Journal of Personnel Psychology

Running head: SABIC- ACCOUNTING AND FINANCIAL REPORTING
SABIC- Accounting and Financial Reporting
Name of the Student
Name of the University
Author Note

SABIC- ACCOUNTING AND FINANCIAL REPORTING1
Table of Contents
Answer to Question 1.................................................................................................................2
Company’s Overview.............................................................................................................2
Answer to Question 2.................................................................................................................2
Porter’s Five Forces Model....................................................................................................4
VRIO Analysis.......................................................................................................................7
Environmental, Social and Governance.................................................................................8
Answer to Question 3.................................................................................................................9
SABIC’s Financial Performance............................................................................................9
Answer to Question 4...............................................................................................................14
Sustainable Competitive Advantage....................................................................................14
Answer to Question 5...............................................................................................................14
Saudi ARAMCO-SABIC acquisition..................................................................................14
Appendix..................................................................................................................................17
References................................................................................................................................20

SABIC- ACCOUNTING AND FINANCIAL REPORTING2
Answer to Question 1
Company’s Overview
Saudi Arabian Basic Industries Company (SABIC) is a public company situated in
Riyadh, Saudi Arabia. It is amongst the world's largest petrochemicals manufacturers. The
company has begun in the year 1976 (Sabic.com 2019). Currently, its operation is in more
than 50 countries with above 35,000 employees working within this company. The
company's 70% shares are with the government of Saudi Arabia, and the rest 30% is being
publicly traded on the Saudi stock exchange (Gashgari 2017). SABIC is a diversified
manufacturing company that is composed of four different strategic business units that are
Agri-Nutrients, Specialties, Metals and Petrochemicals. They support the customers through
packaging, construction, agri-nutrients, medical devices, transportation, electronics and clean
energy. SABIC used to develop a deep understanding of the customer's requirement and
engineer products at the right time. The SABIC, with their expertise, adapts the business
needs of the customers that allow them to prepare a product solution. This strategy helps
them to maximize the customer's advantage over the long-term (Alotaibi 2015). The products
and services of the company are extensive. SABIC's product portfolio involved within the
five primary industries that is Polymers, Agri-Nutrients, Chemicals, Specialists and Metals.
SABIC keep a good knowledge about such sectors in which the customers compete. This
allows them to find a way to increase the customer's market success.
Answer to Question 2
SABIC’s Business Model
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
The government
of Saudi Arabia
Petrochemicals, Provide quality
products and
Create and Industries
different

SABIC- ACCOUNTING AND FINANCIAL REPORTING3
has owned 70%
shares,
Remaining 30%
shares is
publicly traded
on the Saudi
stock exchange,
Agriculture
industry,
Petrochemicals,
Affiliates and
Subsidiaries,
Oil,
Joint Ventures.
Metals,
Agri-nutrients,
Specialists,
Technology
acquired by
joint ventures,
Manufacturing,
Quality control,
Engineering
plastics and its
compounding,
Oil extraction,
Supply chain
management,
Research and
development,
services with
their continuous
innovation,
Sustain
maximum value
to their
shareholders,
Value-added
commodities,
Introduce more
than 150 new
products every
year.
Deliver,
Long-term
contacts,
Patent-attached
agreements,
Inspiring and
engaging,
Leadership,
Government-
backed
agreements.
vertical
markets:
Construction
Healthcare,
Agriculture,
Automotive.
Key Resources Channels
Highly qualified staff,
Manufactures on a global scale,
Support from the Saudi government,
Intellectual property, Natural resources,
21 technology and innovation centres, 12191
global patents. Hundreds of dedicated scientists
News and media,
Global website,
Reports, Videos,
Social Networks,
The dedicated team of Sales,
Account management

SABIC- ACCOUNTING AND FINANCIAL REPORTING4
Cost Structure Revenue Streams
Manufacturing facilities,
Raw material,
Factories,
Research and Development,
Technology and innovation centres,
Distribution,
Economies of scale,
Legal,
Royalties,
Staff compensation.
Agri-nutrients and metals,
Chemicals,
Licensing in technology,
Service fees,
Commodity and high-performance plastics,
Sale of several products.
Porter’s Five Forces Model
Threat of New
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substiututes
Industry
Rivalry

SABIC- ACCOUNTING AND FINANCIAL REPORTING5
(Source: Author)
Threat of New Entrants (Petrochemicals- Low and Polymers- Moderate to Low)
The threat of the new entrants for the petrochemicals industry is low. The company’s
initial capital, expenditure, its patented technology, economies of scale to sell their products
at a reasonable price, complex supply chain, favourable support of the environmental and
government regulations are highly managed. To enter the segment of such an industry, a
company will need to make a high investment (Leker and Bauer 2017). Therefore, the new
entrants find it not easy to enter the market.
Further, the government of Saudi also discourages the new entrants by regulating the oil
supply. The Polymers industry is having moderate to the low threat of new entrants, as the
company is still evolving. It requires a considerable capital investment, and the major
limitation is exposure to technology.
Threat of Substitute Products (Petrochemicals- Low and Polymers- Moderate to Low)
SABIC’s petrochemical companies used the produces materials into several sectors
such as food or beverages, construction, electrical, industrial and agricultural sectors. The
industries used to make indispensable products every day that required by people too
frequently in their life. Polythene is famous in its production because of low-cost
manufacturing and its use. Farmers mostly prefer the artificial fertilizers to manure due to its
reliability and readily availability. SABIC is a significant player in analyzing the trend and
positioned to cater at a speed that is not possible by other industry to meet such strategy soon.
Accordingly, the threat of its substitutes is too low.
Bargaining Power of Customers (Petrochemicals- Moderate to High and Polymers-
Moderate)