Koch Industries Inc. SWOT and PESTLE Analysis

Strength

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Weakness

1. Paper-mill and oil companies cause huge pollution: Koch industries is a major industrial polluter and due to the private nature of the company, they often get away with improper environmental disclosures and duck penalties. They have been and currently are involved in a lot of litigations regarding non-compliance of environmental laws. One of Koch’s cellulose facilities in Florida was found to be responsible for two major and successive chlorine dioxide chemical leaks in 2014. Koch’s oil refining division spilled over 17,000 gallons of crude oil near Texas in 2013. The cleanup took months and the spill contaminated livestock ponds causing huge economic losses to the communities settled there. Georgia-Pacific discharges over 45 million gallons of toxic paper waste per day in rivers. These paper wastes contain harmful chemicals like ammonia, chlorine, zinc, and mercury. Koch Carbon was accused of accumulating massive piles of petroleum coke from its operations and not disposing of it correctly, leading to coke dust being blown into the nearby towns and into people’s homes. Despite community protests and lawsuits from environmental groups, Koch industries did not remove the pile of pet coke. Koch’s oil refinery in Texas continues to release harmful chemicals like benzene, sulfuric acid, hydrogen cyanide, etc.

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Opportunity

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Threat

1. Technological division faces competition from big industry players: The world today is constantly changing, and technology is evolving faster than ever before. Tech companies must keep up to speed with this innovation and constantly come up with products that will satisfy consumer wants while staying ahead of the competition. Tech products are usually cost intensive and have short life cycles. Hence to earn profits, they must earn large amounts of revenue to offset the costs. If competitors manage to come up with a better product before INFOR, they may lose revenue not only for that product, but also a significant portion of the market share for subsequent products. Koch Industries’ INFOR competes with other software companies like Oracle and SAP which are bigger companies with a long-standing history in the software industry. These companies also have bigger management teams, more divisions, more market cap and hence more room for investments in R&D. Oracle is also a step ahead as it possesses the ability to bundle its software with database applications, which account for a significant portion of most installed applications. Competition in the software industry is only expected to intensify in the coming years.

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Political

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Economic

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Social

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Technological

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Legal

Growing number of consumer data protection laws: In 2018, amidst growing privacy concerns, EU passed a law called the General Data Protection Regulation (GDPR). It is said to be the toughest privacy and security law in the world. Software companies often collect consumer data without their knowledge in order to understand what consumers want from their products order to improve consumer experience. However, more and more people are concerned about their personal data being used and processed. Under the GDPR, even companies not based in the EU will be forced to comply to its regulations if they collect data from EU citizens. Inspired by GDPR’s good public reception, governments around the world are also enacting data privacy laws. California recently legislated a strict consumer protection law. While this may be good news for consumers, tech companies who were earlier collecting data on their own terms will have to reform and collect only that data which the laws allow. Moreover, they have to have a strong legal team in place to ensure that they do not mistakenly commit privacy breaches which could result in very expensive lawsuits and bad publicity.

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Environmental

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