The Reglatory & Econ Envirnmnt Essay Example | Topics and Well Written Essays - 2000 words

The Reglatory & Econ Envirnmnt - Essay Example Gist includes supply chain services and management mainly in the UK (Lines of Business online). Being a capital-intensive business, BOC's profitability hinges on its sustained investment in technology to develop new products and services across all businesses and novel uses for existing products, as well as to design efficient methods for manufacturing industrial gases such that economies of scale could be achieved (Annual Report and Accounts 2005: Group Profile, 16; Annual Report and Accounts 2005: Risk Factors, 39). For example, for its PGS business segment, better plant reliability has led to a 16 per cent improvement in total revenue and an 11 per cent increase in total adjusted operating profit for the first half of 2006 (BOC Interim Report 2006, 2). Other than plant reliability, investment in new production facilities will also affect the profitability of PGS as such investments are critical in securing long-term supply contracts (Annual Report and Accounts 2005: Group Profile, 18). For the ISP business, BOC is planning the construction of a helium production plant in Au stralia. When completed, it will be only one of its kind in Australia (Annual Report and Accounts 2005: Group Profile, 20). This monopoly of the Australia market should be beneficial to profits. Furthermore, state-of-the-art technology to efficiently use power has delivered tremendous savings (Annual Report and Accounts 2005: Social, Environmental and Ethical Performance, 31). Technology can also be viewed from the perspective of its customers. Technological developments in industries where customers operate can increase the profitability of BOC. For example, success with major flat panel fabs in Korea has led to a soar in materials consumption and equipment demands, which brings about the strong vacuum equipment market share (Annual Report and Accounts 2005: Research, Development and Information Technology, 36; Merrill Lynch Chemicals Conference, 12). On the economic front, energy costs are particularly influential on profits, especially for PGS (BOC Interim Report 2006, 2) and ISP (BOC Interim Report 2006, 2). Domestic revenue depends on the manufacturing economy and pension costs (BOC Interim Report 2006, 2), while revenue and profit in the US and Canada hinges on demand from the oil and gas sector in the western region (BOC Interim Report 2006, 2). Exchange rate movements are also particularly influential on profitability (Annual Report and Accounts 2005: Operating Review, 40; BOC Interim Report 2006, 3) since BOC operates worldwide such as the UK, US, Europe, China, Asia, Australia, and Africa (Annual Report and Accounts 2005: Group Profile, 18; BOC Interim Report 2006, 2-3). Lastly, BOC is affected by the semiconductor business cycle as manufacturers in the semiconductor industry form the bulk of BOC Edwards' customer base, and BOC Edwards' profitability is directly influenced by the demand of these manufacturers for vacuum e quipment, services and industrial gases (Annual Report and Accounts 2005: Risk Factors, 38) There are many factors in the legal environment that are particularly influential on BOC's profitability. These factors include compliance with accounting, safety, health and environmental regulations and laws. They are discussed in the