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Module name: Business EnvironmentTitle of the assignment: Business environment of AZ               Electronic Materials   ...
ContentsMission, objectives and history of your assigned company ............................................................
Mission, objectives and history of your assigned companyHistory of the companyAZ electronic materials is a UK based compan...
Moreover the product wise revenue is as followsProduct                      Revenue          Revenue                      ...
Cost globalization drivers        Low cost production facilities in countries        Huge cost savingsGovernment globaliza...
(Source, www.hbr.org)    1. Threat of new entrantsSince there is a high demand for electronic items there may be threat of...
It can be noted that the company is operating in an oligopoly market as there are fewcompanies who engaged in this industr...
Appendix 1-Yips internationalization strategy
Market                             Drivers                           Potential for            Government       Cost Driver...
New           MARKET DEVELOPMENT                     DIVERSIFICATIONMarkets                          Expand    operations...
developments                   3. Concentration on carbon footprint of                      organizations.5. Legal Factors...
Az electronic assignment
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Az electronic assignment

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Az electronic assignment

  1. 1. Module name: Business EnvironmentTitle of the assignment: Business environment of AZ Electronic Materials Student name : Submission date :
  2. 2. ContentsMission, objectives and history of your assigned company ......................................................................... 3 History of the company............................................................................................................................. 3Market conditions and competitive.............................................................................................................. 4 Market Conditions .................................................................................................................................... 4 Yips internationalization strategy ......................................................................................................... 4 Ansoff’s Growth matrix ......................................................................................................................... 5 PESTEL Analysis ......................................................................................................................................... 7Reference ...................................................................................................................................................... 7Appendix 1-Yips internationalization strategy .............................................................................................. 8Appendix 2. Ansoff’s Growth matrix ............................................................................................................ 9Appendix 3. PESTEL Analysis ....................................................................................................................... 10
  3. 3. Mission, objectives and history of your assigned companyHistory of the companyAZ electronic materials is a UK based company incorporated in 1950 as a section of the Hoechst AG whichis a German chemical company currently known as Senofi- Aventis the company’s main business activities areproduction and supply of high quality and purity special types of chemical which are used by companies in producingintegrated circuits (IC) and flat panel displays (FPD), photolithographic printing and LEDs. Currently the head office ofthe company is situated in Stockley park UK and the company is listed in London Stock Exchange (LSE) Thecompany is one of the leading companies who engaged in this industry and holds almost thousand patent rightsacross 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 thecompany has.Every Sony television watch, every Samsung smart phone or tab used every Toshiba photocopier used AZ electronicmaterials products are there. Due to the fast change in the electronic industry towards high speed small devices AZelectronics too spend significant amount of money for research and development activities since for them to be amarket 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 respectedchemical 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. Thusit can be noted that the company.When considering the competitive environment of the AZ electronic materials it can be noted that it competes in aglobal 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 rangeof 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 theirproducts. 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. Mostof the revenue is generated from Asian region as most of the electronic companies are located in Asian countriessuch as Japan South Korea and Taiwan. The country wise revenue of the company is as follows,Country Revenue US $ Revenue US $ 2011 2010Taiwan 209 191Japan 186 136USA 142 78China 89 57German 53 51France 15 16Source, Annual report AZ Electronic materials, 2011)
  4. 4. Moreover the product wise revenue is as followsProduct Revenue Revenue 2011 2010IC materials 545 448Optronics 224 207Printing & other 23 26 Further the company’s profit was amounted to US $ 125.6 Mn in the financial year 2011. When considering theasset base of the company it can be noted that the company’s total assets exceed more than 1.7 billion out of thoseUS $ 663 mn were the value of the patent licenses of the products it offers. Therefore it is evidenced that thecompany is a large scale company from its operation results and financial position.Market conditions and competitiveMarket ConditionsIt 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 tofocus in these areas is that countries in those regions are specialized in manufacturing electronic items. Countriessuch 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 strategyAs shown in appendix 1 Yip suggests that the in order to analyze the internationalization or globalization four types ofdrivers needs to be evaluated with regard to a particular organization. According to this analysis there are fouraspects (drivers) where the attention needs to be given. Those are, Market globalization drivers Cost globalization drivers Government globalization drivers Competitive globalization driversMarket globalization drivers Growing demand for new and smart electronic devices Connection with globally accepted electronic device manufacturers
  5. 5. Cost globalization drivers Low cost production facilities in countries Huge cost savingsGovernment globalization drivers Exchange rate variations Government regulations Interdependence of countries to help in relation to subsidizing their competitorsCompetitive globalization drivers Increase of threats of new entrants Increased competition among the existing companiesAnsoff’s Growth matrixIn appendix 2 we can identify that the company is adopting market penetration strategy and productdevelopment strategy. As per the company’s objectives the company aims at existing markets with aorganic growth and this can be concluded as that the company offer existing products in to the existingmarket. Further in with their Research and development company tries to offer new products to theexisting markets.The company’s competitive market environment can be evaluated using Michael porter’s five forces
  6. 6. (Source, www.hbr.org) 1. Threat of new entrantsSince there is a high demand for electronic items there may be threat of new entrant to theindustry. 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 suppliersThe company has taken several measures to reduce bargaining powers of suppliersAccordingly the company has created a strong supply chain which reduces the bargainingpower of suppliers. Further the company holds the lots of patent rights of where othercompanies cannot product such products and the suppliers also has to sell their products to thecompany as there is no any other customers to buy their products. 3. Bargaining powers of CustomersCompany can manage bargaining powers of customers by entering in to long term supplyagreements with customers. Further since the company has lots of patent rights in the industrycustomers doesn’t have any other supplier for these types of products 4. Threat of substitutesThreat from substitutes is very high as the industry is moving fast. This threat can be eliminatedby investing in research and development activities and inventing new products with improvedefficiency 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. 7. It can be noted that the company is operating in an oligopoly market as there are fewcompanies who engaged in this industry. Further company has lots of market opportunities asthey have lots of patent rights which they can use for growth of their operations. However thecompany has managed to dominate in the electronic material market with the knowledge andthe patent rights they have.PESTEL AnalysisFurther 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 countriesin which it carry out operations and countries in which it manage its manufacturing plants. In thisaspect political stability of countries such as Japan, South Korea, Taiwan, USA are important tothe AZs operations. Economic factors such as inflation and developments in ICT may affect tothe operation of the company. For example economic crises prevail in European region mayhave a impact on the sales value of the company and may affect to the operations of thecompany 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 thecompany. Being a main customer of the company, demand for smart phones of Samsung hasaffected 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. 8. Appendix 1-Yips internationalization strategy
  9. 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. 10. New MARKET DEVELOPMENT DIVERSIFICATIONMarkets  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. 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.

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