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1. INTRODUCTION

1.1 Background

Strategy as defined by Bennet (2008) is the steps managers take to achieve the aims of their organization. It is a major determinant factor in any organization and the manner in which it is designed determines the effectiveness and success of the organization. Strategic management therefore, provides the direction of the organization through formulating policies and plans that are designed to achieve goals and objectives followed by facilitation and finally the execution of the   plans.   Other than   effectiveness,   strategic   management   helps   an   organization   to   have   a competitive advantage in the market. Competitive advantage of any organization is anchored to its strategy that   identifies   opportunities   and   capabilities   needed   to   outperform   the   market’s current and potential rivals. Jeyarathmm (2008) describes strategic management process as

1. Strategy formulation that entails among other things, developing mission and vision
2. Strategy implementation that entails among other things, developing objectives and policies, and
3. Strategy evaluation that entails examining the efficacy of the strategy.

Understanding the business environments is another major facet in the growth of an organization. There is the internal and the external environment and their interrelationship is fundamental for organization’s   overall   sustainability.   The   internal   environment   consists   of   stakeholders’ influence i.e.  owners, employees, partners,  and  shareholders etc. while external environment consists of legal, political, social, technological, environment, and economic forces.

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To determine an organization’s environment, it is imperative that:

1. An analysis of internal environment is done through SWOT analysis
2. An analysis of external environment is done through PESTEL analysis, and
3. Competition analysis is done through among other models the Porter’s Five Forces Analysis tool.

Porter’s   Five   Forces   as   explained   by   Jeyarathmm   (2008)   helps   organizations   in   analyzing competitive forces with the aim of identifying attractiveness of the industry; the areas analyzed are

1. Threat of new entrants
2. Bargaining power of buyers
3. Bargaining power of suppliers
4. Threat of substitute products and/or services, and
5. Power of customers

Under external environment is task environment that is composed of organizations and definite groups affecting the company; task environment in a firm is affected by competitors seeking same resources, customers, suppliers, regulators, as well  as strategic partners (Campbell and Craig,   2005).   It   is   through   understanding   internal   and   external   environments   including   the competitors, and if possible their strategies, in order to create a unique market niche that will help the organization to stand a notch higher in the market or industry.

INEOS Group is a British MNC (multinational company) with headquarters in London. INEOS is globally known for manufacturing petrochemicals; the organization has operations in29   different   countries   with   194   sites   making   $61   billion   in   revenues   on   annual   basis,   the organization   employs   26,000   people   and   it   also   complements   its   business   through   INEOS Hygienics, oil products, and making an impact across a range of elite sports as a way of creating awareness of the brand in the global space (INEOS, 2022).

1.2 Scope

The scope of this assessment is INEOS Group.

1.3 Objectives

The aim of this assessment is to write a report which provides a comprehensive description and analysis of the strategy of a Multinational Corporation, in this case INEOS Group. The specific objectives are as follows:

1. Describe comprehensively the mission, vision, offerings and area of operations of INEOS Group.
2. Analyze the general environment of INEOS Group, and conduct a competitor’s analysis using PESTEL and SWOT, and Porter’s Five Forces analytic tools respectively.
3. Critically assess   the   competitive   advantage   of   INEOS   Group   to   expand   in   non   –traditional markets and develop a strategy direction for this case.

2. DISCUSSION

2.1 The Environment of INEOS Group: About INEOS

Vision: The vision for INEOS Group is to become the world’s leader in sustainable petrochemicals (INEOS, 2022).

Mission: The mission is utilizing entrepreneurial culture that delivers long-term value to stakeholders and customers; it does so through embracing CSR (Corporate Social Responsibility)(INEOS, 2022).

Key Values: INEOS   believes   in   excelling   in   health,   safety, and environmental performance, focusing on   satisfaction of customers, reliability,   and total quality;   continuous improvement   to   become cost-effective,   embracing   innovation,   reward   achievement,   and entrepreneurship, as well as empowering employees to develop real value for company and customers (INEOS, 2022)

Offerings: The Company has a huge product portfolio that ranges from chemicals, oil and gas, polymers, sanitizers, automotive, clothing, and elite sports i.e. cycling, sailing, Formula1, and Rugby (INEOS, 2022).

Areas of operation: INEOS has 1934 sites of operations spanning in 29 countries; the company has managed to employ 26,000 people.

2.2 Identification and Analysis of the General Environment

General direction as stated by Campbell and Craig (2005) is a set of broad aspects and influences in a firm’s setting and it governs the general context; general environment has two facets i.e. economic   dimension   and   technological   dimension.   The   economic   aspect   entails general   vivacity   and   health   of   the   economy   system   under   which   INEOS   operates.   The technological dimension entails methods that INEOS uses to convert resources into products.

Other factors needed to understand the general environmental are social legal, political, environmental factors.

2.2.1 PESTEL Analysis

Political factors: Some of the issues under political factors are corporate taxes, free trade disputes, sanctions, and political stability. INEOS has operations in 27 countries and these countries are selected because of  some factors;  friendly  FDA policies, friendly tax regimes, bilateral relations with mother company, and political stability. Majority of INEOS locations are in Europe and North America and the rest are in China, India, Japan, and Indonesia (INEOS, 2022).

Economic factors: The elements to consider under economic influences are interest rates, inflation, employment rates, and exchange rates. In 2020, the world was hit by COVID-19that caused phenomenal economic meltdown; inflation in many countries has also be on theirs and this led to INEOS opening a new product line the INEOS Hygienic that manufactures hand sanitizers and related products; The company was able to open a number of new sites in the country and overseas thanks to its financial muscle (INEOS, 2022).

Social factors: The change in social trends also positively impacted INEOS when health directives like sanitizing of hands and surfaces was issued; the company ceased this opportunity by introducing Hygienics product line. Additionally, INEOS has been involved in community service among other social interventions. INEOS is engaged in a number of charitable projects in education, community, conservation, and health like the INEOS Oxford Institute, the Daily Mile, and the Forgotten Forty (INEOS, 2022).

Technological factors: The fundamental elements for consideration are among others, research and development (R&D), automation, internet connectivity, and cyber security. INEOS is a highly innovative company and it embraced latest technologies. Therefore, the company has to consider those locations with advanced technologies and R&D. The company’s innovativeness is seen through the 4×4 INEOS Grenadier, INOVYN, Styrolution, and Belstaff etc. (INEOS, 2022).

Environmental factors: Environmental sustainability has become a major global concern considering the worrying climate warming. Companies have been pushed to address their carbon footprint through engaging in practices that are environmental friendly. According to INEOS (2022) safety is a priority for all and it ensures this through maintaining and protecting environment in order to ensure health and safety through SHE (safety, health, and environment) performance.

Legal factors: Legal influences have been deterring   operations at INEOS especially considering that the company is engaged one oil and gas operations that are considered as high carbon sources. Policies and regulations to cap injection of carbon fumes into the atmosphere have slowed production of oil and gas. This mean that companies like INEOS in this industry have to consider cleaner energy.

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2.2.2 Task Environment

Task environment consists of the factors that affect an organization and these factors include the competitors seeking similar resources, customers buying organization’s products, the suppliers, regulators controlling the industry, and the strategic partners (Campbell and Craig, 2005). INEOS attracts many competitors considering its wide range of product lines. Some of the major   competitors   are   British   Petroleum   (BP),   De   Nora,   KAUSTIC,   and   Huntsman.

Additionally,   depending   on   the   wide   range   of   products,   there   are   a   number   of   regulators controlling INEOS operations like the EU REACH and Good Manufacturing Practice (GMP) (INEOS, 2022). INEOS operates a number of consumer brands ranging from petrochemicals, fashion, automotive,   and hygienics (INEOS,   2022).  Until recently, INEOS has been   a   B2Bcompany but with more diversification especially in automotive and hygienics, the company also sells directly to consumers. After introducing INEOS Hygienics, the company confessed that it was the first time it was the first time in history to sell directly to public; the hygienics for example are sold to  supermarkets, through Amazon, shops, and pharmacies (INEOS, 2022).

INEOS has a good number of strategic partners from different fields that it has operations. These strategic partners are among others, Viridor that deals with plastic recycling and Saica Natur (INEOS, 2022). Other than partnerships, INEOS has acquisitions and mergers as well as business units i.e. INEOS Trading and Shipping, INEOS Group, INOVYN, INEOS Styrolution,   and Forties Pipeline System etc. With the range of consumer brands, INEOS acquires its materials from many suppliers and contractors. INEOS (2022) lists its suppliers/contractors as INEOS NV, INEOS Manufacturing NV, INEOS Feluy SPRL, INEOS Phenol Belgium NV, INEOS, and INEOS Technology Polyolefins.

2.3 Competitor Analysis

Through competitor analysis, a firm is able to gauge its performance as well as understanding its strengths and weaknesses, and where improvements are needed. Therefore, the Porter’s Five Forces and SWOT analysis are two tools that can be used in understanding a company’s position in terms of performance and the competitive market forces.

2.3.1 SWOT Analysis

According to Wit and Meyer (2010) SWOT analysis is a tool that helps an organization to assess its competitive position with an aim to develop appropriate strategy; this too assesses both internal and external factors and well as the current and future organization’s position.

INEOS SWOT Analysis

Strengths

• String financial   strength   with   61 billion   annual   revenues   (INEOS, 2022)
• Global brand   enhanced   through elite   sports   and   aggressive marketing
• Wide product range allowing large market share
• Advanced health,   safety,   and environmental   performance through SHE (INEOS, 2022)
• Advanced R&D allowing innovation

Weaknesses

• Management intricacy due to many consumer brands with many products involved
• Potential hazards from petrochemicals

Opportunities

• Wider market to expand specially for new product lines like INEOS Hygienics, Belstaff,   and   INEOS Grenadier
• Increasing dominance in emerging economies like India, China, and Indonesia

Threats

• INEOS is facing competition from other global brands like BP
• Increasing pressure on green or clean energy where organization are pushed for net-zero carbon
• Strict regulatory measures in some countries on petrochemical products limiting global expansion

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2.3.2 Porter’s five forces analysis

This is another tool that helps organizations to appraise competitive forces affecting the industry. The aim of this analysis is to determine industry’s attractiveness. Through Porter’s Five Forces analysis a firma is also able to have a better strategic planning that will allow it to become competitive in the industry.

INEOS Porter’s Five Forces Analysis

1. Threats of new entrants

INEOS has established concrete barriers through patenting and economies of scale. Bureaucratic government prerequisites and high capital requirements scare new entrants into the industry.

2. Bargaining power of suppliers

As aforementioned INEO has suppliers and contractors affiliated to it significantly reducing supplier power to its advantage

3. Bargaining power of buyers

There is a high bargaining power from buyers since majority of the products manufactured by INEOS can be found   elsewhere. This implies that consumers have the power to push prices down.

4. Threat of substitute products

There are many capable competitors like BP, De Nora, and Huntsman. Nearly every consumer brand under INEOS has strong rivals including fashion, automotive, and hygienics.

5. Competitive rivalry

INEOS does not enjoy much differentiated products and this means there is a relatively threat of substitution where customers can easily switch suppliers.

2.4 The Strategic Direction

2.4.1 INEOS competitive advantage

From the SWOT and Porters Five Forces analysis, it is evident that INEOS has some substantial benefits over its current and potential rivals. An organization’s competitive advantage is a set of competencies and resources that help in outperforming rivals as well as allowing the organization   to  elevate   its   performance   at   sustained   level   (Porter,  2008).  INEOS is already established global brand with vast experience. The organization has also accumulated unmatched resources and capabilities as compared to majority of its competitors; this is evident through the high performances where the company is able to amass 61 billion in annual revenues (INEOS, 2022).

Therefore, INEOS has been able to concretize its competitive advantage through financial resources, good reputation, physical resources, advanced technology use, and competent human resources. INEOS’s resources and capability might was evident at the height of COVID-19 in 2020 when it was able to build a new production line in 10 days in Newton Aycliffe and within such a   short the  company   was able  to  produce and   give freely  millions  of bottles  of  hand sanitizers on monthly basis before much later commercializing the product line (INEOS, 2022).Injecting such resources within a short time and for charitable project shows that INEOS has a solid completive advantage in terms of resources and capability.

2.4.2 Strategic direction design

Strategy is a fundamental factor that enables an organization to realize its goals, vision, and mission. According to Wit and Meyer (2010) strategy can be viewed as well-designed and well-combined structure aimed at helping firms become responsive to external challenges and assisting them to effectively dealing with increased competition. Strategy, therefore, is used as a direction   to   determine   the organization’s position vis-à-vis its environment;  such directions appear from external environment   pressure as the resources  available as well as needs and opportunities focusing on strategic fit achievement.

Recently, INEOS invested in state-of-the-art technology aimed at designing recyclable flexible packaging film so as to prevent a million tons of waste from getting to landfills on annual basis (INEOS, 2022). INEOS intends to achieve net-zero goals in 2045; this will be achieved through Grange mouth, a science-based commitment that entails changes in production processes, investing in reduction measure, and efficacy upgrade (INEOS, 2022).

INEOS (2022) under takes maintenance on FPS in order to match system reliability, availability, and efficacy with its customers’’ needs; it complies will all legislations in place,   meeting   expectations, meeting production quality, and to be considered the industry’s benchmark. This design direction will be realized through attaining over 99.3 percent availability, nil loss of hydrocarbon content, and utter compliance with system operating tenets (INEOS, 2022).

2.4.3 Expanding in non – traditional markets

Many companies have been going global for a number of reasons like lowering competition in the domestic or traditional markets, increasing global demand, fluctuations in local markets, spreading risks, increasing brand awareness, and increasing revenues etc. INEOS is   already   a   global   brand   and   it   offers   standardized   products   across   the   global   market. Implementing a global strategy effectively requires solid global presence, proper packaging, customer relationship, and social presence.

Through   elite   sports   like   F1,   cycling,   sailing,   football,   and   rugby   have   significantly helped INEOS solidify its global presence and force; INEOS is also present in social media since it has Facebook, Twitter, and YouTube links in its website (INEOS, 2022). According to Soofi and   Zhang   (2018),   the   industry-levels   elements   are  competitive   capabilities   like   advertising intensity, technological intensity, and sales force intensity while the country-level variables for consideration are cultural differences, market growth, and extent of risk aversion of acquiring company.

The organization,   like aforementioned, boasts in its   financial   strength, advanced technology, physical resources, and human resources that add to its competitive advantage and enabling factor to further expanding in the international arena. So far INEOS has 19 sites that span in 29 countries across the world (INEOS, 2022). This is evident that the organization has successfully   established   its   brand   in   the   global   space   and   further   geographic   expansion   is possible   courtesy   of   its   experience,   resources,   and   competency. From   the   SWOT   analysis, INEOS prides itself in a number of factors like commanding a large market share, strong brand image and reputation, wide range of product lines or consumer brands, the new businesses in fashion, automotive, and hygienics, and financial strength.

2.4.4 Direction design

There are a number of factors that are involved in the strategic direction design like excelling performance, good leadership, receptiveness to change, customer-focuses, team work, innovativeness, integrity, results driven, and open communication. Mission and vision of the organization are the central factors in the design. Therefore, INEOS strategic direction design should appear as indicated in Figure 1.

Figure 1: Showing strategic direction design for INEOS

3.0 CONCLUSION

The paper has extensively explored the environment and strategic direction from the lens of INEOS Company. INEOS is London-based MNC that has different consumer brands ranging from petrochemicals, hygienics, automotive, fashion, and elite sport. The paper has underscored the company’s mission that revolves around delivering value to stakeholders, vision that entails sustainability, and values underpinned by SHE (safety, health, and environment). The write-up has also delved into the company’s general environment by conducting PESTEL analysis, task environment, and competitor analysis through Porter’s Five Forces model and SWOT analysis.

INEOS has 194 sites spanning in 29 countries majority of   which are in Europe and North America and the others in parts of Asia. The company   has   selected   the   countries   that   are economically feasible in terms of political stability, trade relations, and favourable exchange rates. INEOS has been embracing CSR meaning it engages in practices that do not harm people and   the   environment.   INEOS   is   highly   innovative   and   through   technology   it   has   gained milestones in concretizing a competitive advantage in the industry. From the SWOT analysis, INEOS enjoys strength in string financial base, good reputation, innovation, global brand, and new product lines.

With majority of suppliers being affiliates, and enjoying economies of scales as well as having a wide product portfolio, the company does well as per Porter’s Five Forces analysis. However, there is threat from substitutes and the buyer power is considerably high considering that the customers can switch suppliers or drive prices down. There is also competitor rivalry considering that all the consumer brands or the specific products are manufactured by other firms either locally or internationally. The paper has also explored INEOS competitive advantage that is pegged on its extensive physical resources, strong financial resources, and competent human resources as well as technology and innovation. INEOS has a wide room for expansion in the international corridor.   The   weaknesses   however,   are   stern   chemical regulations in many countries, pressure on carbon footprint, competition, and complexity in management considering the wide range of consumer brands. The potential threats are new market entrants, and increasing inflation in many parts of the world.

3.1 Recommendation

Finally, the paper has discussed strategic goal direction and suggested one for INEOS as seen in Figure 1. Strategy is used as directions in determining the position of a firm in relation to its environment such direction appear from external forces acting on the firm. The elements of strategic direction design that have been used to develop INEOS’s hypothetical design are focus, candid communication, customer-focused, vision, mission, integrity, results-driven, teamwork, innovation, and receptive to change. The paper recommends that INEOS stands a better ground to expand globally with standardized products. This is possible because the MNC has also been successful in 29 countries; it has a strong brand image, good reputation, and enabling financial capacity among other resources.

Reference List

Bennett R. (2008). International Business (2nd edn), New Delhi, India, Pearson educationLtd. ISBN13 9788177589238

Campbell, D. and Craig, T. (2005). Organizations and the business environment. 2nd ed. ElsevierButterworth-Heinemann. Available at:https://www.ascdegreecollege.ac.in/wp-content/uploads/2020/12/Organisations-and-the-Business-Environment.pdf (Accessed: 11th August, 2022)

INEOS. (2022). About. INEOS Group.  Retrieved from https://www.ineos.com/ (Accessed: 9thAugust, 2022)

INEOS. (2022). COVID-19:   Hand   sanitizer.  INEOS   Group.  Retrieved from https://www.ineos.com/charities/health/ineos-hygienics/ (Accessed: 9th August, 2022)

Jeyarathmm, M. (2008) Strategic Management. Mumbai: Global Media. Chapter 1: The strategic management process, pp. 1-12, Chapter 2: Mission and vision, pp. 13-26. Available at: http://www.worldcat.org/oclc/946541340 (Accessed: 10th August, 2022)

Porter, M. E. (2008). The five competitive forces that shape strategy, Special Issue on HBS Centennial.  Harvard   Business   Review,  86 (1),   pp.   78-93.   Available at:https://edisciplinas.usp.br/pluginfile.php/5484780/mod_folder/content/0/Porter-HBR.pdf?forcedownload=1 (Accessed: 11th August, 2022)

Soofi, A. S. and Zhang, Y. (2018). Global mergers and acquisitions, Volume II: Combining companies   across   borders. 2nd ed. New York: Business Expert Press. Available at: https://ebin.pub/qdownload/global-mergers-and-acquisitions-volume-ii-combining-companies-across-borders-2ndnbsped-978-1947098725.html (Accessed:   11th   August,2022)

Wit, B. D., and Meyer, R. (2010). Strategy: process, content, context; an international perspective. Andover, Hampshire, Cengage Learning. Available at: https://www.worldcat.org/title/strategy-process-content-context-an-international-perspective/oclc/506250411 (Accessed: 10th August, 2022)