Norsk Hydro SWOT and PESTLE Analysis

Strength

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Weakness

1. Cybersecurity needs to be beefed up across entire operational teams: Norsk Hydro lacks adequate cybersecurity which is further weakened through flawed firewalls. In December 2019, there was a system breach reported by Norsk Hydro where production lines of 170 plants had come to a complete stand still. IT team of Norsk Hydro tried rebooting the systems so that production lines could be restored, but instead systems displayed a ransom note. The hackers demanded ransom-ware in bitcoins. Microsoft’s Detection and Response Team was called in to help Norsk Hydro. Microsoft later disclosed that the hackers had weaponized a malicious program known as LockerGoga. This event costed the company a whopping $71 million. Norsk Hydro needs to beef up IT security and cyber security to foil these incidents in the future.

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Opportunity

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Threats

1. Decrease in demand is leading to shutdowns and cost saving programs: World economy had been sleepwalking in 2019. Misbalance in demand and supply, trade war and spiralling operational costs had been some of the common challenges faced globally. Public debt and private debts have recorded historical heights. Norsk Hydro has also been a target of economic slowdown. Norsk Hydro had a precision tubing plant in Remscheid, Germany. This unit of Hydro was accumulating losses since the last 2 years. Norsk Hydro decided to pull down the shutters on this loss-making unit. This has jeopardized 129 jobs. Market outlook in long term translated to negative. Hydro is now concentrating on precision tubing plant in Denmark to fulfill demands in Europe. The auto and construction industry are also victims of global economic crisis due to which demand for Aluminum has dropped precipitously. Share price of Norsk has dipped to a six months low of 11%. This has led Norsk to initiate cost saving program with an aim to cut down cost to the tune of NOK 7.3 billion by 2023.

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Political

1. Allegations of land grabbing and corruption impacting global image: Norsk Hydro has successfully setup the world’s biggest aluminum refinery in Brazil in the vicinity of the Amazon forest. Amazon forest is one of the densest forest and is home to many tribes, animals and species of birds. Major indigenous, quilombo and riverine communities have been staging protest against this industrialization. These communities are also terrified as they have been attacked numerous times. They allege that their place has been taken over by land mafia and corrupt officials are supporting these activities. These tribes have been fighting since a decade and they have been protesting against Hydro refinery, its raw material bauxite’s supplier Albrus, against land mafias, against corruption and against the threats they receive.

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Economic

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Social

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Technological

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Legal

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Environmental

1. Investments and adherence to guidelines of UNEP in operations: The environmental effects of industrial activities relate to climate change, water saving program, recycling, biodiversity and waste management. Norsk Hydro has decided to reduce emission by 30% in 2030. Norsk Hydro has increased investment on innovation and technology development as these are the key enablers towards saving energy and reducing carbon footprint. Hydro Alunorte, the largest aluminum refinery in Barcarena was under lens for environmental issue. This unit was discharging Bauxite residue in the open environment, to which Hydro later confessed and was apologetic to the whole world. Embargo was implemented on Alunorte. Recently it has been declared that embargo will be lifted and Hydro Alunorte will start working in full capacity. Alunorte will be carrying out operations in line with United Nation Environment Program. Hydro Alunorte has pledged to generate profitability with sustainability.

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