Case study of Johnson Matthey company
Johnson Matthey is a leading producer of chemicals in the world today. With an illustrious 200 years of past, it has now diversified into precious metals, chemicals, and catalysts. It has moved to the third century by adapting its techniques and strategies to suit the industrial climates of its operating units.
Johnson Matthey has those essential traits that define its character, make it distinct from its peers, and has helped it to survive for 200 years.
Business in the modern world
In the modern world, no business can survive in isolation. Many factors affect business activities. The unique interrelation between business and the variables that affect its survival are depicted in a triangle as below.
A company that is a natural survivor, builds on its strengths and conquers its weaknesses to move forward. One of the self-reflective assessments that companies employ is the PEST analysis; a study of the macro-environmental factors like political, economic, social, and technological factors. A few additional environmental factors have been added to the PEST analysis in recent years.
Background of Johnson Matthey as an organization
As a gold assayer, Johnson Matthey established itself as a venture of integrity and honest business dealings. Then it expanded itself into engineering and metal refining, Now it focuses on the microenvironmental factors essential for its survival, which are the 3 Cs’ of its strategic plan- collaboration, customer focus, and creativity. It focuses on sustainable technologies and ecologically healthy business technologies.
PEST Analysis in the context of Johnson Matthey
PEST analysis follows two steps:
- Gathering information about macro-environmental factors that would potentially affect its market.
- Identifying which PEST factors are threats and which are opportunities.
Johnson Matthey has business operations in over 30 countries, each with a different business milieu. Being aware of market changes as they arise and sometimes before they appear gives Johnson Matthey an advantage over other companies.
- Government stability.
- Administration of government.
- Taxes and insurance.
- Freedom of press.
- Export and import control.
- Trade unions.
- Environment and education law.
Many countries have passed anti-pollution laws and fixed have fixed penalties. After it burnt its fingers in the Utah refinery for violation of the Clean Water Act, Johnson Matthey company has decided to act responsibly by venturing into new markets only after a thorough study of the environmental laws of those countries.
Factors like inflation rates, interest rates, exchange rates, availability of cheap labor, unemployment trends (with a view to capitalize on this information), labor costs, disposable income of customers, fiscal policies, and prices are some of the economic factors that are studied in a PEST analysis. The British law that allows tax credits to a business that support research and development (R&D) has proved beneficial to Johnson Matthey, whose current focus is on Research and development created by its skilled workforce specialized in the STEM subjects (Science, Technology, Engineering, and Maths)(Williams 2011).
As a strategy to cut costs during the global recession of 2008, the company adopted lean technologies that used less natural resources in an efficient manner.
Factors studied here are educational levels of the people and their attitude towards imported goods and services, product quality and customer service, emphasis on safety, support for renewable energy, immigration rates, population demographics family structure, and so on. STEM skilled staff have been appointed at its facilities in various countries in which such skilled labor is deficient along with increasing awareness of STEM subjects in schools (Tyson et al. 2007).
Johnson and Matthey have helped investments in the fertilizer industry with the use of catalysts that accelerate the chemical reactions in this industry.
The technological environment of a country is reflected in the level of basic infrastructure, investment in research and development, incentives for technological advances, laws regarding technology, access to the newest technology, digital ecosystems, and so on. Johnson and Matthey encourage technological innovations in their industries. It uses bio-based materials, which has cut down the use of nonrenewable resources like oil and gas. So the company is trying to low carbon ways to produce low-cost electricity.
The PEST analysis has revealed certain threats which might hamper its growth in the future which are as follows:
- Failure to identify new business opportunities: The company needs to scout for newer and better business opportunities.
- Newly acquired companies not showing the anticipated benefits: Many of its new ventures might not be as profitable as they might have been thought to be
- Changes to environmental legislations: If environmental laws of some countries become lax, then a company like Johnson Matthey which specializes in sustainable industries may not be able to grow.
- Inadequate investment of resources into the global drivers impacting the chemical industry: Before it ventures into newer areas, Johnson Matthey needs to study factors that support strong market growth, new market entry positions and newer technological solutions to combat its problems.
- Investment in ongoing Research and development.
Johnson and Matthey need to be competitively informed decision-makers. Awareness of changes in the micro and macro environment of the company will help it retain its hold on its market and also it’s future. In its drive for environmentally sustainable products and chemicals, it must not forego its principle of integrity. Honesty in its dealings would give it a reputation for being one of the ‘good guys” in a business world where survival of the fittest, funding of terror, or money laundering is the norm.
- Chapman, A., 2010. PEST market analysis template and method. BusinessBalls.com. Available at: http://www.businessballs.com/pestanalysisfreetemplate.htm.
- James Manktelow & Amy Carlson, 2012. PEST Analysis. Problem-Solving Training from MindTools.
- Tyson, W. et al., 2007. Science, Technology, Engineering, and Mathematics (STEM) Pathways: High School Science and Math Coursework and Postsecondary Degree Attainment. Journal of Education for Students Placed at Risk (JESPAR), 12, pp.243–270.
- Williams, P.J., 2011. STEM education: Proceed with caution. Design and Technology Education, 16, pp.26–35.
- 1983. Johnson matthey. Anal.Chem., 55, (13) 1286A available from: PM:22742100.