Clariant Chemicals SWOT and PESTLE Analysis

Strength

1. Strong Financial Performance and Strategy: Clariant has been a consistent performer in terms of revenue with operating income in FY 2016 being 5,847 million CHF and growing to 6377 million CHF in FY 2017. The reported growth over 2016 is 9%. The company experienced the best growth in North America and Middle East & Africa of about 16%. In Asia, the growth was around 13%. Sales in Europe were seen to have grown by 8%. The Catalysts and Care Chemicals experienced growth of about 19% and 9% respectively. The sales in Natural Resources and Plastics & Coatings increased by 18% and 5%. The company follows a growth strategy which is focussed on Innovation and Sustainability. The primary Strategy is in line with three strategic implementations namely comprehensive restructuring, clariant excellence, and profitable growth.

2. Strong global presence: Clariant has developed its global presence over the years. Clariant has been expanding its global footprint by engaging in strategic acquisitions and partnerships. The company has diversified its presence across strong markets like United States, Europe, North America, Middle East and Africa, Asia Pacific. The company is diversified to 156 companies in 52 countries. The sales in North America was recorded at 1241 million CHF, in Asia 1632 million CHF, in Europe 2194 million CHF, in the Middle East 480 million CHF while in Latin America it was 630 million CHF. Recently the company has also shown interest to expand its market in China by opening up a catalyst office. The company has also opened up its new plastic plant in Maine.

3. Strong brand Value: Clariant overall global presence and reputation across various countries has led to its brand development over the years. The brand ranked 46 in “Switzerland 50”- The most valuable Swiss brands of 2017. Clariant is also a major player when it comes to color, additive concentrate and innovative performance solutions for plastics. The company is well recognized in major countries like India, North America, in European countries. The main strength of the company lie along the lines of performance, growth, and innovation. The company further invests to strengthen its brand portfolio across the world through innovative new product offerings. For example, recently Clariant launched a new brand Eqius for humidity control.

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Weakness

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Opportunity

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Threat

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Political

1. Trade regulations and policies:Changing global trade policies and tax regulations have a significant impact on the operations of Clariant. Clariant has its presence in significant regions – China, US, Austria, Middle East, India. Thus the operations are subject to change in the US trade policies. Trade protection measures such as import or export restrictions and requirements, the imposition of burdensome tariffs and quotas or revocation or material modification of trade agreements are some of the parameters which will affect the operations. Moreover, the trade protection measures are expected to further intensify due to presidential guidelines. Stringent export laws in China, ban on plastics has been one of the major factors which will affect the operations in China. Similarly, GST (Goods and Service tax) in India will have a major impact on the operations of chemical industries in India.

2. Oppositions from activist investors: One of the major hindrance Clariant chemicals faced in recent times is the continuous interference of its shareholders in the operations of its business. One of its investor group White Tale Holdings has been active in opposing the functioning of the organization. The recent merger with Huntsman would have been a game-changing deal for Clariant, however, the continuous opposition from White tale holdings stopped this 20-billion-dollar merger from happening. As a result, the company had to face high costs and losses. The investor group demands a board seat and an independent strategic review from the organization. Also, recently the investor group has sold Clariant’s stakes to its Rival SABIC in the middle east giving them a quarter of the control in the organization.

3. Changing prices of raw materials: Clariant depends largely on the procurement of raw materials from their suppliers located in different countries. Higher oil prices affects the natural resources procurements to a large extent. The fluctuating prices of raw materials will have a significant impact on the care chemicals as well. Rising pollution levels in China also has led to stringent policies which have affected the operations of major chemical industries. This has had a significant impact on the supply chain of chemical companies which has resulted in a change of prices of raw materials from suppliers.

Economical

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Social

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Technological

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Legal

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Environmental

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