Sinopec Corp SWOT and PESTLE Analysis

Strength

1. Stable and remarkable growth: While both share price and market capitalization increased, Sinopec Group, with Sinopec Corp. as its core asset, ranked third on the Fortune Global 500 list for 2014. Sinopec has maintained a favourable growth momentum throughout the years. The operating revenue of the company has increased by 12.8% in 2014, from the year 2011. Sinopec financed its capital needs through the issuance of bonds based on market conditions, which effectively improved its capital and debt structure, enhanced enterprise value and supported the rapid development of the company.

2. New innovation and research: It enhanced its capabilities in innovation and achieved a series of strategic research advances with practical applications. The breakthroughs in the research into shale gas development, new type of coal-to-chemical conversion, new materials, energy conservation and environmental protection have helped Sinopec to further improve their industry structure and product mix.

3. Improving the Efficiency: The company focuses on improving the efficiency of upstream exploration, in particular through the development of unconventional oil and gas exploration and the construction of liquefied natural gas facilities. Sinopec fully upgraded the quality of refined oil and were the first to make all of their gasoline and automobile diesel products meet the GB IV national standard; some regions have upgraded product to the GB V.

4. Successful international operations: Sinopec has paid great attention to international operations. The Group accelerated its “Going Global” pace and achieved great progress. Presently, the Group has cooperation agreements with many countries, including Iran, Saudi Arabia, Gabon, Kazakhstan, Yemen, Ecuador, Angola, Oman, Libya, Niger and Mali, to exploit and develop their local oil and gas projects.

5. Committed to quality and efficiency: Sinopec is committed to development through the improvement of internal quality and efficiency, and they maintain their core strategy of driving growth by innovation, in order to transform Sinopec into a scientific and services based company. They hope to gradually shift the industry structure from “petroleum and chemicals” to “energy and materials,” changing the value creation model from a focus on manufacturing to a focus on innovation and services.

Weakness

1. Does not feature in the top league: Even though Sinopec has 11 refineries with processing capacity is up to 107 tons per year, Sinopec doesn’t even feature in the list of top 10 companies in the world, in terms of processing speed.

2. Need for a sustainable model: Availability of oil and petroleum resources is getting increasingly difficult over the years. In order to have sustainable business model, the company needs to look for some sustainable options in its value creation model.

Opportunity

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Threat

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Political

1. Governments bilateral and multilateral agreements and international relationships: The Government’s international relationships will impact the company’s global collaborations and joint ventures and comprehensive efforts, including oilfield production, technical services, refinery and pipeline construction.

Economic

1. China’s massive economic development leading to a high spending customer group: In line with China’s massive economic development, China’s oil consumption has increased year after year, especially, in the high energy consumption secondary industries. More energy availability has been translated into the improvement of China’s social life, increasing ownership of personal cars, and the quickening pace of construction that characterize a well-off developing society.

2. Weak Global economic Recovery: The weak recovery in global economic slowdown will have a negative impact on the international trade and exports of the company, as the consumption pattern has shown a downward slope.

Social

1. Various Social Responsibility initiatives taken by the company: Sinopec has established a Social Responsibility Management Committee to guide the Company on sustainable development. The company has continued to fulfill their social responsibilities in all aspects of their business.

2. Sinopec supported the United Nations Global Compact China network, hosting two sessions of the China Summit on Caring for Climate: Sinopec has joined the Global Compact LEAD and the Caring for Climate initiatives. They conscientiously followed the ten principles of the Global Compact, and made ten voluntary commitments at the Rio+20 Summit. Sinopec supported the United Nations Global Compact China network, hosting two sessions of the China Summit on Caring for Climate.

3. The Company sincerely cares for its staff, actively participating in public welfare initiatives: They took the lead in publishing a corporate environment conservation white paper and an Environmental, Social and Governance report for shale gas development, setting an example for Chinese enterprises to collectively cope with climate change. The Company sincerely cares for its staff, actively participating in public welfare initiatives and promoting development that benefits both the business and its various stakeholders.

Technological

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Legal

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Environmental

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