Saudi Basic Industries Corporation Innovation Performance

Subject: Company Analysis
Pages: 2
Words: 621
Reading time:
3 min
Study level: Bachelor

Saudi Basic Industries Corporation (SABIC) is a groundbreaking company that considers innovation through the lens of sustainability. The firm has a formal innovation strategy, which is included in its 2025 business strategy (SABIC, 2019). According to SABIC (2019), the corporation aims to promote both product and process sustainability and develop advocacy and advancing partnerships with multiple organizations and institutions to achieve the set goals and objectives. The business’s annual report for the 2019 financial year (SABIC, 2020) states that the company focuses primarily on developing new, lighter, and stronger materials for vehicle manufacture. SABIC also works on engineering new batteries for electric vehicles, new resins, and the implementation of new polycarbonate into the existing market (SABIC, 2020). In addition, advances in production technologies are encouraged, with the development of global cracker and oleochemicals methods (SABIC, 2020). Overall, it can be argued that SABIC applies incremental innovation as it transforms and improves existing products and technologies to make them more valuable to the customer.

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Although the company’s innovation strategy is clearly defined, several drives and obstacles can be identified. Such internal factors as the size and quality of human resources can be defined as clear improvement drivers. Currently, SABIC has over twenty research centers with more than 1500 employees working on various projects in order to deliver more sustainable products and production technologies (SABIC, 2020). Moreover, the personnel working in those facilities are required to have a master’s degree in their respective fields, with most of the employees possessing PhDs (SABIC, 2020). Thus, the company has formidable internal drivers of innovation at its disposal.

However, there are also certain obstacles to the corporation’s strategy. SABIC is “exposed to risks associated with the use of intellectual property and technology licenses” (SABIC, 2020, p. 68). Suspension of individual licenses can lead to the firm being unable to use its technologies and potentially losing profit. The primary external obstacles are the government regulations of several countries, including the United States, China, Saudi Arabia, and the EU, and international trade controls (SABIC, 2020). SABIC has numerous partnerships with many international companies, and any changes in trade controls can adversely impact the company’s operations, financial condition, and innovation. Similarly, SABIC needs to receive regular approval from the government and local authorities in several countries to continue its operation. Failure to comply with local laws can lead to a financial and material impact on the business. Overall, although SABIC has strong internal drivers of modernization and advancement, many external obstacles can hinder the innovative process.

SABIC is connected with multiple innovation stakeholders in its ecosystem, including universities, government agencies, and other businesses. The company has a long-standing relationship with BMW, ExxonMobil, and Land Rover (SABIC, 2020). SABIC also collaborates with several Saudi universities and has initiated the NUSANED program that allows the corporation to cooperate with Saudi Ministries of Labor, Industry and Mineral Resources (SABIC, 2020). Moreover, NUSANED connects SABIC with Small and Medium Enterprises General Authority, Local Content and Government Procurement Authority, and General Investment Authority (SABIC, 2020). These connections can be described as effective as the company’s collaboration with BMW and Land Rover resulted in the manufacturing of new products. Similarly, NUSANED allows it to create new partnerships and search for new investment opportunities. Thus, the firm has many connections with innovation stakeholders around the world.

In summary, the company’s performance is remarkable, with the strategy being clearly defined and new marketable products and production technologies. In addition, the SABIC is well connected with both international and domestic innovation stakeholders, including government agencies, universities, and other businesses. However, the firm could improve its innovation performance by extending its business model and applying its products and production technologies in other industries, for instance, IT and computer engineering.

Reference List

SABIC (2019) SABIC launches sustainable development goals roadmap underlining global priorities, Sabic.com. Web.

SABIC (2020) Toward a vibrant future: Annual report 2019. Riyadh: SABIC. Web.

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