Case Study Of The Low Cost Strategy Implementation In SPC

SINOPEC Shanghai Petrochemical Co., Ltd.(SPC) is a SINOPEC Corp. controlled company, one of the earliest established and largest petrochemical companies in China, integrating refining and chemicals. In2004, it was listed by the U.S. magazine Chemical Week among the top100chemical companies in the world. The company processes12million tons of crude oil per year with0.845million tons of ethylene capacity. In2011, it processed10million tons of crude oil with sales revenue of95.5billion RMB and taxes of9.675billion, ranking the5th in Shanghai. Against the weak global economic background since2008featured by the fluctuating crude oil price, China’s slowing-down economic growth, low chemical market demand, and policy mandated price of oil products, SPC has been undergoing great pressure on production and operation. In this situation, SPC, learning from the positive experience of large chemical companies both in China and overseas, comprehensively put forward low cost strategy in2009based on its actual environment, and endeavored to control and bring down the operation cost by making use of the potentials in eight aspects in order to achieve the economy of scale for its products and comprehensive utilization for oil resources. It also optimized product portfolio, business process and technological innovation, thus providing the products with same quality but lower cost to end users compared with its competitors, gaining and keeping its competitiveness in the development.SPC adopted the low cost strategy based on its mission, vision, and objective. Through practice, stable relations and rules have been acknowledged, thus serving as a reference for other petrochemical enterprises. The case study here demonstrates that the strategy implementation means the transformation of strategy into the guideline of the daily activities of all employees, the reflection in the enterprise activities and its value, belief, and atmosphere. The implementation needs the participation of all business sectors and employees, and it runs through all operation segments and positions. On condition that every single employee truly realizes the importance of bringing down the cost, makes every triviality count while with a general guideline in mind based on work characteristics, the company would possibly gain the cost reduction to the maximum degree and thus the competitiveness.