Scgm Berhad Pest Analysis

PEST analysis

The external factors affecting SCGM Berhad are as follow:

1. Political Factors

SCGM Berhad is affected by as follow:

1. Selangor and Penang plastic free policy

Ban implemented by Selangor government effective 1st Jan to promote reduced plastic bag usage. Banning of plastic bag policy also applies to states like Penang which have practise plastic free policy for several years. This ban is slowly being implemented throughout the country. It poses positive impact to SCGM Bhd as its core business is surrounding produce of plastics.

1. Goods and service tax

The implementation of 6% GST since 1 of April 2015 has impacted the plastic industry in Malaysia. The small and medium enterprise which utilize plastic food packaging suffered the most significant effect, as the cost of doing business increased. Eventually, it also negatively impacts SCGM company. This is because the customer of the company may look for alternatives to reduce the cost of doing business, such as choosing paper based product, thus posing threat to SCGM.

1. Economic Factors

SCGM Berhad is affected by as follow:

1. Economic trend

The plastic packaging product is driven by domestic consumers. Due to recent economic trend in Malaysia, consumers are demanding cheaper product, and this situation is getting more significant after the implementation of GST. Therefore, consumers are demanding cheaper prices for plastic, especially the merchant and dealers of package product. It poses threat to SCGM Bhd.

1. Crude oil prices

The volatility of international crude oil prices is impacting the plastic industry. This is due to fact that crude oil is the main source of making plastic When the oil price increase, the cost of making plastic also increase, and thus affecting the consumer of plastic product. Any fluctuations in oil prices have direct impact on plastic prices. This is a negative impact on SCGM as the production cost will increase.

1. Social Factors

SCGM Berhad is affected by as follow:

1. Impact of negative news on plastic materials

Plastic is a material that cannot be decomposed or degraded. It cannot be decomposed naturally by mother earth. Nowadays, it is common to see news reporting issues of plastics pollution and killing wildlife. The most recent cases are the dead whale washed off shore, they found it is filled with plastics trash inside the stomach, and turtles with plastic straw stuck in its nose. These cases of animals killed by plastics are a wakeup call on the danger of plastics pollution. Above mentioned situation is sending a strong message to the public where people should start to stop using plastics product to help save the environment. This is not good for SCGM as their core business will be negatively affected.

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