AZ Electronic Materials is a UK-based company that produces chemicals for electronics manufacturing. [1] It has a global market and competes internationally. [2] The document analyzes AZ's business environment using models like Yip's internationalization strategy and Ansoff's Growth Matrix. [3] It finds AZ focuses on market penetration and product development in existing Asian and US markets. PESTEL and Porter's Five Forces are also used to evaluate political, economic, social and competitive factors affecting AZ.

1. Module name: Business Environment
Title of the assignment: Business environment of AZ
Electronic Materials
Student name :
Submission date :

2. Contents
Mission, objectives and history of your assigned company ......................................................................... 3
History of the company............................................................................................................................. 3
Market conditions and competitive.............................................................................................................. 4
Market Conditions .................................................................................................................................... 4
Yips internationalization strategy ......................................................................................................... 4
Ansoff’s Growth matrix ......................................................................................................................... 5
PESTEL Analysis ......................................................................................................................................... 7
Reference ...................................................................................................................................................... 7
Appendix 1-Yips internationalization strategy .............................................................................................. 8
Appendix 2. Ansoff’s Growth matrix ............................................................................................................ 9
Appendix 3. PESTEL Analysis ....................................................................................................................... 10

3. Mission, objectives and history of your assigned company
History of the company
AZ electronic materials is a UK based company incorporated in 1950 as a section of the Hoechst AG which
is a German chemical company currently known as Senofi- Aventis the company’s main business activities are
production and supply of high quality and purity special types of chemical which are used by companies in producing
integrated circuits (IC) and flat panel displays (FPD), photolithographic printing and LEDs. Currently the head office of
the company is situated in Stockley park UK and the company is listed in London Stock Exchange (LSE) The
company is one of the leading companies who engaged in this industry and holds almost thousand patent rights
across the world such as UK, USA, china, France etc. Among other companies Samsung, Intel, IBM, Sony, LG,
Sharp, Toshiba are leading customers of the company which in turn shows the company’s strength and the image the
company has.
Every Sony television watch, every Samsung smart phone or tab used every Toshiba photocopier used AZ electronic
materials products are there. Due to the fast change in the electronic industry towards high speed small devices AZ
electronics too spend significant amount of money for research and development activities since for them to be a
market leader innovation is one of the most important aspect.
Company’s vision is to sees the company’s continuance development in to one of the most advanced and respected
chemical material company in the world. Company’s strategy is to research and development driven organic growth.
Further company is targeting niche markets where it can obtain leadership in the market by way of acquisitions. Thus
it can be noted that the company.
When considering the competitive environment of the AZ electronic materials it can be noted that it competes in a
global level in several sectors. Accordingly the products of the company are sold all around the world including UK,
USA, china, Japan, France. Further it can be noted that product wise also the company’s competition is wide spread,
company offers its products to range of customers who ultimately use the company’s materials to manufacture range
of products in all kind of electronic products.
It can be noted that the company have range of business partners who trust the company to provide inputs to their
products. Thus, when achieving the company’s goals and objectives their support is very useful to the company.
In the year of 2011 the company’s revenue was US $ 791 which is 16% growth compared to the previous year. Most
of the revenue is generated from Asian region as most of the electronic companies are located in Asian countries
such as Japan South Korea and Taiwan. The country wise revenue of the company is as follows,
Country Revenue US $ Revenue US $
2011 2010
Taiwan 209 191
Japan 186 136
USA 142 78
China 89 57
German 53 51
France 15 16
Source, Annual report AZ Electronic materials, 2011)

4. Moreover the product wise revenue is as follows
Product Revenue Revenue
2011 2010
IC materials 545 448
Optronics 224 207
Printing & other 23 26
Further the company’s profit was amounted to US $ 125.6 Mn in the financial year 2011. When considering the
asset base of the company it can be noted that the company’s total assets exceed more than 1.7 billion out of those
US $ 663 mn were the value of the patent licenses of the products it offers. Therefore it is evidenced that the
company is a large scale company from its operation results and financial position.
Market conditions and competitive
Market Conditions
It is noted that the company carry out its operations in the global perspective across the world such as Asia, Europe,
USA. Further it can be noted that the company’s main focus region is Asian region and USA. The main reason to
focus in these areas is that countries in those regions are specialized in manufacturing electronic items. Countries
such as Japan, Taiwan, USA, China as the examples for these types of countries.
The company’s internationalization strategy can be analyzed using following strategic management models.
Yips internationalization strategy
As shown in appendix 1 Yip suggests that the in order to analyze the internationalization or globalization four types of
drivers needs to be evaluated with regard to a particular organization. According to this analysis there are four
aspects (drivers) where the attention needs to be given. Those are,
Market globalization drivers
Cost globalization drivers
Government globalization drivers
Competitive globalization drivers
Market globalization drivers
Growing demand for new and smart electronic devices
Connection with globally accepted electronic device manufacturers

5. Cost globalization drivers
Low cost production facilities in countries
Huge cost savings
Government globalization drivers
Exchange rate variations
Government regulations
Interdependence of countries to help in relation to subsidizing their competitors
Competitive globalization drivers
Increase of threats of new entrants
Increased competition among the existing companies
Ansoff’s Growth matrix
In appendix 2 we can identify that the company is adopting market penetration strategy and product
development strategy. As per the company’s objectives the company aims at existing markets with a
organic growth and this can be concluded as that the company offer existing products in to the existing
market. Further in with their Research and development company tries to offer new products to the
existing markets.
The company’s competitive market environment can be evaluated using Michael porter’s five forces

6. (Source, www.hbr.org)
1. Threat of new entrants
Since there is a high demand for electronic items there may be threat of new entrant to the
industry. Company can eliminate threats by following ways.
Increasing entry cost by investing in Research and development activities
Signing up agreements with existing customers
Increasing economies of scales
Obtain more patent rights where other companies cannot produce such products.
2. Bargaining powers of suppliers
The company has taken several measures to reduce bargaining powers of suppliers
Accordingly the company has created a strong supply chain which reduces the bargaining
power of suppliers. Further the company holds the lots of patent rights of where other
companies cannot product such products and the suppliers also has to sell their products to the
company as there is no any other customers to buy their products
.
3. Bargaining powers of Customers
Company can manage bargaining powers of customers by entering in to long term supply
agreements with customers. Further since the company has lots of patent rights in the industry
customers doesn’t have any other supplier for these types of products
4. Threat of substitutes
Threat from substitutes is very high as the industry is moving fast. This threat can be eliminated
by investing in research and development activities and inventing new products with improved
efficiency as a substitute for existing products.
5. Competitive rivalry within the industry
Competition faces by the company can be eliminated by following ways,
Entering in to long term supply agreements with customers
Investing in research and development activities
Increasing the efficiency in supply chain
Increasing economies of scales

7. It can be noted that the company is operating in an oligopoly market as there are few
companies who engaged in this industry. Further company has lots of market opportunities as
they have lots of patent rights which they can use for growth of their operations. However the
company has managed to dominate in the electronic material market with the knowledge and
the patent rights they have.
PESTEL Analysis
Further the company’s external environment can be analyzed using PESTEL analysis,
Accordingly as discussed in the appendix 3 it can be noted that political stability of the countries
in which it carry out operations and countries in which it manage its manufacturing plants. In this
aspect political stability of countries such as Japan, South Korea, Taiwan, USA are important to
the AZs operations. Economic factors such as inflation and developments in ICT may affect to
the operation of the company. For example economic crises prevail in European region may
have a impact on the sales value of the company and may affect to the operations of the
company ultimately.
Current market trends in the electronic industry may affect to the operations of the company.
More specifically trend for smart phones and tabs may affects positively on the operations of the
company. Being a main customer of the company, demand for smart phones of Samsung has
affected the strategy of the company.
Reference
 BCG Matrix, Available (online) http://www.bcg.com/about_bcg/history/history_1968.aspx
[Accessed on: 15/3/2012]
 Chisnall, Peter: Strategic Business Marketing, 1995
 Johnson G, Scholes K, Whittington R. (2005): The Environment: Exploring Corporate
Strategy, Pearson Education
 Porter, M.E. (2008) "The Five Competitive Forces That Shape Strategy", Harvard
Business Review, January 2008,
 Johnson G. and Scholes K. (2003), Exploring Corporate Strategy, 6th edition, Prentice
Hill: London.
 AZ Electronic materials 2012, AZ Electronic materials United kingdom,<
http://www.az-em.com/en.aspx > viewed on 7, April 2012

8. Appendix 1-Yips internationalization strategy

9. Market
Drivers
Potential for Government
Cost Drivers
Globalisation Drivers
Competitive
Drivers
(Source www.hbr.org)
Appendix 2. Ansoff’s Growth matrix
Products/Services
Existing New
Existing MARKET PENETRATION PRODUCT DEVELOPMENT
 Expand the operations  Offer products in to
Asia and USA existing markets such
as Asia and USA

10. New MARKET DEVELOPMENT DIVERSIFICATION
Markets  Expand operations to  Expand in to new
new countries or areas countries with new
where company sees products
more potential..
Appendix 3. PESTEL Analysis
1. Political Factors 1. Political situation of the countries such
as Japan, Korea, USA, UK in where
the AZ electronics operates.
2. Economic Factors 1. Economic condition of the countries
where company carry out its business
operations.
2. Governments policies affecting the
operations of the company such as
fiscal and monetary policy.
2. Social/Cultural Factors 1. Current demand for latest electronic
items such as smart phones and tabs
2. Concentration of public on companies
ethical business practice.
3. Technological Factors 1. New dimensions of technology such as
smart phones and tabs
2. Increasing demand for online shopping
4. Environmental Factors 1. New trends in corporate social
responsibilities
2. Increased attention on sustainable

11. developments
3. Concentration on carbon footprint of
organizations.
5. Legal Factors 1. Laws and regulations relating to
manufacturing of industrial
materials and other inputs
2. Laws and regulations relating to
market conditions such as
monopoly and cartels.