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Master of Management Studies under the University of Mumbai By Shweta , Roll No. 11 Hussain Hakeem, Roll No. 12 Rashid Gafoor Kaskar, Roll No. 15 Mohd Mukhtar Kasmani, Roll No. 16 Irfan Faizullah Khan, Roll No. 19 Naqeeb Sakharkar, Roll No. 32
Under the Guidance of
Prof. Sameer Charania
(Lecturer International Business)
Allana Institute of Management Studies and Research
CST, Mumbai-400001 2011
Contents..................................................................................................................... 2 ACC Cements – CORPORATE PROFILE.........................................................................3 SUBSIDIARIES AND ASSOCIATES of ACC CEMENTS:-...................................................7 Manufacturing process at ACC Cement....................................................................10 Swot Analysis of ACC Cement...................................................................................12 Cement Industry A Global Perspective......................................................................13 Overview of Cement Industry - Brazil.......................................................................17 PESTLE - Brazil..........................................................................................................19 Main drivers for doing business in Brazil...............................................................33 Main Challenges of doing Deals in Brazil...............................................................34 Different Modes of Setting up Business in Brazil...................................................35 Overview Of Cement Industry - Bangladesh.............................................................36 Pest Analysis of Bangladesh.....................................................................................41 Modes of entry in general.........................................................................................46
ACC Cements – CORPORATE PROFILE
ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 21 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers. Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy services. The company's various manufacturing units are backed by a central technology support services centre - the only one of its kind in the Indian cement industry. ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the country’s road transport network services for inward and outward movement of materials and products. Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as
far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices. ACC plants, mines and townships visibly demonstrate successful endeavors in quarry rehabilitation, water management techniques and ‘greening’ activities. The company actively promotes the use of alternative fuels and raw materials and offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing. ACC has taken purposeful steps in knowledge building. We run two institutes that offer professional technical courses for engineering graduates and diploma holders which are relevant to manufacturing sectors such as cement. The main beneficiaries are youth from remote and backward areas of the country. ACC has made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going efforts in community welfare programmes have won it acclaim as a responsible corporate citizen. ACC’s brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer Super Brands of India.
and warehouses. sales and distribution processes are industry standards. . in turn. who assist and advice customers with prior and post sales service. rural and semi-urban India. This is backed by a vast distribution network of over 9.ACC's brand name is synonymous with cement and enjoys a high level of equity in the Indian market. ACC’s marketing.individual homebuilders in small towns. ACC cement enjoys an image of assuring consistency and of high quality backed by in-house research and expertise. Although we take immense pride in having supplied some of India’s most admired projects. This service begins with selection of type and grade of cement (where applicable) to troubleshooting and on-site assistance. ACC is essentially a people’s brand of cement with more than 80 per cent of sales made through an extensive dealer network that covers every state in India. Its customer base represents the masses of India . are assisted by their sub-dealers.000 dealers who. Area Offices. Complementing this is a unique customer services cell comprising qualified civil engineers. Our range of cements and blended cements is marketed through a countrywide network of Sales Units.
.ACC manufactures the various kinds of Portland Cement for general construction and special applications.
SUBSIDIARIES AND ASSOCIATES of ACC CEMENTS:• ACC Concrete Limited ACC set up India's first commercial Ready Mix Concrete (RMX) plant in Mumbai in 1994 which together with the promotion of bulk cement has played a key role in redefining the pace and quality of construction activity in our large cities and mega infrastructure projects. • ACC Mineral Resources Limited . Today this company is one of the largest manufacturers of Ready Mix Concrete in India with a countrywide network of plants. with modern equipment and a large fleet of transit mixers. The Ready Mix Concrete business of ACC was reorganized as a separate wholly owned subsidiary which was incorporated as ACC Concrete Limited with headquarters in Mumbai.
It has two cement storage silos with a capacity of 5. a fleet of specialized trucks and site silos for the convenience of customers and is capable of offering loose cement in bulk-tanker vehicles as well as packed cement in bags of varying sizes from 1 tonne down to 25 kg bags. It is a landmark structure spread over 30 acres of land. BCCI is situated strategically on the outskirts of Mumbai.000 tons each. The plant has its own special purpose railway wagons and rakes and its own railway siding. The Cement Marketing Company of India Limited.ACC's wholly owned subsidiary. including a laboratory. ACC Mineral Resources Limited has already entered into Joint Venture arrangements for prospecting. in Navi Mumbai (formerly New Bombay). The company is also exploring other opportunities for securing additional coal and gypsum resources in India and abroad • Bulk Cement Corporation (India) Limited Situated at Kalamboli. exploration and mining coal from the coal blocks in Madhya Pradesh and West Bengal. such as coal for captive use. was renamed as ACC Mineral Resources Limited (AMRL) in May 2009 with an objective of securing valuable mineral resources. just off the new Mumbai-Pune Expressway. this company caters to bulk cement requirements of the city of Mumbai and its environs. The plant receives cement in bulk from ACC plants at Wadi. BCCI is equipped with all the facilities required by increasingly sophisticated construction sites in a bustling metropolis. . The first of its kind in India.
The company is engaged in the business of mining and sale of limestone. This company holds limestone mines in the Sikar district of Rajasthan. It holds mining leases for limestone in the state of Rajasthan. . and helps supplement limestone supply to the Lakheri Plant. • Encore Cement & Additives Private Limited ACC acquired 100 percent of the financial equity of this company which is a slag grinding plant in Vishakhapatnam in coastal Andhra Pradesh.• Lucky Minmat ACC acquired 100 per cent of the equity of Lucky Minmat Private Limited. • National Limestone Company Private Limited National Limestone Company Private Limited is a wholly owned subsidiary. This company became a wholly-owned subsidiary of ACC in January 2010.
Key 00.Manufacturing process at ACC Cement Map . . Deep Bucket Conveyor 11/1Clinker/Gypsum Storage 2. Limestone Quarry and Crushing plant 01. Limestone Stockpile 02. Cooler 10. Additives Hopper 09.
Cement Mill and Bag House 15. Blending and Storage Silo 06. Preheater 07. ACC cement specifications exceed those set by BIS by a wide margin. Accordingly. Coal Mill Building 14. Gas Conditioning Tower and ESP 08. and justifies the preferences of a nationwide customer base.03. arising out of a focus on quality and process improvement. Central C Product Development has always been an important activity at ACC. . Raw Mill Building 05. As a result of this focus on quality. ACC has effectively pledged its reputation as the market leader in the quality of cement. This demonstrates our tradition of providing reliable and consistent quality through the application of modern technology. Cement Storage Silo 16. Additives Storage 04. Kiln PRODUCTS QUALITY:- 13. It has been a constant partner. Packing & Dispatch 17. Maintaining this lead calls for harnessing the resources and expertise of the company . Today. driving research. all ACC factories are equipped with state-of-the-art process control instrumentation and associated quality control and testing laboratories manned by qualified personnel.from applied research and production to marketing. innovation and evaluation. all ACC cement plants have the ISO 9001 Quality Systems certification.
even government is spending heavily on infrastructure projects. People ask for ACC have same price prevailing for wholesale at dealers/stockiest retailers end. 4. Thus. 2. People are opting for more stable structures and intensive use of cement is taking place. As Indian core industry is also growing at rate of nearly 10% per annum. this is the right time to fully tap these markets. Lack of awareness program for consumers. It is having a good image and brand loyalty among consumers. Rapid growth is taking place in Bihar and Madhya Pradesh. . 2. WEAKNESS:The competitors are doing much promotional activity rather than ACC Limited that’s why it facing more problems in selling of product in the market. 2. Service is good 3. • OPPORTUNITY:- 1.Swot Analysis of ACC Cement • STRENGTHS:- 1. 3. They • 1. it is having a good future.
4. Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers. The emergence of small players in this market may increase the competition and start the malpractices. Prism Cement. and Birla Samrat are eating up considerable market share. Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads. 5. which will increase the demand of cement. . 3. and heavy discounts to retailers. • THREATS: 1. Players such as Jaypee Cement. Foreign direct investment in infrastructure sector going to increase in coming years. Due to India exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war.9% last year to continue a strong rebound in demand as construction worldwide picks up since the economic downturn of 2008. according to a new report. Cement Industry A Global Perspective Global consumption of cement grew 9.4. 2.
and forecasts for 2013 and 2018 by type (e. The report provides statistics for demand for the commodity in more than 160 countries. blended. which was a growth rate of 5. Worldwide cement consumption is forecast to reach a record 3859Mt by 2012. Asia/Pacific. evaluates company market share and profiles 34 industry participants. China dominates world cement statistics. world region (e. The study also considers market environment factors..4% the previous year.g.. It presents historical demand data for the years 1998. Blended cement will increase its dominant position over Portland.1 percent annually through 2013. Holcim and CEMEX.8 billion metric ton world cement industry. strongly reversing a slowdown of 2.. consumer. including Lafarge. Gains will be fueled by rising infrastructure investment in developing countries and improved markets in developed areas. 2003 and 2008. along with additional data for clinker consumption.9%. Portland). Ready-mix concrete will remain the fastest-growing outlet. results show consuming more than a third of global output – or 1.g.851 . This study analyzes the 2. Africa/Mideast) and for 46 major countries. construction contractors. topping the 2.294 million tonnes (Mt) were sold.The ninth edition of International Cement Review’s Global Cement Report found that 3. details industry structure. concrete products). Global cement demand will rise 4.998 million tonnes sold in 2009. ready-mix concrete.g. market (e.
followed by Nigeria at 7 million tonnes and the USA at close to 6 million – a sixth of 2006 levels. declining US production by 36. China. Bangladesh is the largest cement and clinker importer. with the United States. (Jan 2011).2Mt last year to produce a turnover of EUR 15. the third-largest consumer. India. India and USA. overtaking China which recorded close to 17Mt of export sales. 11Mt higher than Lafarge. saw demand fall down to 69Mt. Thailand was third with 14Mt of cement and clinker exports.in 2010. Turkey is the world's leading export nation of cement and clinker. at 212Mt. Major Cement Exporting Countries of the World: This is a list of top countries by cement production in 2010 based on USGS Mineral Program Cement Report. didn't change in the last 5 years. Holcim still has the largest global cement capacity. the closest rival to China for economic growth was the second-largest consumer at 212Mt.8 billion. shifting 141. Lafarge remains the world’s biggest selling company. with over 12 million tonnes of deliveries in 2010. ahead of Holcim with cement sales of 136. with sales of 19Mt in 2010. a ahead of Heidelberg Cement. almost double 2004 levels.7Mt and a turnover of EUR15.million tonnes . Brazil (13th to 5th) and Vietnam (17th to 9th). The most progressing countries in terms of ranking are Turkey (10th to 4th). While the top 3. All top European .6 billion.5% is noteworthy.
as a result of the global financial crisis.800 290 74 63.5 60 59 56 50 50 49 48 46 45 42 35 34 31 . Italy. Germany and France). Russia. World Cement production in 2010: Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Country/Region People's Republic of China India Iran United States Turkey Brazil Japan Spain Viet Nam Russia Egypt South Korea Saudi Arabia Indonesia Italy Mexico Germany mil Tonnes 1.cement producing countries except Turkey lost their rankings (Spain.
2. and production trends within the industry have been dynamic throughout the past 30 years. and is ranked 6th in the world for cement production (Soares. Current Industry Structure and Outlook.5 Overview of Cement Industry . recent data on production and capacity .18 19 Thailand Pakistan Others 2010 World Production 31 30 520 3. Today.413. factors that encouraged domestic consumption (Christino. 2008). Background Cement production is one of the major industries driving Brazil’s national economy. Since 2004 the country has seen growth in cement production as a result of decreasing national interest rates and lower retail costs of cement. 2010). This section provides an introduction to the key industry players in Brazil’s cement sector. a synopsis of the current structure of the sector. a discussion of their domestic and international markets.Brazil This section presents a brief history of cement production and use in Brazil. and a summary of the data available at the sector and plant levels on production processes and GHG emission 1. Brazil has become the largest cement producer among all Latin American countries.
902 3.548 international drivers that could shape the outlook for the industry.137 1.849 5. infrastructure (19%).670 plants located in 22 states across4the country. These areas include the Southeast.Brazil’s Cement Manufacturers 2006 Annual Production (thousand metric tons) Number of Capacity Company Name 2005 2006 2007 Plants (million metric tons) Votorantim brief discussion of some of the domestic and 19 25 14. Cimpor 8 6 3.591 Manufacturers Cement production in Brazil2.948 is divided among 11 Camargo 5 2.349 manufacturing companies. On average.422 2.500 2. this group operates 65 Correia Lafarge 5 2. domestic consumption is highest in Brazil’s most developed regions where the average income level is highest. per capita consumption in Brazil is . The main end-uses for cement in these regions are buildings (78%). South.974 5.402 levels.164 5.013 3.265 Domestic and International Markets The cement industry in Brazil accounts for approximately 1% of Brazilian gross domestic product (GDP) and is strongly correlated to income levels. In 2007. Collectively.1 2008). Moreover.683 3.472 16. and Northeast regions. Brazil’s CP Cimento 3 cement Ciplan producers had a combined output of nearly 1. and a Joãs Santos 10 4.079 5.393 Holcim 5 5 3.239 19. Itambé 1 829 838 938 CCRG 1 Other* 6 5.225 3.319 Cimentos Liz tons of cement (SNIC.6 1 1. and agriculture (3%) (Soares 2008).248 million 46.889 4.
several of the industry’s major manufacturers have revealed plans to invest in production expansion in the coming years. market sources indicated the emergence of a trend in which smaller economic groups began entering the market and are now faced with the challenge of competing with the industry’s major players. The table below presents available data on production of cement since 2008. in which you are operating. which is low compared to the world average of approximately 400kg (Christino. Furthermore.approximately 200kg. and the . domestic cement production in Brazil has been growing. In 2008. 2007). Cement Production 2008-2010 Year Output (Thousands of tons) 38.895 46.Brazil PESTLE analysis is a useful tool for understanding the “big picture” of the environment.589 2008 2009 2010 Source: SNIC PESTLE .705 41. Outlook Reflecting the strong performance of the country’s economy and civil construction in particular since 2004.
such as entering a new market or launching a new product • A potential acquisition • A potential partnership • An investment opportunity A. . The PESTLE subject should be a clear definition of the market being addressed.opportunities and threats that lie within it. By understanding the environment in which you operate (external to your company or department). which might be from any of the following standpoints: • A company looking at its market • A product looking at its market • A brand in relation to its market • A local business unit or function in a business • A strategic option. Political System:- Federal Republic similar to United States The federal republic has three independent branches independent branches: executive legislative and judicial. you can take advantage of the opportunities and minimize the threats.
although non-codified statutes also represent a substantial part. The total is membership of the House is 513. state and local courts throughout the country. i. Doctrinal works and the . the heads of which are appointed and are known collectively as the cabinet. Legislative power is exerted by Congress consisting of a Senate and house of Representatives. playing a complementary role. 70 years or older and illiterate can opt to vote. its members need not be members of the legislative. Under the President are a number of executive departments. three from each from state each and state the federal District on its of Brasila. headed by the Federal Supreme Court. they are seldom binding on other specific cases. Voting compulsory at the age of 18 but 16 and 17 year-olds. however. Most of Brazilian law is codified.The President heads the executive branch. Besides the executive departments. the number of representatives depending population. The judicial branch consists of a system of federal. there are a number of independent agencies many of which are regulatory. Court decisions set out interpretive guidelines. Law Brazilian law is based on Roman-Germanic traditions and civil law concepts prevail over common law practice. There are 81 senators. Unlike those in many parliamentary democracies.
national and world economy impact i. However. footwear. electrical equipment. The country has been expanding its presence in international financial and commodities markets. ethanol. iron ore. and is one of a group of four emerging economies called the BRIC countries. B.The local. Brazil pegged its currency.S. steel. putting Brazil in the 64th position according to World Bank data. the Central Bank of Brazil temporarily changed its monetary policy to a managed-float scheme while undergoing a . It has large and developed agricultural. Brazilian exports are booming. dollar in 1994. creating a new generation of tycoons. textiles. Major export products include aircraft. the real. automobiles. the Russian default in 1998 and the series of adverse financial events that followed it. mining. as well as a large labor pool. the world's tenth largest economy at market exchange rates and the ninth largest in purchasing power parity (PPP). Economy of Brazil Brazil is the largest national economy in Latin America. according to the International Monetary Fund and the World Bank. manufacturing and service sectors. Economic. orange juice. soybeans and corned beef. Its GDP (PPP) per capita is $10. to the U. after the East Asian financial crisis. coffee.works of academic jurists have strong influence in law creation and in law cases.200.
shoes. and the United States is traditionally the number one foreign investor in Brazil. other machinery and equipment. Brazil must continue to attract FDI. and other infrastructure needs. In order to attract increasing levels of FDI. many business groups and international organizations have highlighted the need for Brazil to improve its regulatory environment for investments and to simplify the tax code. ii. chemicals. FDI Brazil is generally open to and encourages foreign investment. coffee. motor vehicles and parts. was passed in 2004. steel. the Government of Brazil initiated an ambitious infrastructure development program. vehicles. to address the country’s significant road. energy supply. textiles. iii. agriculture. known as the Growth Acceleration Program (PAC). cement. soybean. iron ore. aviation. Brazil does not have a bilateral tax or investment treaty with the United States. a key effort to attract private investment to infrastructure. rail. orange juice. Major export products include aircraft. Brazil is the largest recipient of foreign direct investment (FDI) in Latin America. Since domestic savings is not sufficient to sustain long-term high growth rates. until definitively changing the exchange regime to free-float in January 1999. In 2007. Key industries Key industries are textiles. Legislation promoting public-private partnerships. footwear and electrical equipment.currency crisis. .
Among other influences. where conditions resemble those in industrialized countries to some extent. Sociological. but national mean values mask the great disparities between the relatively developed southern and southeastern regions. But during the last several years.6% in 2006. because of its strong colonial ties with the Portuguese empire. Brazil exhibits a medium level of development according to key indicators. social exclusion is quantitatively and qualitatively pronounced and structurally ingrained. the Portuguese Catholicism introduced and the Portuguese language. i.4% of the wealth. also strongly . Millions of people still live in poverty. poverty reduction and income distribution indicators have dramatically improved. The full poverty rate fell from 34% of the population in 1995 to 25. Culture The core culture of Brazil is derived from Portuguese culture. and the socioeconomically disadvantaged northern and northeastern regions.The ways in which changes in society affect business Brazil’s inequality levels remains among the highest in the world. Roman colonial architectural styles.C. About 45% of the national wealth is concentrated in the upper 10% of the income pyramid. while the lower 20% control just over 2. Brazil still shows one of the worst values of income distribution worldwide. The culture was. however.
At the same time. German and other European immigrants who arrived in large numbers in the South and Southeast of Brazil. Brazil is the only Portuguesespeaking nation in the Americas. an indigenous language of South America. ii. Brazilians often are . and for business and administrative purposes. Language The official language of Brazil is Portuguese which is spoken by almost all of the population and is virtually the only language used in newspapers. radio. General Attitude Brazilians are warm. Some aspects of Brazilian culture were influenced by the contributions of Italian. The exception to this is in the municipality of São Gabriel da Cachoeira where Nheengatu. and free-spirited.influenced by African. television. indigenous and non-Portuguese European cultures and traditions. has been granted coofficial status with Portuguese. fun-loving. they are hardworking. iii. Brazilians are proud of their country's natural resources and diverse culture. dance and religion. cuisine. One point of pride is the “Brazilian way”—their ability to find creative ways around seemingly insurmountable problems. The indigenous Amerindians influenced Brazil's language and cuisine. and the Africans influenced language. making the language an important part of Brazilian national identity and giving it a national culture distinct from those of its Spanish-speaking neighbors. They are also outgoing and enjoy being around others. music.
The Brazilian Government seeks to develop an environment that is more supportive of innovation. such as biofuels. People in the warmest and most humid regions dress more casually. iv. most Brazilians are hopeful about their country's future. D. Personal Appearance In general. In spite of economic difficulties. Government. Some of Brazil's most notable technological hubs are . Brazilians are fashionable and like to dress according to the latest styles. But more than 73% of funding for basic research still comes from government sources.S. and the extent of bilateral scientific and technological cooperation is expanding. U.How new and emerging technology affects business? Brazil is a leader in science and technology in South America and in some fields a global leader. and academic researchers have extensive ties with Brazilian counterparts. and colors are lighter and brighter year-round. private sector. taking scientific advances from the laboratory to the marketplace. deep-sea oil production.opinionated and will argue for their convictions with vigor. i. and remote sensing. agricultural research. In rural regions. more traditional clothing is common. Technological Research Technological research in Brazil is largely carried out in public universities and research institutes. People in urban areas like to wear brand-name clothing. especially among the native peoples.Technological.
The overall outlook remains constructive for growth in IT spending. For a developing market. the Air Force's Aerospace Technical Center. ii. is an . the percentage of Brazil IT market revenues generated by services is high at around 38%. with significant capabilities in launch vehicles. launch sites and satellite manufacturing. Information Technology The Brazilian IT market is the largest in Latin America and spending on IT products and services is forecast to pass US$25bn in 2010 and US$30bn by 2012. with an expanding economy lifting millions into a middle class for whom computers are no longer beyond reach. due to the economic situation. BMI has downwardly revised its five-year forecast. the Butantan Institute. and to grow at a CAGR of 12% over the forecast period. R&D Most of Brazil's research and development activities take place in its main public universities. Brazil’s IT services market is expected to continue to grow strongly in 2010. the Brazilian Agricultural Research Corporation and the INPE. This makes Brazil's one of the fastest growing global markets. The Brazilian Space Agency has the most advanced space program in Latin America.4bn as the economy continues to bounce back from recession. in particular. iii. with total spending of around US$9.the Oswaldo Cruz Institute. which corresponds more to developed market levels. Brazil. but IT spending is still expected to increase to remain in positive territory in 2009.
it opted for a policy of gradually opening the market to foreign competitors. According to UNESCO.1 million researchers increased from 1.7%. Brazil’s GDP declined in 2009 by 0.interesting country to consider. from its 2009 levels. to $2.7% in 2007. the government has radically changed the framework conditions for industrial development. as scientific growth is in the beginning stages and offers tremendous future potential. iv.5%. Acknowledging that the import substitution model had run into a dead end. but is starting from a relatively low base.2% in 2002 to 1.048 billion and $18.637 billion respectively. thus creating an environment that requires international competitiveness and thereby forces companies to attain international levels of quality and efficiency.91%. This has been accompanied by a number of technology and industrial policy . Brazil has about 625 researchers for every million citizens of Brazil. with an equal drop in its R&D investment for that year. So Brazil has great potential in growing the number of scientific papers its researchers publish. Technology policy in Brazil: Old approaches to a new situation In 1990. Brazil’s share of the world’s 7. Its GDP and R&D are both expected to increase in 2010 by about 3. Brazil’s R&D as a share of its GDP is about 0.
How local. adapting the flow of external knowledge to its local context.programmes. Despite the accelerated pace of growth witnessed up until 1980. However. national and world legislation affects business . E. or have had little impact so far because the recession inhibited private sector investments. is made up of a steady stream of embodied and disembodied external technology flows. the level of development in the country still falls way below the levels reached by developed countries. Up until now. or only after long delays. Legal. These efforts have also been brought on by local technological demands that the external flow of technology has been unable to meet. which began in the 1930s. Even the Quality and Productivity Program that has pursued an innovative approach (mainly trying to build a consciousness for quality issues inside firms) and got a lot of publicity in Brazil apparently has only had a limited impact. v. Even so. which directs itself essentially to attending the demands of the internal market. in most cases. Industry. rare have been the cases of sectors in which firms generate flows of new knowledge in order to gain dynamic competitive advantages. they were either not implemented. Brazilian industry and technology Brazil got off to a late start in its process of industrialization. Brazilian industry has been making considerable efforts in technology directed towards.
must also obey the terms of the Federal Constitution. and consequently to those of the Federal Constitution itself. is limited by the principles established in the Federal Constitution. as defined within the Constitution. ii. As for the Federal District. is the supreme rule of the country and is the characterized by its rigid written form. however. Municipalities It enjoy restricted autonomy as their legislation must follow the dictates of the Constitution of the state to which they belong. embedded in the form of National Congress and consists of two houses: The Chamber of Deputies . their autonomy. are the Executive. The Constitution organizes the country as a Federative Republic. The 26 federate states have powers to adopt their own Constitutions and laws. which are independent and harmonious amongst them. 1988. which is both the Chief of State and the Head of Government and is directly elected by the citizens. and its equivalent to a constitution. the Legislative and the Judiciary. it blends functions of federate states and of municipalities. The Legislative. formed by the indissoluble union of the states and municipalities and of the Federal District. The Brazilian legal system It is based on Civil Law tradition. in force since October 5th. named Organic Law. The head of the Executive is the President of the Republic.i. The powers of the Union. The Federal Constitution.
Environmental.The local.8 percent of its forest cover.(lower house) and the Federal Senate (upper house). degraded forest is more susceptible to fires. deforestation in Brazil is one of the most important global environmental issues today. The finding is trouble to ecologists because degraded forest has lower levels of biodiversity and is more likely to be cleared in the future. labor and military disputes. the Superior Court of Justice. F. Nevertheless. Due to the vastness of the Amazon rainforest. Brazil's average loss of 34. A large portion of deforestation in Brazil can be attributed to land clearing for pastureland by commercial and speculative interests. There are also specialized courts to deal with electoral. Research led by the Woods Hole Research Center and the Carnegie Institution's Department of Global Ecology found that each year the amount of forest degraded is roughly equivalent to the amount of forest cleared. inappropriate World . including a majority of the Amazon rainforest. national and world environmental issues Brazil holds about one-third of the world's remaining rainforests. The Judicial powers are vested upon the Federal Supreme Court. both constituted by representatives who are elected by the citizens.660 square kilometers of primary forest per year between 2000 and 2005 represents only about 0. Further. misguided government policies. the Regional Federal Courts and Federal Judges.
During lean times. while the government lacks funds to sponsor highways and colonization programs and grant tax breaks and subsidies to forest exploiters.Bank projects. It is important to recognize that Brazil is a sovereign state with its own rights to develop its economy. While this is discouraging. Brazilian deforestation is strongly correlated to the economic health of the country: the decline in deforestation from 1988-1991 nicely matched the economic slowdown during the same period. For effective action it is imperative that these issues be addressed. How it chooses to do . ranchers and developers do not have the cash to rapidly expand their pasturelands and operations. This author personally expects at least half the Amazon to be converted for agriculture or otherwise degraded by 2050. and commercial exploitation of forest resources. Focusing solely on the promotion of sustainable use by local people would neglect the most important forces behind deforestation in Brazil. The Future It seems likely that deforestation will continue in the Brazil Amazon for the foreseeable future. while the rocketing rate of deforestation from 1993-1998 paralleled Brazil's period of rapid economic growth. there is hope that improved agricultural techniques—perhaps based on research into how pre-Colombian societies managed these forests —could maybe increase productivity on already affected areas and reduce the need for further forest clearing.
environment for such a scenario is not favorable.so will likely be influenced by economic factors which may include how western countries value the services (especially climate moderation and biodiversity preservation) provided by forests. If Western countries begin to place greater value on these services. Many local companies are undervalued and in need of restructuring. Scientists will play an important role in disseminating the value of these forests to policymakers and the media. Main drivers for doing business in Brazil • Brazil has the 10th largest economy and a population of more than 194 million. highways. this author believes it will become more so in the next few years. then the protection via the of Brazil's rainforests While can right likely now be the "purchased" open market. ports) and distribution channels in most industrialized areas • Privatization in late stages and follow-on transactions still in development . capital and technology • • • Growth potential and consumer market Broad industrial base and infrastructure. mineral and energy resources and potential • Established transportation networks (railways. and a diversified economy • Abundant agricultural.
sales and income • Multiple taxes with fast changing legislation affecting business plans and increasing risks of contingencies • Economic environment still considered volatile as compared to more stable economies • • Fast-changing business conditions Complex transfer pricing and foreign capital registration rules • Difficulties in reorganizing companies quickly. Main Challenges of doing Deals in Brazil • Complex tax and employee related regulatory environment.• Increasing globalization and international trade. with high taxes and social charges on payroll. including high costs for employee terminations • High demand for investments in the distribution channels and infrastructure • Semi-skilled and unskilled labor in certain developing areas . with Government policies favoring exports • • Goodwill generally tax deductible New regulations favoring minority shareholders.
It has to be established by at least two partners. and can be considered open or closed.a significant portion of the population not participating in the consumer market Different Modes of Setting up Business in Brazil MODES OF SETING UP A BUSINESS DEFINITION • The capital stock of the company is divided in shares. Joint Stock Company or Corporation (Sociedade Anônima S/A) • Limited Liability Company (Sociedade por Quotas de responsibilidade limitada .Ltda) • Shares represent the participation of each partner in the company’s capital. depending on whether or not the securities it issues are traded on the stock exchange. Simple partnership • A special form of the Ltda that can be . no matter what its objectives. with the partners’ liability limited to the value of their shares or quotas. and the firm must necessarily aim at profits. It is always regarded as a trading company. A private limited company may engage in commercial.• Social extremes with unequal distribution of wealth . industrial and service activities and has its bylaws registered with the Board of Trade.
• Individuals • This type of legal entity applies to industrial. (Sociedade Simple S/S) • In this type of partnership. Source: Investing in Brazil Overview Of Cement Industry . commercial and service activities. making himself or herself responsible for all the company’s acts that involve economic activities such as the production and circulation of goods and services. scientific. literary or artistic professions. the partners are jointly and severally responsible for the company’s debts should the company’s assets be insufficient to pay them.MODES OF SETING UP A BUSINESS DEFINITION utilised by partnerships without commercial activities or whose object is the exercise of the intellectual. Made up of a single individual that gives his or her name to the firm.Bangladesh The development of cement industry in Bangladesh dates back to the early-fifties but its growth in real sense started only .
Khulna 9. Chittagong Mongla Cement. Bangladesh has been experiencing an upsurge in the use of cement in recent years. Existing Cement Manufacturing Units of the country and their production capacity SL.000 390.00. more than 23 companies in the private and public sector are operating in the country. Due to higher profitability of the local cement manufacturers.000 . Increase in demand for cement has soared mainly due to the property sector boom and infrastructure development concentrated in the Dhaka Metropolitan area and other major urban areas of the country. The infrastructural development at grass root level has led to an increased demand for cement at an average rate of 8% per annum during the past decade.about decade or so. developing the infrastructure facilities and also for creating a large sales network throughout the country.000 480. Name of the Company MT) Installed Production Capacity (In 1 2 3 Chittagong Cement Clinker Confidence Cement. Existing industry Structure: The Cement industry involves a huge outlay for setting up of the plant.
Jessore Aramit Cement.000 540. Emirates Cement and Lafarge are most important. the developed countries. CEMEX. these groups are in favour of .000 200.000 180.000 180. Chittagong M I Cement Eastern Cement.000 200.000 23.000 450. Due to environmental hazard and health consciousness. Jessore Diamond Cement.000 90.000 180.100.000 180. Pabna Niloy Cement.380.000 Units under Multinational Giants: Among the Multinational giants.000 180. Dhaka Seven Ring Cement Mollah Cement Saiham Cement Madina Cement S Alam Cement A R Rahaman Cement Padma Cement Royal Cement TOTAL 1.000 30. Dhaka Modern Cement. Sunamgonj Ayeenpur Cement. especially the Europe. Dhaka Chhatak Cement. Scancem.000 210.000 8. Sylhet Doel Cement.000 660.000 180.4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Meghna Cement Holcim Cement. Chittagong Ahad Cement.000 550.000 267.000.000 210.000 1. Holder bank.
.4 million MT of cement. crush the same. b. mix them with gypsum and put them into bags with a marginal value addition. Increasing supply of quality cement from the local manufacturers. Estimated Supply situation of Cement in Bangladesh: The state owned Chhatak Cement Factory and Ayeenpur Cement Industries Limited in private sector are two basic cement factories in the country. Continuous devaluation of local currency has put the imported cement in severe price competition with local products. while the rest of the factories simply import cement clinkers. The volume of annual import of bagged cement in the country was around 3. utilising on an average. but presently hardly any import of cement is being made.5 million MT till 1995-96. 65% of their installed capacity. c. which uses limestone to produce cement. The major reasons behind the decreasing demand for the imported cement are as below: a. The 24 units currently produce 5.setting up of cement factories in the developing regions like Bangladesh. Diminishing strength of imported cement due to long time span between production and usage (120 days on an average).
while production is expected to grow at a higher rate from the year 2003 onwards with the completion of a few under construction factories. The fear of environmental hazard. With the introduction of the National Housing Policy and expansion schemes of the House Building Finance Corporation (HBFC) and other house finance agencies. On the basis of the capacity utilization and the future expansion programmes of the existing units. health consciousness etc of the developed countries and the low cost of labour.d. which makes local production more attractive.5% and 68% respectively. our projection of supply of cement in the country during the next five years stands as below: Estimated Demand for Cement in Bangladesh: Increase in demand for cement is dependent on the growth of property sector and infrastructure development of the country. and also the production capacity of the under implementation units. favorable tariff . the Middle East and other markets. the demand for cement is expected to grow further in future It is expected that the Demand for cement would grow at around 10% per annum. Potentiality of Cement Export from Bangladesh:The local production scenario demonstrates that it would not only be able to meet the entire domestic demand but also export to the developed countries. At present Import duty and Tax on clinker and finished cement are 40.
It is anticipated that by the year 2004. Possibility of market dominance by the Giant Multinational Companies The multinational companies. who have set up plants in the country.policy and better infrastructural facility of Bangladesh likely to help us to make an inroad in the international market. This integration will continue to take place and the ongoing process of acquisition and its acquisition cost of the existing facility will determine justification of future establishment of a brand new factory. In apprehension. believe that the local production would be more than sufficient to meet the domestic demand and they would soon be able to dictate the market price as well as supply of cement through controlling the source of procurement of clinker as well as the network of distribution of finished cement. Pest Analysis of Bangladesh Political • Environmental issues Environmental dreadful conditions and depletion of natural resources are often observed in Bangladesh due . there is a number of locally established cement factories who are planning to get out of the business by way of selling to the giant operators. the cement market shall be dominated by major giants leaving some of the left-out small producers to continue to operate in their controlled market.
and it has enacted a number of policies to this end.to poverty. Natural calamities like floods. It is manifested by deforestation. cyclones and tidal-bores also result in severe socio-economic and environmental damage. dates mostly from the period of British rule. however. There are no distinctions between foreign and domestic private investors regarding investment incentives or export and import policies. The legislation in force are as follows: Patent and Design Act of 1911 Patent and Design Rule of 1933 Trademark Act of 1940 Copyright Act of 1999 • Government policies for Foreign Investments The stated policy of the government of Bangladesh (BDG) is to pursue foreign investment actively. Incentives for investors include: 100% . over-population and lack of awareness on the subject. etc. • Legislation The existing Bangladeshi legislation in this area. destruction of wetlands. depletion of soil nutrients.
According to the gradation by the International Monetary Fund. Economic • Economy situation The economy of Bangladesh is constituted by that of a developing country. fish. vegetables. with RMG.a. ceramics. and tax exemptions. leather and leather goods.500 (adjusted by purchasing power parity) significantly lower than India. Bangladesh ranked as the 48th largest economy in the world in 2009. duty-free imports for 100% exporters. • Bangladesh Corporate Tax Rates The standard rate of corporate tax in Bangladesh is 27. nearly half of Bangladeshis are employed in the agriculture sector.889 billion. tax holidays.ownership in most sectors. More than half of the GDP belongs to the service sector. rice as other important produce.497. reduced import duties on capital machinery and spares.2009 tax years. with a gross domestic product of US$224. The economy has grown at the rate of 6-7% p. US$1.5% in 2008 . Pakistan. over the past few years. both which are also lower than the world average of $10. Its per capita income in 2009 was est. This is the standard corporate tax rate applicable to publicly traded .
10% rebate on total tax is allowed. ferries do capsize. a list including tax rates for other corporations are as follows: Publicly Traded Company 27. and thus uses a wide network of water-based public transportation. Every year there are dozens of fatalities resulting from ferry accidents. Typically overloaded and top-heavy.5% Non-publicly Traded Company 37.5% Bank. particularly during the monsoon season from May to October or during unexpected thunderstorms or windstorms. Insurance & Financial Company 45% Mobile Phone Operator Company 45% If any publicly traded company declares more than 20% dividend. Ferries and other boats compete with the railroads as a major means of public transport. • Seasonality/Weather Issues Bangladesh is a country crisscrossed with rivers. Social .companies in Bangladesh.
Although Consumer Rights Movement. Technological The need for faster technological development is increasingly felt in Bangladesh. Companies can contribute to social and environmental Social into their core objectives. They are increasingly aware that Social responsibility can be of direct economic value. business organizations can thereby investment. commercial and social approach. more companies to have Social attaching importance responsibility in the local market as well. enforcement of government regulations and a structured view regarding the economic importance of Social responsibility are not yet so widespread in the corporate gradually world in Bangladesh. as a business through strategic strategy. So. inclusive financial. leading to a long term strategy minimizing risks linked to uncertainty.Companies are facing the challenges of adapting effectively to the changing environment in the context of globalization and in particular in the export sector in Bangladesh. not a cost. much like quality management. Development plans of Bangladesh have emphasized science and technological . This is an have an integrating investment responsibility management instruments and operations.
institutional Dissemination and and manpower documentation development. A National Science and Technology Policy has been formulated and adopted by the Government. The proper planning is required for its effective transfer through acquisition. multinational ﬁrm has interest to by contrary acquire ﬁrm with high productivity when the ability of integration is suﬃciently weak and the gap is comparatively large and cross border M&A could be the most welfare-enhancing entry mode when the technology gap is very large. the multinational ﬁrm acquires the ﬁrm with low productivity when the ability of integration is strong and the gap of technology is suﬃciently small. reviews the activities of different institutions and provides direction towards S and T research and activities. the variation of transport cost can alter the choice of target ﬁrm through the inﬂuence of price acquisition. and either greenﬁeld investment or export option can be the most welfare-enhancing entry mode in case of medium ability of integration. adoption. Modes of entry in general We found that cross border M&A is always the optimal entry mode under both greenﬁeld investment and export credible threats. As the country is heavily dependent on imported technologies. facilities. If the greenﬁeld investment entry mode is viable. Under an export credible threat. assimilation and National Council for Science and Technology (NCST) determines S and T policies. .research to develop technologies through adoption of imported technology as well as development of indigenous technologies. It has laid down the directions for S and T activities and research.
If there is maximum ability in the host country. the second option is to build a new ﬁrm abroad. the attention shifted to the composition of FDI as ﬁrms can choose between diﬀerent types of FDI. One potential entry mode is to acquire an existing foreign ﬁrm via a cross border M&A. Recently. people have also seen cross-border M&A increasing in importance relative to greenﬁeld investment . As well as seeing an increase in total FDI. not only the M&A of low-technology ﬁrm but also the acquisition of high-technology ﬁrm can enhance more the welfare compared to the other entry modes. which is usually referred to as greenﬁeld investment.
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