Optimizing Customer Demand: Strategies for Effective Demand Forecasting

Sinopec Company is a service-oriented organization that comprehends the core requirements of consumers and raises the switching cost for them. The company manages the threat of substitute products or services by establishing effective supply chains with multiple providers, designing products using diverse materials, and expanding dedicated providers whose business is based on the firm. Furthermore, Sinopec faces issues such as government forces, investment concerns, safety standards, and must maintain a high level of performance to attract investment. To resolve these issues, recommendations include maintaining strategic distance from ideal targets, engaging employees in planning, using look-ahead data for decision-making, and focusing on customer requirements and pricing. The company should also analyze the Porter Five Forces model and PESTLE analysis to evaluate the effects of external factors on its business environment.

RUNNING HEAD: Company analyzes of Sinopec
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Company analyzes of Sinopec

Company analyzes of Sinopec 2
Table of Contents
Introduction......................................................................................................................................3
PESTLE analysis.............................................................................................................................3
Political........................................................................................................................................3
Economic.....................................................................................................................................4
Social............................................................................................................................................4
Technological...............................................................................................................................4
Legal.............................................................................................................................................5
Environmental..............................................................................................................................5
Porter’s Five Forces model..............................................................................................................5
Rivalry among competitors..........................................................................................................5
New Entrants Threats...................................................................................................................6
Customer bargaining power.........................................................................................................6
Threat of substitutes products......................................................................................................6
Bargaining powers of suppliers....................................................................................................7
Issue Analysis..................................................................................................................................7
Managing government pressure...................................................................................................7
Attracting investment...................................................................................................................7
Improving safety principles.........................................................................................................8
Recommendations............................................................................................................................8
Maintaining a strategic distance from the ideal tempest:.............................................................8
The requirement to look ahead.....................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Company analyzes of Sinopec 3
Introduction
This report analyzes the business environment of Sinopec Company in China. The report
explains the several components in order to analyze external environment of Sinopec Company
which includes PESTLE analysis of Company, Porter's five Forces model examines of the
company's competitive environment. All these factors are examined in order to assess the
external environment of Company and show how company’s industry is affected by these forces.
Sinopec is a super-substantial oil and petrochemical enterprise group, built up by the state in July
1998 on the premise of remaking the previous China Petrochemical Corporation. The principal
operations of Sinopec Group incorporate modern speculation and venture administration, the
investigation, creation, storage and transportation, deal and comprehensive usage of oil and
flammable gas, the generation, deal, stockpiling and transportation of coal; oil refining. Sinopec
concentrated on mode turning and structure altering, quality change, quality progressing and
productivity increment and upgrading, actualized advancement driven improvement procedure
with great efforts and developed the change of specialized framework and system. In the present
time, Sinopec Group is the biggest oil and petrochemical products providers and the second big
oil and gas producer in China. In short words, Sinopec Group is the biggest oil refinery and the
second biggest chemical company in the world.
PESTLE analysis
According to Bandinelli & Gamberi (2011), a PESTLE analysis is a stage or framework which is
utilized by the advertisers to investigate a monitor the macro-environmental factors that affect an
organization. China is the main and quickly developing country which has a solid economy and
it has an expansive number of businesses in all fragments. It has shown a solid power which is
supporting its business over the world and its items are considered as the sensible items.
Political
According to Epstein & Buhovac (2014), China has a strong political system which can produce
its economy. Particular new approaches go in their congress and these formal and pleasant
measures help the economy to turn up clearly more grounded. It has the appropriate approach for
the money related expert their aggregate in different present day divisions and government is

Company analyzes of Sinopec 4
additionally concentrating on the movement of online business. The industrial segment has solid
and great political empower which can reinforce its economies and the favorable position and
just controls can keep it on the correct strategy for headway and accomplishment.
Economic
Since past five years, the economy of China got mind boggling change rate in GDP and China
can in like manner continue with its pace of its progress. It has a massive rate of extra
sponsorships, a broad number of skilled specialists and has the wide charge business which
contributes its flourishing (Gupta, 2013). The company arranged the "thirteenth Five-year Plan"
outline for legitimate works and "seventh Five-year Plan" law advancement wanting to move
lawful development. It actualized the door keeping instrument for lawful audit of significant
choice, source mediation and process interest of lawful work, to give lawful administration
support to corporate change and real activities.
Social
According to Ho (2014), the social factor of China is fundamental part as the demographic
consistently change. For example, population improvement age-allocation fluctuates and these
can change social cases and social esteems. Family size and social practices routinely impact
how choices are taken. Other social sections are purchaser lifestyles, preparing, religion, and
resettlement. Sinopec corporate culture comprises the spirit of strengthening the petrochemical
industry as well as such fine traditions as being hard-working, meticulous, honest, faithful and
committed.
Technological
There are couples of technical elements which are occupied with the headway of new items,
purchased of new systems, new era innovation and another strategy for circulation such as the
web and new procedure of working consisting broadcast communications. China has to see the
issues as it does not have a protected online installment strategy, so as the Chinese buyers
confront the considerable level of vulnerability and experience the long term introduction. It is
also determined that Chinese markets have low credit entrance in China which is for the most
part used over the world as the powerful and quick installment strategy (Inkpen & Moffett,
2011).

Company analyzes of Sinopec 5
Legal
China is working on the drafting of e-business legislation on different angles such as licensed
innovation rights assurance and duty. No regulations are shaped to help security, perceive the
computerized signatories (Srdjevic et al, 2012). Sinopec partners, including government,
representatives, customers, providers, and contractors, group and people in general, non-
legislative associations and significant establishments, and so forth. Their trust and support is the
ceaseless improvement, unfaltering development imperative condition.
Environmental
According to Mitchell et al. (2011), the environmental factors have the significant impacts as the
all overall public has the mindfulness about the earth security. The rising of different creative
updates in the business makes everything fundamental and snappy. Sinopec actively establish
mutual support, mutual benefit and friendly win-win cooperation relations, and promote to
realize economic growth, environmental protection and social progress of coordinated
development.
Porter’s Five Forces model
According to Taiwo (2010), Porter’s five forces model is an analysis tool that follows five
competitive forces which are used to determine the company's strength, weakness, and the
profitability level. The five forces which are to examine in Porter’s model are as follows:
Rivalry among competitors
The contention means to the competition for a market share of the overall industry between in an
industry. This force is a major element in determining how a competitive and profitable an
industry is. The rivalry in India among competitors is high and a strong threat to profitability.
The competitiveness of Sinopec Company and particularly in the upstream division of the
business is out and out genuine. Sinopec Company is China’s biggest producer and distributor of
refunded oil products and large petrochemical items. Company will genuinely execute
procedures of resource, market, integration and globally with more concentration on
advancement of science, innovation and administrative specialist as well as improve the workers
quality. Sinopec Company manages its business activities in a very competitive oil and
petrochemical industry. This competition dies take view on the whole long-term profitability of

Company analyzes of Sinopec 6
the company. Sinopec can handle the intense rivalry among the existing participants in the oil
and petrochemical industry by the following main components:
By establishing a sustainable differentiation
By establishing scale so that it can compete in a better manner
Cooperating with competitors in order to enhance the market share.
New Entrants Threats
According to Wheelen & Hunger (2011), new entrants in oil and gas industry come up with up
the innovation, new methods of doing the task and enforce the pressure on Sinopec company
through pricing strategy, decrease cost and offer new esteem propositions to the consumers.
Sinopec has to handle all these issues and establish effective barriers to protect its competitive
edge. Company can manage the new entrant threat by creating new items and service, by
establishing economies of scale so that company can reduce the fixed cost per unit, establishing
potential and spending money on research and development. New participants are less likely to
come in a dynamic business where the recognized players keep defining the principles
constantly.
Customer bargaining power
In today’s competitive environment, the bargaining power of buyers is an important factor which
influences every decision that the manufacturer make to enhance their customer base. The
bargaining power of purchasers can be accessed on the premise of various purchasers in the
business, accessibility of substitutes, aggressive value, purchaser's volume and reliance on
wholesalers (Wüstenhagen and Menichetti, 2012). The bargaining energy of buyers in oil and
gas industry is respectably negligible in view of the likelihood of the business. The smaller and
stronger base is of Sinopec Company the larger the bargaining power of buyer and expand their
capability in order to seek the increasing discounts and offers. Sinopec Company can manage the
bargaining power of buyers by establishing a large customer base and by quickly innovating new
item which help the business to reduce the defection of existing consumers of company to its
competitors.

Company analyzes of Sinopec 7
Threat of substitutes products
In Porter's model, substitute items refer to those items which have the ability to meet the
customer's demand effectively. The threat from substitutes force exists when demand for
products is affected by the change in the price of a substitute product. The threat of substitute
product or service is large of it provides a value proposition which is specifically different from
the present contributions of the industry. Sinopec Company is a service oriented rather than just
product oriented, comprehend the core requirements of the consumer and rising the switching
cost for the consumers. Thus, all these factors enables the industry to manage the threat of
substitute products or services (Yüksel, 2012).
Bargaining powers of suppliers
Bargaining power of providers means the capability of providers to expand the costs of input
such as crude material, work, segments and different supplies or to build the cost of the business.
In other words, this power measures how effortlessly providers can expand the costs of industry
and enterprises. Providers in superiority position can reduce the margins Sinopec Company can
receive in the market. The strong providers in basic material segment use their bargaining power
to remove higher prices from the firms in the oil and gas industry. Sinopec Company can handle
bargaining powers of suppliers by establishing effective supply chain with numerous providers,
by creating with items design using diverse materials and expanding dedicated providers whose
business is based on the firm (Aliyeva, 2012).
Issue Analysis
While competing with globally big companies and preventing one international contract after
another, Sinopec has survived with many challenges by analyzing the porter’s model are
explained as follows:
Difficult to handle government force: Government all over the world are initiating
ambitious carbon reduction objective and this is placing business under increasing pressure to
reduce their discharges. Sinopec organization is being investigated closely and company is relied
upon to devise better approaches to remove natural resources while limiting pollution.
Engage investment: Productivity drooped in 2011 and presently it cannot seem to
completely recover, which will definitely cause speculators to have apprehensions about pouring

Company analyzes of Sinopec 8
money in oil undertakings, particularly when oil prices are fluctuating. This issue is certainly
restrictive in China, as speculators all over the world are commonly more mindful since the
financial downturn in 2008-2009. The other main biggest issue for Sinopec is to maintaining a
high level of performance in order to attract investment.
Safety standards: Oil rigs are dangerous work environment and organizations have
dependably fought an upward battle to offer the greater protection to their workers. There should
be establishment of some regulatory frameworks which prevent the safety standards of workers.
Recommendations
In my opinion, main recommendations for the Sinopec Company in resolving the above issues
that could be enacted by organizations in order to be successful in the future are:
Maintaining a strategic distance from the ideal tempest: There are ways which
assess the progress regarding an objective in which management has no scope of knowing
whether the essential actions are correct or not as being adopted to achieve it (Hokroh, 2014). In
my opinion, management can set an intermediate objective each day and a target distance to
cover. The management produces additional inputs and helps to establish their commitments to
the end plan. It is essential to engage employees in the planning of strategy and guidance for the
Sinopec Company.
The requirement to look ahead: It is required that the sharp leadership teams use look
ahead data to direct their enterprises. According to Shuen et al. (2014), the management of
Sinopec Company has to identify the goal was achieved or not. The management can use the
various tools such as balanced scorecard, future indicators which can tell where the company to
be in next one to four quarters with respect to its objectives. The company can ensure the
challenges that company may face in future may be prevented by the proper planning and
management and company should focus on the customer requirements and the pricing of the
product.

Company analyzes of Sinopec 9
Conclusion
From this report, it has been concluded that there many factors which affect the business
environment in several ways. This report explains the PESTLE analysis, Porter Five forces
model of the company to evaluate the effects of these techniques on the company environment
and explains the reason for affecting the business activities by these factors. The report also
analyze the various issues which are faced by company and provide some strategic
recommendation that could be enacted by organizations in order to be successful in the future On
the other side, the report also suggests some recommendation for a company that could be
adopted to be successful in the future.

Company analyzes of Sinopec 10
References
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https://www.intelligenthq.com/latest-news/top-10-challenges-in-oil-and-gas-industry-in-
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Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in
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Gupta, A. (2013). Environmental and pest analysis: An approach to the external business
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Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European
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Inkpen, A. C., & Moffett, M. H. (2011). The global oil & gas industry: management, strategy &
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Company analyzes of Sinopec 11
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