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BASF SWOT & PESTLE Analysis

ID : 52518953| Mar 2019| 15 pages

COMPANY PROFILE -BASF

Business Sector :Chemicals

Operating Geography :Germany, Europe, Global

About BASF :

BASF is world’s leading chemical company based out of Ludwigshafen, Germany. It has 12 divisions which are into six segments based on their business models and the divisions bear operational responsibility and are organized according to sectors or products. They manage their 54 global and regional business units and develop strategies for the 86 strategic business units. For financial reporting purposes, they organize the regional divisions into four regions: Europe; North America; Asia Pacific; South America, Africa, Middle East. BASF has more than 122,000 employees, 6 verbund sites and 376 additional production sites globally as of 2019.
BASF’s purpose is that “We create chemistry for a sustainable future”

BASF Revenue :


€ 62,675 million – FY ended Dec 31st 2018 (year-on-year growth of 2.4%)
€ 61,223 million – FY ended Dec 31st 2017

Competitive Analysis of BASF

SWOT
PESTLE
The SWOT analysis of BASF is presented below:
Strengths
Weaknesses
1. Consistently strong financial performance
2. Portfolio focused towards innovative and growing businesses
3. New and upgraded segment structure
4. Agile and customer focused
5. Established Verbund system one of BASF’s greatest strengths
1. Operations impacting environment
Opportunities
Threats
1. CO2 Neutral Growth
2. Highly Competitive R&D
3. Surging Demand for Petrochemicals
4. Agricultural Solutions having huge potential in the future
1. Corporate Governance and Compliance
2. Competition from other major players
3. Brand Image Impacted after Chromium spill in Hannibal
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Detailed SWOT Analysis of BASF

 

Strength

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Weakness

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Opportunity

1. Technologies for CO2 neutral growth: All the countries are moving towards strict regulations for carbon emissions to tackle with the effects of global warming and there is immense pressure from international bodies as well. BASF’s readiness and preparedness to deal with such regulations in near future is clearly visible in its goal to be CO2 neural till 2030, with the mission to create value for society and an initiative to protect our climate. BASF is committed to contributing to the Paris Climate Agreement. With this initiative, BASF has placed itself among the very few green companies and nowadays customers are easily bent towards such organizations. To achieve this goal, they are dedicated to develop new and breakthrough technologies by 2030 which will have an impact even beyond that. They are targeting to reduce their carbon intensity by 30%. For this, they are launching many process improvements, operational excellence measures, shift to Co2 neutral power and portfolio development aligned with CO2 neutral initiative. They will also include greenhouse gas emissions consistently into their decision making. As part of Sustainable Solution Steering, BASF predicts 22 billion € sales with their Accelerator products by 2025 through innovation. Accelerator products have strong growth in the markets and also profit margins around 7% above other products in the portfolio. The sales reported from these products in 2017 stood at 15 billion € and they already have over 13,000 Accelerator products and many more to come from the R&D pipeline.

2. Highly competitive R& D: BASF’s highly competitive R&D will ensure long-term growth and generates a net benefit to earnings every year. BASF spent 2,028 million € in their R&D activities in 2018.They are going to spend around 2.3 billion € on their R&D activities in 2019. out of which they plan to spend around 17% on Corporate Research, 42% on Agricultural Solutions, 6% on Chemicals, 9% on Materials, 9% on Industrial Solutions, 10% on Surface Technologies and 7% on Nutrition & Care. Cross-divisional corporate research will strengthen existing and develop new key technologies. They also plan to fully leverage Artificial Intelligence. They intend to capitalize on innovative mindset. They plan to increase customer centricity by implementing measures such as stronger alignments of customer needs and R&D projects and establish rapid prototyping, Move R&D closer to businesses. With high focus on R&D, they will be able to move into new markets and geographies and be able to create a stronger value proposition for their customers there.

3. Surging Demand for Petrochemicals: International Energy Agency identifies petrochemicals as one of the key blind spots in the global energy debate, especially give the influence they will exert on future energy trends. IEA also points out in their latest press release that demand for petrochemicals is surging and will continue to grow. Demand for plastics- the most familiar group of petrochemicals has outpaced all other bulk materials like steel, cement and aluminum. Advanced economies such as US and Europe currently use up to 20 times as much plastic and up to 10 times as much fertilizer as developing economies such as India and Indonesia, this establishes a huge potential and opportunity for BASF. Petrochemicals are also leading the race for largest driver of oil demand globally. With growing demand for petrochemicals, its also easier for UN to meet its sustainable development goals.

4. Agricultural Solutions having huge potential in the future: According to World Bank, Agricultural Solutions can help reduce poverty, increase income and improve food security for 80% of world’s poor, who are inhabitants of rural areas and work mainly in farms and agricultural sectors. World Bank group has announced 6.8 US billion dollars in its new IBRD/IDA commitments for 2018. In 2014, Agricultural sector accounted for one-third of global gross domestic product (GDP) which makes it very crucial for economic growth. With rising climate change issues, there is high risk for crop-yield cuts more so for the world’s poor countries, agriculture and forestry also contribute to 25% of greenhouse emissions. For tackling with both these problems of less crop yield and greenhouse emissions coming from agricultural practices, the solutions provided by BASF can make a mark in near future across many countries both developed and developing economies.

Threat

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Major Competitors :

Key Business Segments / Diversification :

BASF
Chemicals Materials Industrial Solutions Surface Technologies
Nutrition & Care Agricultural Solutions

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Open Table Preview
Name
Business Segment
Year
Type
Objective/Synergy Achieved
Solvay’s polyamide businessPolyamide2019AcquisitionThe acquisition will complement BASF’s engineering plastics portfolio, enhance the access to key growth markets and strengthen the value chain through backward integration
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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BASF SWOT & PESTLE Analysis - SWOT & PESTLE.COM

SWOT & PESTLE.com (2020). BASF SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/basf/ [Accessed 02 Apr, 2020].

In-text: (SWOT & PESTLE.com, 2020)

Copyrights and Disclaimer

BASF SWOT and PESTLE analysis has been conducted by Akansha Chaudhary and reviewed by senior analysts from Barakaat Consulting.

Copyright of BASF SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

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