Multinational Firm Report- BASF

When researching multinational organizations involved in chemical production, one giant stands out among them, and that organization is BASF SE (BASF). Founded in 1865 and based out of Ludwigshafen, Germany, BASF SE has grown into one the world’s premier producers of chemicals and plastics. BASF SE is involved in the production of numerous chemical compounds, as well as providing chemical components to other industries that have a need for these unique chemicals in their products. Additionally, BASF SE has operations involving agricultural, and most recently they have begun to explore for and produce oil and gas through subsidiary companies. Operating on an international level that encompasses four regions of the globe, BASF SE truly has a presence throughout the world and greatly influences the global economy. Even though BASF SE was founded in and still currently operates out of Germany, the company has expanded their operations throughout the globe in an attempt to grow and expand their business capacity. The company classifies their operations into four different business units: Europe, North America, Asia Pacific, and South America/Africa/Middle East. Each one of these units is operated on their own, yet they all report back to corporate headquarters in Germany. It always the company to run more efficiently and determine what products and services are needed in each specific region. Since BASF SE is based out of Germany, it stands to reason that the sales and revenue of the North American sector of the business would be significantly smaller then the sales and revenue that the company produces overseas. The financial data provided by the company in their 2007 annual report supports that assumption, as a majority of the income that the company earned in the 2007 fiscal year did indeed come from BASF’s European operations. Total sales by the company totaled €57.921 billion in 2007, up 10 percent from the totals accumulated in the 2006 operation year. The European region of BASF earned roughly €34 billion, €24 billion of which came from BASF’s home country of Germany. This means that the domestic sales of the company account for nearly half of their sales in 2007, demonstrating a strong customer relationship in their own backyard. Compare this to the North American numbers, sales totally €12 billion, and it is easy to see that BASF conducts a majority of their business in Europe. Asia Pacific and the South America/Africa/Middle East regions total less than €12 billion combined, highlighting an area that BASF can focus on in the future. Between the fiscal years of 2006 and 2007, BASF experienced growth throughout the entire organization. On a whole, the company experienced a 10.2 percent increase in sales, growing from €52.610 billion in 2006 to €57.951 in 2007. In Europe the company increased their already substantial earnings by 9.1 percent, which included a 5.9 percent increase in Germany. The North American sector of the business experienced the smallest amount of growth, with an increase from 2006 to 2007 of only 5.4 percent. The most surprising issue with regard to the growth of sales by BASF in 2007 was the growth that the company experienced in Asia Pacific and South America/Africa/Middle East. BASF experienced growth of 17.9 percent and 23.6 percent respectively in these two areas, a large jump from the typical growth that the company experienced in their traditional operating areas. This growth shows that BASF is expanding their base of operations and examining new markets that are suitable for increasing the sales and revenue potential of the organization. Operating out four global regions, and doing worldwide sales of nearly €58 billion, means that BASF has the need of an expansive employee base to properly do business. The entire BASF Company has 95,175 employees, spread across all four operating regions. Europe accounts for the largest number of BASF employees, with the total number being 61,020. Of the 61,020 employees that are located in Europe, 46,890 of these individuals work for the company within Germany. North America has a substantial amount of employees, 15,191 during the 2007 business campaign, yet they still significantly trail the European region for total number of employees. Less than 19,000 of the nearly 96,000 people employed by BASF work outside those two regions, furthermore demonstrating that the significant operational bases for the company are located in Europe and North America. When examining the domestic and international operations that BASF is involved in, it becomes apparent that while there are some changes made from region to region, most products are available throughout the world. The region in which BASF offers the most items is the European region, which makes sense as the majority of the operational aspects of the business are located there. What makes the company special, though, is that its products can be shipped throughout the worldwide. They have operating bases set up in every major market, so when a company needs a product that may not be common in that area it becomes easier to get a shipment schedule set-up. The total product offering of BASF increased between 2006 and 2007 as the company continued to expand and grow, specifically in oil and gas.
The largest problem that the company has with its product offering is the economic state of the country and the restrictions placed on chemicals entering a government regulated market. If a government agency refuses to let certain chemicals enter their country, there is little that BASF can do to work around this. Environmental concerns and health issues are always a passionate subject, and BASF has to deal with the reality of the issues daily. The current economic situation always influences the way the company can operate, as demand for some of their products has fallen in what had previously been some of their stronger markets. This drop in the demand has forced prices to slightly fluctuate depending on the market, as the company is unaware about how stable large investments in their products may be. Much of the chemical products purchased from BASF are purchased in bulk and with credit, meaning that sometimes prices may be increased or cash transactions requested in areas where credit is not strong. The price of BASF products are fairly uniform international, although the current situation facing all economies has changed that slightly.
BASF has a unique approach to marketing their product lines since the typical product that BASF is involved with is not produced by the company. For the most part, BASF provides the chemical compounds or ingredients that compose the products individuals use daily. Therefore, BASF has undertaken the task of brand awareness by demonstrating that, “We don’t make the products you buy. We make the products you buy better!” They promote the chemicals and plastics produced by the company as superior to the competition, and to buy a product that is not made with BASF material is to purchase an inadequate good. Most of this advertising is done through television and print ads throughout the world, and typically includes a specific product that BASF material helps to manufacture. It is a creative way to promote a commodity that is not the final, assembled product, and promote the brand without using the scientific terms that would confuse consumers. This strategy makes people want to have BASF products in their merchandise, even if they do not know exactly why they have this need.
On the international level, BASF SE conducts an expansive and challenging hiring process to find the most qualified individuals and bring them into the organization. With the industry that the company specializes in, chemical production and research development, there is a need within the organization for individuals who have earned a PhD or masters degree in their field of study. Additionally, even when hiring for positions do that no require employee to be a doctor or specialist, BASF typically requires years of experience within the field and an advanced degree for an individual to even be considered for employment. BASF is a massive company, conducting business throughout the world and totally nearly 100,000 employees, yet it will hire only the most qualified and educated people that are available. This is the reason that BASF has become a worldwide leader in chemical and plastic design and production.
To combat the stringent hiring requirements of the company, BASF is very proactive in searching for new employees and finding the right people for the job. The company is able to get their name out there and allow for individuals looking for employment opportunities to find what BASF has to offer. On the corporate website, BASF has an expansive job search feature, which lets a person search the entire organization for the job that fits them. Also, BASF conducts research on the finest chemical and plastic people coming out of school, trying to obtain talent early. Finally, BASF even puts their open positions of sites such as Monster.com, trying to make sure that regardless of the circumstances a person who is qualified find the company and see what employment opportunities are there.
When conducting business throughout the world, it would seem reasonable that an individual seeking employment would have to travel. Much of the business the company does is on an international level, so even though the company has a specific international program many of the employees at one point will have to travel. The doctors and specialists are at times required to travel around the Europe, especially the company’s home country of Germany, to attend lectures and give details of recent developments and research. Sales and marketing must always find themselves ready to enter new markets and seek fresh opportunities for the company. Typically the low level manufacturers and production assistants are the only ones that may not have to travel at some point, as the work they are faced with is rather stationary and does not need to move offsite.
The products that are offered by BASF do not change too much as they move throughout the world. The company deals in plastics and chemicals, so there is little room to alter the product offering. If a company seeks a certain type of chemical to product the merchandise they specialize in, then BASF cannot alter that chemical in any way. Where changes do occur is in the demand for products and what different regions of the world have a need for. What can be looked at as a typical chemical compound in the US market may never be used in Asia Pacific. BASF does a sound job of identifying where their products are in high demand, and manufacturing these products as close to the area of need as the company is capable of.
To handle all the different regions of international market that have a need of BASF products, the company has a website that can be viewed in two different languages and focused on numerous regions. You can view the website in English or German, the languages that compromise the majority of the customer base that BASF currently does business with. This allows for the largest number of employees and customers, located in Germany, to be able to read the website in their native language, while the rest of the world can use the English version to comprehend the website and its information. It is a way to satisfy the needs of their global customer but allows BASF to stay true to their country of origin, and the people that have grown the company into what it is today.