Formosa Plastic Group Case Study

1252 words 6 pages

Formosa Plastic Group (FPG) was founded in 1954 and headquartered in Taipei, Taiwan with over 47,000 employees. FPG was the largest private diversified chemical company that produced and sold a broad range of products which mostly related to plastic. It also operated 6000 bed hospital, medical college, a nursing school, and a technical college.

FPG was organized into three major corporations and other affiliated companies. Those three major corporations are Formosa Plastics, Nan Ya Plastics, and Formosa Chemical & Fibre Corp, and each corporation were consist of several divisions. Most of the administrative functions of the company were centralized in order to take the economies of scale for granted. FPG had
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For instance, when the company set the division target to have an 80-90% probability of achievement, the employee might not have clear details about the target and what is the benchmark of the targets they have to accomplish because it is too general and broad. Therefore, by not knowing how they will be evaluated, the employees tend to do their work without any purpose and motivation. Another major issue in this case is about the shortage of ethylene. CPC is a government corporation which is the only local supplier of ethylene. CPC faced the problem of shortage of ethylene, therefore it unable to supply it to FPG. The process of importing of ethylene is expensive and complicated. Because of that, FPG tried to build it own ethylene plant but the government had not given the permission because of worries about overcapacity. The shortage of ethylene not will only affect the production of polyethylene but will also affect FPG’s financial planning. It is because Taiwanese ethylene price fluctuated significantly. However, the price of polyethylene did not fluctuate together. While they are facing the shortage of ethylene, unfortunately there was the Gulf War happened at the largest oil producing countries in the world. Since the ethylene is petro-chemical, the Gulf War has major effect on the ethylene supply.



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