Running a business in today’s times has become a thrill of sorts. After dealing with the 2020 pandemic we have to acknowledge that discounting the influence of external factors on a business is like living life with a myopic vision. While companies are constantly juggling between internal factors like business objectives, internal policies, employees, productivity and financial resources to name a few there are several external factors that, are often beyond one’s control that we need to look out for. In recent times the packaging industry has been highly affected by many such external forces that have taken us by storm. While mitigating these risks, we must cast our eyes toward the horizon and search for what's coming next from the outside.
Here are three external threats that have kept the flexible packaging industry on our toes in recent times:
1. Plant shutdowns – The recent plant shutdowns in Texas, US has reduced imported supplies of PE and PP. The estimated PE and PP capacity in Texas amounts to around 12mn t/yr and 7mn t/yr, respectively, which has created a snowball effect all over the globe. A shortage of raw materials has a massive dent in the demand-supply equilibrium where industries like packaging are directly impacted by these disturbances.
2. Uncontrolled Price rise in raw materials – The price of raw materials to manufacture flexible packaging has been sky-rocketing in the last few months. An exponential increase in prices ranging from 30% to 120% in various grades of polymers with a surge in the price of crude oil has a direct impact on manufacturing and adds to our woes. This spiralling inflation has become a constant challenge that we are encountering.
3. Global Uncertainty – The entire world is going through a difficult time where regulations and trade behaviour has been unpredictable. Dependence on imports is bound to affect the smooth functioning of any economy and often a glitch-free blueprint of internal working is not enough to solve the problem.
At Montage Group our internal discipline and vigilance have constantly helped us to steer out of difficult situations and keep marching on. A clear and practical SWOT analysis of our business helps us to acknowledge troubling times, identify roadblocks early on and improve our preparedness to serve our customers in the most efficient way possible. Yet, a constant change in global policies, prices and economic conditions often lead to smooth disruption of internal company objectives throwing us off guard. Our stability and profitability are interdependent on our ability to quickly identify and respond to changes in the external environment. Change is inevitable and developing an attitude of flexibility to deal with unexpected market mutations often becomes the difference between survival and extinction for an organization. While we are determined for this storm to pass, business leaders of several organizations must develop new skill sets to become proficient sailors of choppy waters in the rough sea. Else, there’s no other way forward.