementation process. For the case of SABIC Company, the company must comply with the culture of doing business in the Kingdom of Saudi Arabia. This is a different business environment which requires keen analysis and compliance to the law. Additionally, SABIC has a developed culture which is challenging to change, and the implementation of the strategic plans would be limited by the lack of flexibility in the organization.
Leadership engagement and employee commitment are some of the strategies that a company like SABIC should use to successfully implement different procedures aimed at increasing the profitability and relevance of the company to the KSA (Kane). Human capital development is also essential, and SABIC should enhance the skills of its employees to increase their competitive nature in performing various tasks.
In conclusion, strategic planning is a critical aspect of business organizations which requires the management of these organizations to showcase their commitment to increasing their profits and promoting diversity. SABIC’s success depends on the company’s monopolistic power in the Saudi economy, and since the company is a huge success, further developments to meet the rising demand for manufactured products is critical. The company should develop its technology, so that industrial operations are achieved more easily. Mechanization promotes service delivery, and there is a possibility of the company beating many companies in the manufacturing sector if its operations are fully automated. The company should also focus on ensuring that the environment is not polluted. The marketing decisions should be developed in such a way that they are more operational to meet the needs and objectives of SABIC Company. The management of the organization should implement key aspects that increase profitability to be guaranteed success. Further investments in production, corporate social Responsibility and research will improve the company’s outputs and also lead to positive relationships with the public. The company should also create more employment opportunities to meet the rising need for employment in the Saudi Arabian Kingdom.
Kane, Frank. “Why SABIC is So Important to Saudi Arabia.” Arab News, 8 Oct. 2018, www.arabnews.com/node/1384141/business-economy.
Katanani, Ahmad K. “Policies and models for planning the economic development of the non-oil sector in Saudi Arabia.” 2013.
Moon Sub Choi, Paul, and Francis Joonsung Won. “Do firms park capital? Evidence from the U.S. manufacturing sector.” Investment Management and Financial Innovations, vol. 15, no. 2, 2018, pp. 194-202.
Niblock, Tim. “State, Society and Economy in Saudi Arabia (RLE Saudi Arabia).” 2015.
Praveen Kumar, P., and R. Hema. “Outcome of Innovations in Manufacturing Sector.” International Journal of Management Studies, vol. V, no. 4(9), 2018, p. 64.
Ramady, Mohamed A. “Saudi Arabia and the WTO.” The Saudi Arabian Economy, 2010, pp. 289-320.