The SWOT Analysis of Formosa Plastics Group

Topics: Cost, Costs, Ethylene Pages: 2 (289 words) Published: February 4, 2014
1. FPG is the largest private company in Taiwan, and it is a top petrochemical multinational company in the world (Brand, reputation, customer basis). It has been profitable for 30 years. 2. Economies of scale:

1) A diversified company with extensive business divisions Lower costs; 2) Is able to make sizable investment in improvement (R&D, management), which contributes to more attractive products and lower costs 3. Internal management

1) Has a detailed cost accounting and reporting system better cost control 2) Effective performance measurement:
Monthly performance reports attack problem quickly
President closely monitors performance in every month (meet senior managers for performance review) Weakness
1. Subjective performance measurement:
a. Likely to be biased (personal relation)
b. often provide inadequate or no feedback about how evaluated c. even though evaluation was fair, employees do not trust (unclear weightings) d. it can create an excuse culture
e. expensive in management time
2. The bonus plan is less incentive (too steady; too long time to reduce rewards) 3. Internal tension between division managers and corporate managers on target planning (too conservative? Too high? discourage); between central staff/division 4. Sizable investment on development of high value-added products, but a very small proportion of total sales

1. Promote high value-added products (excellent R&D)
2. Seek for new sources of raw material (ethylene) (other countries or Taiwan) 3. The rapid development of emerging economies in Asia
4. Be more diversified ( the petrochemical industry)

1. One supplier: CPC (government company) leads to fluctuate or increasing price of materials; 2. The material price does not have positive correlation with the market price of products 3. The labor price in Taiwan increases

4. The import duties in low in Taiwan, which leads to fierce competition on...
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