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Reason behind company success

Operational Eco Efficiency Program

In 2013, AkzoNobel focused on in reducing the variable cost through smart ideas and
saves up to 3.8 million and reduce emission of 11,650 ton of CO2. As the traditional focus
of the organizations is to maximize production volume and availability of the plant , now a
major shift has taken place and now the companies are focusing on efficiency and providing
superior quality products to the customer. In 2013 key milestones were achieved in eco
efficiency improvements, through continuous improvement in the operations with the help
involvement of all the employees. Operational eco efficiency were based on two important
variable cost drivers; Primary Steam consumption reduction and increased the efficiency of
raw material. In comparison with 2011-2012 Primary steam savings were 30-40% were
achieved as part of this process. Different steps to get better the yield of ethylene also
results in major savings. The key part of the success is the know-how of the process and
participation of the process engineers and process operators. Now AkzoNobel is embedded
in the organizations which are focused and have complete control on energy savings.

AzkoNobel with the help of 64,600 employees divides its company operations into
three different divisions.

Pharmaceuticals

Coatings

Chemicals

The coating division of AzkoNobel utilizes 30,000 employees in more than 60


countries. In 2003 the company sales was 5.2 billion Euros. The division of coating is the
world largest leading manufacturer of coating for boats, cars a, wood and metal.

The main reason behind the company success is their strategic planning which they
adopt in different countries. To reduce the solid waste of AkzoNobel installed a treatment
plant in Barcelona and to re-use the white wash water it again in the operations, this results
in overall annual saving of 80,000.

AkzoNobel believes in continuous improvement , for this the company installed a


aeration system in the plant of water waste plus the installation of frequency control in water
cooling pumps. The key role of aerations system is to control the quantity of oxygen in the
water and reduce the energy usage of the water plant. Through this process AkzoNobel
reduces 40% of the energy usage in 2012. On the other hand the frequency control system
ensures energy saving of 8% and reduces the amount of fresh water required in the
operations.

In Indonesia, AkzoNobel installed decanter centrifuge which was a part of waste


water treatment plant unit that splits water from solids . The installation of decanter
centrifuge plays a vital role in reduction of the waste from the site. Sites have gained many
of the green benefits such as reduction of total waste 9% in 2012, chemical costs are
reduced by 41%, and operation costs are reduced by 43% and reduction of mud storage at
the site place.

The clients of AkzoNobel are demanding greener products, and the company is
actively involving in providing products according to the requirement of the customer. The
company is taking keen interest in providng safer, environmental friendly paint and
chemicals just like its brand Dulux. The brand produced award winning line of green paints.

As the largest suppliers of the coatings for the beers and beverage cans. AkzoNobel
is permanently looking for providing better product offerings. The Coating and Varnishing
material of the AkzoNobel is so good in quality that it protects the cane from shipping
damages. The company is working so closely with the suppliers and to classify type of
waxes which enables the company to manufacture varnishes that are crystal clear and
scratch resistance. With the help of supplier and vendors the company successfully reducing
the environment footprints.

Value Chain and VRIN.

Valuable.

AzkaNobel through its operational efficiencies has been able to implements a plan
that makes value chain by having a competitive edge over their competitors and overcoming
their weaknesses. The company is providing quality services and maintaining excellent
operational processes which cannot be easily competed by their competitors. The company
creates its reputation by providing quality products by optimizing their processes. The
company is investing in the infrastructure to reduce their operational cost and maximizing
their output. The company is investing in the infrastructure to reduce the future costs of
operations and processes. The company does outsourcing to meet the need of the customer
requirements which creates value ot only for the customer but also for the organization.

Rare

Research and development leads the business towards innovation within the
products (Kinkell, 2005). AzkoNobel provides a wide range of products from paints to
industrial chemical which is a scope of diversification for the company. With the support of
Research and Development, AzkoNobel is able to Innovate their process intensification.
Research and Development with international facilities makes it possible for the AzkoNobel
to stay ahead from their competitors. Although Research and Development is expensive but
AzkoNobel is investing in research and development to found methods to reduce down cost
of their products.

Imitability.

A resource that is valuable and is just controlled by a single firm has a very great
competitive advantage for any organization. AzkoNobel operations are utilized and optimized
its processes in a way which cannot be controlled imitated by any other organization.
Through this the organization has been able to have a competitive advantage over its
competitors (Powell,1995) .

Accoridng to Barney competititve advantage as the resources that includes a high


range of social , organizational and individual experience inside the firm which are subjected
to great deal of research and organizational behavior. The organization has provided no
opportunity for ambiguity in its efficient operations and processes or any other way to
imitated it. The organization have also owns the copyright of the formulation used for the
manufacturing of the chemicals. AzkoNobel research and development is one of the major
key behind the success of their optimized and efficient processes. Non-Transferable and
inimitable resources make it sure that the company creates a sources of different costs
which the competitors find difficult to imitate (Barney ,1990)

Non-substitutability.

No matter the fact that a resource is rare creates value and imitable imperfectly, there
is a very important aspect of it not being able to be substituted. AkzoNoble make their
processes so efficient that no other organization can compete with them in terms of energy
usage, waste material usage and re-use of the products. They are operating in different
organizations of the world and providing excellent quality to their customers and it is very
difficult for the customer to find any substitute which replaces AkzoNoble.

Investing in different exchange relationships should be the priority of a organization.


The cost incurred on investing in suppliers and non-substitutability is costly because there is
no immediate profit, but the profit is in term of business performance and with customer
expenses on non substitutability have a positive impact on profitability. AkzoNoble has over
time ensured that the competitors stand no chance to counter the strategies. The way that
they offer goods and services is almost impossible to counter and copy, making it stays a
leading force in the market where it operates (Chen, 2009).

Leadership.

Through the leadership of the board of the organization, the CEOe group, Ton
Bchner and the CFO, Malys Castella , the organization gets support by the team of the
Members of the Executive Committee. The management is very much experienced as they
belongs from different background. The in depth of experience of the CEO and the CFO will
lead the organization in the right path. The leadership is involving in giving the company a
suitable direction so that the organization is efficiently competing with the competitors, with
the help of supervisory board which involves very experienced and capable member of the
management.

The Management Team

a) Ton Bchner (CEO).

Ton Bchner joined AkzoNobel in 2007; he is an engineer and have earned his
Master of Social Science in Civil Engineering at Delft University of Technology, Netherlands.
He also did a Masters in business administration from IMD in Lausanne and has attended
the Stanford Executive Program in Palo Alto, California, USA. Before Joining the AzkoNobel
, Ton Bchner worked with Sulzer Corporation .Sulzer Corporation is a global leading
industrial corporation which employs more than 16,000 people.

b) Malys Castella (CFO).

Malys Castella is working a in the Board of the Management , she joined AkzoNobel
in 8 October 2014. She was already working as a Chief Financial Officer plus a member of
the Executive Committee since 15 September 2014. Before Joining AzkoNobel she worked
with Air Liquide , A company listed in Paris Stock exchange . She held the position of Group
Deputy CFO at Air technologies . Malys by training is a engineer , she did a masters
degree from the University of Pennsylvania and the French Institute of Petroleum in Energy
Management & Policy.

c) Marten Booisma (Members of the Executive Committee)

Marten Booisma joined Azkanobel in 2013. He was previously working with Royal
Marten , he had taken his early education from Netherland . From 1999 to 2013 Marten
Booisma served many of the senior management positions in Ahole Europe and Ahhold
Corporate Center. He was also a member of the supervisory board in Ahole .
d) Supervisory Board

The main management decision of AkzoNobel is discussed and approved with be the
supervisory board. The activities and meetings of the supervisory board are publish in a
report on yearly basis. It is the responsibility of the Supervisory board to to monitor the board
of management and the executive committee. The supervisory board set directions for of the
AkzoNobel which includes;

Corporate strategy and risks associated with business

Achievement of the financial objectives

Structure of Internal control systems

Compliance of procedures and rules.

Culture

a) Diversification

AzkoNobel is a multinational organization. The company relies on technology driven


processes and serving a huge amount of the customers globally. The business Units of the
company are diversified, the business units reports directly to the Board of Management.
The company maintains a portfolio with important position in market segments.

Diversification is not only found in the business units but in the employees as well.
The management of AzkoNobel encourages cross-cultural diversity among the people. Many
mergers and acquisitions take place in the history of Azkonobel , now people all over the
world joins them in different region with different background , ethnicity and religion.

b) Humility

The organization starts to provide innovation and quality products to the customers,
creating values for the customer without compromising and investment on research and
development plays a key role in the success of the company. The company is operating in
more than 80 countries. It is the trust of the customer which leads the organization to provide
more quality oriented products to the customer.

c) Existence as a family

The management of the organization plays a vital role in making a environment of the
organization .The working environment of AzkaNobel is friendly, coordination among
Executive and managers are friendly but formal. The main aim of the management is to help
out each and every employee of the organization. The employees are given complete
chances of learning and development; employees were given on job training and
development. The management is also focusing on developing good relation with members
outside the organization like suppliers/vendors and the stakeholders as well.

Company strategy

a) Business strategy

The company business strategy is to provide quality oriented products to the


customer by improving the efficiency and effectiveness in their processes. The organization
believes on continuous improvements in their processes. Through efficient business
processes the company provides low cost and better quality products . For the Stakeholders
AkzoNobel business strategy is to create value for them by gaining more and more profit on
their products.

b) International strategy

The world is a global village now. Organization is more likely to expand their
operations and invest in different countries to get maximum profits. AzkaNobel. Adopts
localized strategies so that they can unify its operations and establish a more powerful brand
image and a status that is uniform in every country. AkzoNobel International Strategy is to
take care of the norms and values of the country in which they are operating.

c) Innovative strategy

AkzoNobel believes on introducing world class innovative products in their portfoilio.


The main purpose of this strategy is to provide differentiated products and a combination of
innovation plus value driven benefits for the customers. AkzoNobel works on innovative
ideas that bring a change in the customer lives and performance of the business. AzkoNobel
believes on innovation that provides solutions to their customer and have a competitiv edge
on their customers. Innovatio strategy of the AkzoNobel is to bring more and more
enhancement in their products .AzkoNobel is trying to use latest technology to compete with
their competitors.

d) Collaboration

AzkoNobel is involved in many of the collaborations in order to provide quality


products and maintain efficiency among their operations AzkaNobel has a long history of
mergers , AzkoNobel merger with ICI in 2007-2008. The company believes on strengthen
the business performance through acquisitions. In February 2016 the company acquire
BASF Industrial coatings for 475 million. AzkoNobel is also involved in many of the
partnership to meet the needs of the customers.

Conclusion

AzkoNobel is not adopting orthodox ways of utilizing their resources, they are
investing in infrastructure of the company, using latest technology for innovation in the
products, installing new equipment to enhance their productivity and have a continuous
improvement in their processes to get maximum profit by reducing overhead costs.
AzkoNobel have a wide range of products from paints to industrial chemicals and their
competitive advantage is their research and development departments who bring changes in
their processes and find new ways of manufacturing and reducing the variable cost of the
products in a efficient manner without compromising on the quality. There portfolio includes
many of the well-known brands like Dulux, Sikkens and Eka. Customer of the AzkoNobel are
Satisfied with the company as the products are reliable and according to the needs of the
customer requirements.

Recommendations

AzkaNobel is investing a huge amount of investment on their research projects,


finically this will create problem for the company as the company tries to optimize and utilize
their process to the extent which reduces their cost of production, but the cost can be
reduced up to a certain level. In future this investment on research and development will
create problems for the organization as their competitors are not investing that much amount
on the research projects. The wage rate in china is very low and AzkaNobel is hiring the
wages on the same rate. It was found that employees working in the organization as wages
taking very low perk. The company needs to work with suppliers who are providing quality
raw material so that the products can be protected from damages.

References

Barney, J. (1990). Firms resources and sustained competitive Advantage.

Kinkell, S. (2005). Innovation more than Research and Development.

Durand, R. (1999). The relative contributions of inimitable, non transferable and non
substitutable resources to profitability and market performance.

C. Powell, T. (1995). Total Quality Management as Competitive advantage: A review


Empirical Study.