Pestle and Five Porters Model of Chemical Industry
Assignment # 01 M - Pestle and Five Porters Model of Chemical Industry introduction. S. (Project Management) Management, Organizational Policies & Practices Course Code:- MGT-600 Tutor Name:- Mam Razia Sultana Sahiba Student Name:- M. Faraz Ahmed Bajwa Registration #:- CIIT / SP13-RPM-051 E-mail:- [email protected] com Macro Environmental Factors 1. 1- PESTEL framework 1. 1. 1- Political effect 1. 1. 2- Economical effect 1. 1. 3- Social effect 1. 1. 4- Technological effect 1. 1. 5- Environmental effect 1. 1. 6- Legal effect 1. 2- PESTEL segments (Combination of different PESTEL effects) 1. 2. 1- Demographic segment
1. 2. 2- Sociocultural segment 1. 2. 3- Technological segment and forces 1. 3- Key drives of change 1. 3. 1- Market globalization 1. 3. 2- Cost globalization 1. 3. 3- Technical Standarization 1. 4- Planning for Contingencies 1. 4. 1- Scenario Planning/Scenario building 1. 4. 2- Create Initial Scenario 1. 4. 2. 1- Define the scope of scenario 1. 4. 2. 2- Identify the major stakeholders 1. 4. 2. 3- Identify environmental trends 1. 4. 2. 4- Identify key uncertainties 1. 4. 3- Check each scenario for consistency and plausibility of facts 1.
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4. 4- Create contingency plans from each scenario Micro Environmental effects 1. 5- Porter’s five forces analysis 1. 5. 1- Threats of new entrants 1. 5. 1. 1- Economics of product differences 1. 5. 1. 2- Brand quality 1. 5. 1. 3- Switching cost or sunk cost 1. 5. 1. 4- Capital requirement 1. 5. 1. 5- Access to distribution 1. 5. 1. 6- Customer loyalty to established brands 1. 5. 1. 7- Absolute cost 1. 5. 1. 8- Industry profitability 1. 5. 1. 9- Cost advantage independent of scale 1. 5. 2- Threats of Substitute product/services 1.
5. 3- Bargaining power of customers/buyers 1. 5. 4- Bargaining power of suppliers 1. 5. 5- Intensity of competitive rivalry CIIT / SP13-RPM-051 Introduction to Industry: In this section we will take a chemical industry. Product of a chemical industry can be a soda ash, hydrochloric acid, or hydrogen peroxide etc. Chemical industry have many applications in our daily life and in other industry especially in textile industry, such as hydrogen peroxide is used as bleaching agent and soda ash used as washing powder. PESTEL effects have
influence on the performance, development and fortification on a industry. These effects can be explained as follows, Political Effect: Political effects have great influence on a chemical industry, such as political party may change their import/export rules and regulations, these effects can change the rules for a chemical industry. Economical Effect: As raw material and basic necessities of a chemical industry are very expensive, so a rapidly going organization have less economical bad effects while a company with less profit have more economical bad effects.
Social Effect: Social effects are concerned with the internal effects of a chemical organization such as labor law, annual increments, and other employee’s policies. Unfortunately in Pakistan our chemical industry pays very low packages to their employees, that have a adverse effect on the development of an chemical industry. Technological effect: Technological effect consider most important in all PESTEL framework. Technological team consists of expertise and trained manpower such as Engineers, Supervisors, Technicians, Fitters, and Operators etc.
If technological team of a chemical industry is technically strong and have complete command on operation and maintenance then industry might be progress in very fast way. Environmental effect: Some chemical industry has bad environmental effect, such as surrounding around hydrogen peroxide has a bad effect on crops and plants, while hydrochloric acid have pungent smell. An environmental team at Govt. level ensures the environmental effects on a chemical industry. Legal effect: Industries have some legal effects, such as they can sale/purchase their product according to their own planning and requirements.
Moreover chemical industries have their own legal advisor who helps and guide to management for legal issues. Since last few years’ Industrial police have been introduced for security and safety of industry in strike or protest days of people. CIIT / SP13-RPM-051 Key Drives of Change: Market Globalization: As world is going to become global village, so, every industry try to be ONLINE their products, chemical industry have terms with local and international zone and need to be globalized but there is lack of market globalization in chemical industry.
Technological Segments: Information Technology is an integral part of technological segment, it include LAN (Local Area Network), Internet facility and other IT relevant facilities to employees of an industry. Scenario Buildings: Scenario building in an important and vital part of an organization, in which technical team decide some kind of SOP (Standard Operating Procedures) for problems rectification and alternate solutions. Identify the Stakeholders: Stakeholder Management Strategy:
In this Macro effect we will study stakeholder management strategy, stakeholder management strategy is an approach in which minimize the negative impacts of stakeholders throughout the whole project life cycle. It includes the following steps. • Stakeholders are managed in grouped form • Individually involvement of stakeholder in the project success or failure • Significantly involvement of key stakeholders in the project Stakeholder Analysis Matrix is an example of representing
|Stakeholder |Adopted strategies for reducing |Assessment of |Level of |Communication | | |complication/ problem |Impact |Interest/ |With | | | | |Influence |Others | |Project Manager | | | | | |Functional Manager | | | | | |Team leader | | | | | |Others | | | | | Stakeholder Analysis: (Macro Environmental effect) Stakeholder Analysis consists of qualitative and quantitative analysis in which we thoroughly collect information and interests of those entities which have positively or negatively influence on the purpose, completion and success of the project.
Stakeholder Analysis describes the alliance and potential partnership to improve the projects success chance. CIIT / SP13-RPM-051 Stakeholder Analysis consists of following three parts. 1- Identify Stakeholders: Identify all potential stakeholders and information relevant to them, i. e. expertise, knowledge, departments, rules and regulations and influence level. Identify stakeholders is usually selected by interviewing identified stakeholders and extending the list until all potential stakeholders are included. 2- Prioritize Stakeholders: Stakeholders are prioritizing to define a strategy approach. It is important to prioritize the stakeholders for their efficient and effective use of effect to communicate and manage their expectations.
There are generally following four classification models available for prioritize stakeholders. • High Power/Interest Grid: Those stakeholders who have high authority as well as have high level of influence on the project activities are treated under High Power/Interest Grid. These stakeholders should manage closely. • High Power, Low Interest Grid: Stakeholders who have low interest in the project activities but they have high authority they are treated in this grid. These stakeholders should keep satisfied. • Low Power/Interest Grid: These stakeholders come in minimum effort zone; only monitor these kinds of stakeholders. • Low Power, High Interest Grid:
Keep informed those stakeholders who have high interest but low power. 3- Communication with Key Stakeholders: Key stakeholders are those entities in a project who have maximum authority and power at project resources and activities. Such as established contactors, suppliers and buyers In Power/Interest Influence Grid we can divide our stakeholders according to there activities and functionality into following three types. We have certain specific sign for their representation, such as Advocate and supporters stakeholders are represented by esoteric (*) blockers and critics are represented by Cross (x) while neutral stakeholders are represented by Plus sign (+)
CIIT / SP13-RPM-051 [pic] Power /Interest (Influence) Grid with Stakeholders |Sr. # |Symbol |Description | |1 |* |Advocates and Supporters | |2 |x |Blockers and Critics, | |3 |+ |Neutrals | CIIT / SP13-RPM-051 Micro Effects: Threats of new Entrants:
Suppose a chemical industry product is hydrogen peroxide, if there is no new entrants of this product then there isn’t any effect on this organization, for understanding this concept we take an example, Hydrogen peroxide was first launched by Sitara Group and at that time there was not any competitor of SITARA GROUP and hasn’t any threat of new entrants, but later on after few years DESCON introduce same product with name of DESCON oxychem and it was first threat for Sitara Groups. Threats of new entrants can be minimized by standardization of goods and items in the market. Threats of Substitute Products: If there is an alternate product of the final product of an organization then it can be a great threat for organization, there are fewer chances of threats for a chemical industry. Bargaining power of Customers:
Bargaining power of customers also known as market of outputs, it includes the reaction, responses and expectations of customers and other stake holders. Bargaining Power of Suppliers: Bargaining power of suppliers is meant by market of inputs, it include the vender companies and raw materials for the final product. Chemical industry management tries their maximum to maintain good relationship with suppliers. Intensity of competitive rivalry: If there are more organizations with the same final product then there will be competition among the organization. Intensity of competitive rivalry will depend on the strength and market value of the product. CIIT / SP13-RPM-051