Professional Documents
Culture Documents
Cement Industry in BD
Cement Industry in BD
knowledge based
innovation practices a
small industry in
Bangladesh
A case study of cement Industry
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Cement in Bangladesh.....................................................................................................................5
MARKETING OBJECTIVES.......................................................................................................14
COMPETITIVE ADVANTAGES.................................................................................................15
Target Market.................................................................................................................................17
Marketing Mix...............................................................................................................................20
MARKETING IMPLEMENTATION...........................................................................................21
Bibliography..................................................................................................................................21
Cement in Bangladesh
Unique Cement Industries Ltd. : Unique cement industries ltd established in the year 2002.
The factory is built with modern machinery imported from Germany and China with production
capacity of 1800 M/T per day. Unique cement industries ltd. has ISO 9001:2000 Certificate.
They have two brands of cement in the local market namely "FRESH" and "MEGHNACEM".
Holcim (Bangladesh) Ltd. : Holcim (Bangladesh) Ltd started its operation in this country with
of the acquisition of the-then Hyundai cement. Subsequently it acquired United Cement and
Saiham Cement.
Holcim (Bangladesh) Ltd is affiliated with the Holcim Group worldwide and is one the largest
multinational cement producers in the world with manufacturing in over 70 countries. The group
has a production capacity of more than 120 million tons of cement per year.
MTC Cement Industries Ltd. : MTC Cement Industries Ltd established with the technical co-
operation of CITIC engineering of PRC in year of 1998 is situated on the embankment of the
river Meghna. There is a two unit cement plant with capacity of 1200 MT per day. TIGER
BRAND Cement started its commercial voyage on july 2001. Currently MTC is on an expansion
program in pagla with a small 150 MT per day capacity cement grinding plant.
Lafarge Surma Cement Ltd. : Lafarge/cement mills is setting up the only modern, integrated
cement manufacturing plan known as Lafarge Surma Cement Ltd. in Bangladesh at Chattak
under Sunamgonj district. The majority of Lafarge Surma Cement Ltd. Shareholding (60%) is
held by a 50/50 joint venture company bewteen Lafarge and cementos molins. Founded in 1833,
Lafarge operates in 75 countries, employing 77,000 people. In 2002, the group generated annual
sales of Euro 14.6 billion and globally holdstop ranking positions in Cement, Aggregates &
Concrete, Roofing and Gypsum. Cementos Molins is a renowned spanish cement company with
an annual revenue of Euro 485 million and net profit of Euro 70 million. Operating in Spain,
Argentina, Uruguay and Mexico, it produces Portland and Calcium-Aluminate cement, Concrete
and Precast concrete, Aggregates and Special purpose mortars.
The cement industry of Bangladesh is a rapidly developing sector of the economy. Over the
years, the amount of construction projects have followed an increasing trend as the urban growth
rate has boosted all across the country in places like Chittagong, Bogra, Mongla and others in
addition to the expanding capital city, Dhaka.
Currently, domestic production is unable to meet the complete demand for cement.
Approximately 60% of the demand is met by the local cement industry while the rest is
imported. According to the Banglapedia, per capita consumption of cement in the country (38
kg) is fairly low compared to India (89 kg), Indonesia (127kg), Malaysia (582 kg) and Thailand
(642 kg).
Cement has not traditionally been a major product for the country due to low availability of
required natural resources to produce it. In addition to that, in less developed regions cement was
not a required raw material for construction of buildings. Over the years, however, cement
emerged as a substitute to traditional construction materials and by the mid-1980s, with an
increase in hefty infrastructure projects, accelerated rate of urbanization and increased
construction of multistoried buildings, there was a sharp increase in its demand.
External Factors
High tax rate on imported cement is an opportunity for local producers. They can better compete
Reduction in global prices of cement has become a threat for the industry. In addition to that,
high cost of carriage and raw materials make profit maximizing a big challenge. Moreover, the
slow progress in terms of infrastructural development also poses problems for some companies.
Weak road linkages result in delayed distribution and inaccessibility of certain regions.
Access to Finance
The cement manufacturers we analyzed have a fairly easy access to finance mainly because of
goodwill. The tough competitiveness in the banking sector itself creates a an opportunity for the
firms to gain better offers and become more accessible to long and short term loans of differing
proportions. However, as we know there are over seventy firms competing within the market,
this cannot be true for all firms. Many small manufacturing companies are operating within the
market, and their access to finance will surely not be as easy as those that have established
themselves as a known brand.
The demand for cement is somewhat stable, according to the managers and the growth rate is
more or less average. To improve this condition, they urge the government to provide subsidies
Samina Yasmin Page 9
and greater consistency in the Annual Development Program.
Competitive Scenario
Meghna Cement Mills Ltd.
It is generally agreed that the present scenario is extremely competitive. With multinational
companies as well as local companies trying to grab a bigger slice of this growing market with
extensive advertising that try to attract, inform and persuade the viewers – this is one of the most
emulous industries of the country. Naturally, there are questions asked of fair play. Some
companies have complained that a handful of firms are gaining unfair advantage by avoiding tax.
The competitive scenario maybe improved by ensuring proper collection of taxes. We can also
see that there is a scope for production of clinkers locally, which has a growing demand as well.
Therefore, investment in this particular part of the industry will also increase the
competitiveness.
When it comes to globalization, most firms mention the high freight costs as a big hindrance for
the development of the industry. It makes imports more expensive (which is a good thing in case
of finished products, but a problem in case of raw materials) and also export of locally
manufactured cement less price-competitive in the international market. Low global prices of
cement also deter firms from vying for export deals.
The cement industry of Bangladesh is one of the fastest growing, intensely competitive sectors of
the economy. With plenty of scope to invest in R&D, and plenty of scope to utilize the advent of
new technology, this is a sector that is bound to get more competitive. While existing firms
suggest that this is a nearly saturated industry and new entrants are not encouraged, with the
increasing urbanization all across the country and an escalating rate of construction of high rise
buildings, this opinion may be questioned. Our group is extremely grateful to have had this
opportunity to explore one of the most vibrant business sectors of Bangladesh, as it was an
CEMEX is a global building materials company that provides high quality products and reliable
service to customers and communities throughout the Americas, Europe, Africa, the Middle East,
and Asia. Their operations network produces, distributes, and markets cement, ready-mix
concrete, aggregates, and related building materials in more than 50 countries, and maintain trade
relationships with more than 100 nations.
This company was founded in Mexico in 1906, and grown from a local player to one of the top
global companies in our industry, with close to 47,000 employees worldwide.
CEMEX has a rich history of improving the well-being of those it serves through its efforts to
pursue innovative industry solutions and efficiency advancements and to promote a sustainable
future.
Weaknesses
The cement industry is not without its drawbacks. The cement industry relies on construction
jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of
cement production takes place between May and October. Cement producers often use the winter
months to produce and stockpile cement, to meet demand. Another weakness is the cost of
transport; the cost of transporting cement is high and this keeps cement from being profitable
over long distances. In other words, shipping cement costs more than the profit from selling it.
Debt in USD, Income in foreign currency
US$ denominated debt: a large portion of Cemex’s total debt is US$-denominated and since
Cemex do not generate enough US$-denominated revenues to meet all of its US$- denominated
obligations, currency exchange variations could have a negative impact on Cemex’s financial
performance
Dependency on weather conditions: Cemex’s sales suffer a strong decline in periods of cold
weather in Bangladesh during the rainy season
Opportunities
The cement industry has opportunities as well. One such opportunity is the cement industry's
efficiency. The cement industry has recently streamlined its production efforts, using dry
manufacturing instead of wet, which is heavier and more time-consuming.
Innovation
Takeovers
High expansion rate in Bangladesh market
Cost synergies: Cemex estimates significant savings as a result of cost synergies resulting from
the RMC acquisition.
Long-term growth markets: Cemex’s strategy is primarily focused on markets with high
potential for long-term expansion
MARKETING OBJECTIVES
First marketing objective is to consistently market different types of high quality cement
products. To provide consistently products in the market, it is necessary to make sure that some
stock of the product is always available in the warehouses so that in case of any big market order,
the order can be fulfilled without any problem. This consistency can only be achieved when the
production process is totally interrupted and in case of any problem, the backup is always
available. The raw material for the production of cement should always be available; there must
not be interruption at any time.
COMPETITIVE ADVANTAGES
Leading position in attractive Bangladesh‘s grey cement market.
Cemex cement manufactures have consistently operated at the highest levels of capacity
utilization among Bangladesh’s five divisions. We believe this reflects the strong demand in
Bangladesh for cement products relative to supply. Further, based on capacity expansions
announced by cement manufacturers, we expect cement plants in Bangladesh to continue to
operate at high utilization levels and anticipate continued strong demand for our grey cement
Target Market
A target market is a group of customers that the business has decided to aim its marketing
efforts and ultimately its merchandise. A well-defined target market is the first element to a
marketing strategy. The target market and the marketing mix variables of product,
place(distribution), promotion and price are the four elements of a marketing mix strategy that
determine the success of a product in the marketplace.
Strategies for Reaching Target Markets
Marketers have outlined four basic strategies to satisfy target markets: undifferentiated marketing
or mass marketing, differentiated marketing, concentrated marketing, and micromarketing/ niche
marketing.
Mass marketing is a market coverage strategy in which a firm decides to ignore market segment
differences and go after the whole market with one offer. It is type of marketing (or attempting to
sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that
will reach the largest number of people possible. Traditionally mass marketing has focused on
radio, television and newspapers as the medium used to reach this broad audience.
For sales teams, one way to reach out to target markets is through direct marketing. This is done
by buying consumer database based on the segmentation profiles you have defined. These
database usually comes with consumer contacts (e.g. email, mobile no., home no., etc.). Caution
is recommended when undertaking direct marketing efforts — check the targeted country's direct
marketing laws.
The Psychology of Target Marketing
A principal concept in target marketing is that those who are targeted show a strong affinity or
brand loyalty to that particular brand. Target Marketing allows the marketer / sales team to
customize their message to the targeted group of consumers in a more focused manner.
Market target simply means choosing ones target market. It needs to be clarified at the outset that
market targeting is not synonymous with market segmentation. Segmentation is actually the
prelude to target market selection. One has to carry out several tasks besides segmentation before
choosing the target market.
Through, segmentation, a firm divides the market into many segments. But all these segments
need not form its target market. Target market signifies only those segments that it wants to
adopt as its market. A selection is thus involved in it.
In choosing the target market, a firm basically carries out an evaluation of the various segments
and selects those segments that are most appropriate to it. In the previous paragraph, we
mentioned that to be of practical use, the segments must be relevant, accessible, sizable and
profitable. The evaluation of the different segments has to be actually based on these criteria and
only on the basis of such an evaluation should the target segments be selected. The firm must
assess the sales and profit potential of each; examine the worth of each segment from its
viewpoint “whether the segment is relevant to the firm, whether it is sizable, accessible,
attractive and profitable. It must examine alternative possibilities” whether the whole market has
to be chosen for tapping, or only a few segments have to be chosen, and if so, which ones. It may
look for segments that are relatively less satisfied by the current offers in the market from
competing brands. It must look at each segment as a distinct marketing opportunity. It must also
evaluate its resources and choose the segments that match its resources.
The points below explain the process of choosing the target market.
Marketing Mix
Product
Cemex Cement provides a low construction material- a type of cement which contains fly ash.
Cement making starts with purely organic materials delicately extracted from the earth, refined,
mixed with other all-natural materials, heated, and then milled.
Each stage of our proven process employs technologically advanced systems and is conducted
with respect for our natural environment.
Pricing
Focus on bundle pricing strategies: for example - monthly retainer; annual retainer; all services
bundled for a set rate; certain services bundled together for better pricing – e.g. employee
problem prevention, wrongful dismissal and severance proposals/packages.
Prices/billings compared and analyzed annually against top three competitors in the cement
industry in Bangladesh.
Costs analyzed monthly – cost containment and reduction a key strategy for competitive pricing
Promotion
Advertising programs: local newspapers, local radio, local magazines, business trade journals
Personal selling: Sales and Marketing staff; face-to-face
Direct marketing campaigns to targeted and existing clients; including permission-based email
marketing.
Website: search engine optimized; http://www.cemexbangladesh.com
MARKETING IMPLEMENTATION
The marketing unit can be organized by increasing the existing market and expanding the market
in the south zone of the country. They have to lower down their production cost to compete in the
markets of south zone in the country. Due to the high production cost, the company is unable to
compete in the south zone. The decision making unit has to make sure that they increase the
market share in the north zone and expand their market in the south zone where Karachi is the
main market in that area. Depending on the organization’s structure and the environment, the
first line and middle managers can be empowered to make decisions. If the demand for the
product is increasing rapidly in the market then the company has to increase the production to
capture the maximum market share. They have to increase the sale in the north area of country
by advertising in more areas.
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