The amount of political influence varies depending on the type of company. In the case of an industry needing a great deal of capital invested, they may be more susceptible to political risk. In the case of Astrapak the investment is moderate and does not require heavy foreign direct investment strategies. Though there is a need to export plastic products outside the country of South Africa, the amount of required for manufacturing companies is far less than say for example an energy product industry. The amount of risk rises when the government makes changes based on politically correct moves to garner favor with global strategies such as environmental issues (Bothma, 2011). The regulations that the government can impose on a company can quickly affect its bottom line. The highest level of political risk comes from civil issues between domestic people groups. Another is war that can affect the ability of companies to export product or import needed raw materials. Another factor that may have political ties in industrialized countries such as South Africa are labor issues that can affect price and threaten profits.
Astrapak restructured recently resulting in huge dividends for the company. The CEO said that the slowed economy was the catalyst that triggered the need for change. In exchange for outdated manufacturing practices implementation of best practices and reducing overhead resulted in a return to profits. The basic strategy was to disassemble many unprofitable business segments that were not related to core competitive advantages. The industrial sector was totally dismantled with a refocus on the core products and packaging business. The CEO, Marco Baglione, has commented on the effects of the new restructuring on economic returns (Astrapak, 2004). He says that "the plastics company is committed to implementing world class manufacturing programs and strategies. Including the integration of all systems from the plant floor to the internal processes and even core planning initiatives" (Astrapak, 2004).
The returns for shareholders has nearly doubled from 62, 3c to up around 124, 5c in a single year (2009-2010). The acquisition of additional plant space from Cape Wrappers has fueled a joint venture with Mauritian. There are other company interests that have been sold such as equity in Izakhamzi Plastics, International Edgeboard Technologies, and Tube Technologies. The result of the sale has brought in additional capital of R6, 9m (AllAfrica, 2010).
One of the areas that Astrapak has dealt with is the area of social empowerment in relation to supplier relationships. For those supplying raw materials, supplies and operating equipment long-term communication channels are important to maintain (Astrapak, 2004). Internally, it is also necessary to implement empowering managerial standards that allow for the free flow of information and ideas.
Prior to the restructuring of Astrapak top management rarely received input from plant workers. The autocratic style of leadership is outdated and demands refocus on how to gain leverage from the talents and experience of its workers.
In each of the several business components of Astrapak new innovations have been discovered that have led to advancement in the field of plastics. The films department for example, has experienced a superior product that is viewed as highest quality for packaging foods, fertilizer, shrink wrapping, and many other uses.
The integration of company departmental managerial resources has allowed for seamless reporting capabilities throughout the Astrapak enterprise from raw materials, to production, to distribution, and sales to its many industrial customers around the world.
Astrapak had adopted an open door approach to corporate access which allows the governance policies and procedures to reflect compliance with government regulations. By being objective and open about the business Astrapak shows its willingness to comply and submit its reputation to scrutiny (Astrapak, 2004). The legal department is poised to respond to any claims or provide required information for any investigation.
The operating division of the company is poised to present broad reaching internal controls to ensure safety for workers and also comply with the needs of the local communities. Adherence with environmental standards is key for the company in showing it is open and responsible to partner in providing safe and efficient waste management. The supply chain has built in recyclable strategies that support environmental initiatives such as the National Cleanup Campaign (Astrapak, 2004).
Use Porters model analysis and apply it to the company and its industry