SWOT Analysis of BASF: Global Chemical Manufacturing Leader

Quick Stats on BASF

Founder	Friedrich Engelhorn
Year Founded	1865
Origin	Germany
No. of Employees	117,000+
Company Type	Public
Market Cap	$71.91 Billion (2022)
Annual Revenue	€59.316 Billion (2019)
Net Income/ Profit	€8.421 Billion (2019)

 

Products of BASF

Basf has been in the Chemical industry for more than a century and deals in:

• Chemicals
• Plastics
• Performance chemicals
• Catalysts
• Coatings
• Crop technology
• Crude oil and natural gas exploration and production

Competitors of BASF

BASF’s top five major competitors are:

• AkzoNobel
• Clariant
• Covestro
• DSM
• Dowdu Point

Now that we have understood the company’s core products and services, let’s dive deep into the SWOT analysis of BASF.

SWOT Analysis of BASF

SWOT analysis is a study which is undertaken by the majority of companies to determine their core strengths, weaknesses, opportunities and threats. It is a framework that is used to evaluate a company’s competitive position which later helps in strategic planning. SWOT analysis can be conducted by any popular brand or any brand which is still new in the market can make use of this template to evaluate internal and external variables that might influence the brand authority and market development.

Below is a step-by-step detailed guide to help you with the SWOT analysis of BASF.

Strengths of BASF

The strengths are basically what makes the brand different from the other competitors and what the organisation excels at. Following are the strengths:

• Reach and Distribution: BASF has customers in over 190 countries and supplies products to a wide variety of industries. This makes sure that the products are made easily available to their customers at the right time.
• Cost Structure: As we read earlier, the main motive is to make the products available at a low rate so that they can be more affordable. BASF’s low-cost structure helps them supply products that are low cost but with superior quality.
• Brand Reputation: BASF has been in the business of producing chemicals for a large number of years. Also, with the variety of products and services it provides, it is established as a leader in the industry. This helps the corporation to gain a reputation and get recognized easily.

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• Dealer Community: BASF has built a very strong relationship with its dealers that not only help in supplying the products but also promote the company’s core products and training.
• Financial Position: BASF has a very strong financial position in the market with consecutive profits over the years along with accumulated profit reserves which can be utilised for future expenditures or marketing activities.
• Skilled Labour Force: BASF has invested heavily in the employees that have made them not only skilled but are also highly motivated.

Weaknesses of BASF

The weaknesses are a major drawback that stops the organisation from performing at its optimum level. They are the areas in which businesses can make improvements. The major drawbacks are as follows:

• Research and Development: BASF has a good share of expenditure on the research and development department but it is spending way less than a few of the players within the industry which have benefitted as a result of their innovative products.
• Diversity in the Workforce: The local workers contribute to the majority of the workforce at BASF making it difficult for outsiders to adjust and hence resulting in the loss of talent.
• High Employee Turnover Rates: BASF has a very high employee turnover rate as compared to its competitors which means it spends a lot on training activities as employees keep leaving and joining.
• Need to Invest More in New Technologies: According to the country’s scale of expansion and the geographical areas BASF needs to invest more money in technology to integrate the processes across the board. Currently, the investment in technology is not on par as per the vision of the company.
• Limited Success Across the Core Business: Although BASF is one of the leading organizations in its industry it faces challenges in moving to other product segments with its present culture.
• Abandoned Manufacturing: Despite its size and global presence, BASF has received relatively little public attention since it abandoned manufacturing and selling BASF-branded consumer electronics products in the 1990s.

Opportunities for BASF

Opportunities are the favourable external factors that may give the organization a competitive advantage over others. The opportunities of BASF are as follows:

• Social Media: Over the years the number of active users on social media channels has increased and with this BASF can make use of its social media handles to promote its products, interact with customers and even provide after-sale services.

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• Transport Industry: The transport industry has been booming and is expected to boom in the next few years as well which has resulted in more demand for BASF products which is helpful for BASF to scale its business.
• Globalisation: Increased globalisation doesn’t restrict BASF anymore to conducting activities in its own country which can act as an opportunity to extend operation in other countries and thus enter new markets and unleash potentials of other new markets.
• Population: The population has been growing and is expected to grow at a positive rate for the upcoming years. This is beneficial for Nordea as there will be an increase in the number of potential customers that it can target.
• Expansion to Other Global Markets: The company is planning to expand its international activities with a particular focus on Asia. This serves them as an opportunity to acquire a new customer base.

Threats to BASF

Threats are those factors that have the potential to provide harm to the organisation in any form. The threats of BASF are as follows:

• Technological Advancements: The technological advancements by a few competitors can pose a threat to BASF as today’s customers are more attracted towards new technological advancements and may be lost to competitors’ offerings thus reducing the market share of BASF.
• Competition: There is always an ongoing competition that puts downward pressure on the prices. This could lead to lower profits if it makes changes in the price or may also result in lower market share if it doesn’t make price changes.
• Environmental Record: BASF has been criticized for being the top polluter of water and air in 2018 and still it is. Because of its chemical composition and vast activities, there is a huge climate change and greenhouse gas emissions.
• Exchange Rate: The exchange rate also keeps fluctuating and makes it difficult for a company like BASF because it extends service internationally while its suppliers are local.

This ends our complete SWOT analysis of BASF. Let us conclude our learning below.