A Study Of S Company’s Cost-leading Strategy

Petrochemical industry is a strategic pillar industry in China. The performances of Chinese state-owned petrochemical companies characterized by S company decline significantly from the beginning of the new century. The downward trend of Chinese petrochemical company performance will do harm to the stable development of Chinese national economy. The strategy management theory claims the profitability depend on company strategy rather than operating efficiency. This article is a case study on S company strategy management utilizing industrial structure theory and enterprise resource theory as frame. The total external environment of S company is identified with the PEST model tool. The industrial environment is identified with the five-force model tool. S company’s core competences are identified by the four criterions of sustainable competitive advantage. The above results are then imported into SWOT model for further analyzing. Cost-leading strategy can be deduced by comparing the business-level strategy characters and the conditions of S company. Finally this article provides suggestions on cost-driving factors and value chain structure based on real situation of S company.