Sr report on strategic management concepts for lucky cement

STRATEGIC MANAGEMENTREPORT

Submitted by : MADIHA RAZZAQ (19)

AMEERA JAHANGIR (02)

HUMERA.M.HANIF (14)

pg. 1strategic management report (2014-15)


ACKNOWLEDGEMENT

First and foremost We are grateful to almighty Allah who gave

us strength,knowledge to complete this comprehensive

assignment.

We are deeply indebted to “MR.SHAMEEL AHMED ZUBEIRI”

our mentor who taught us each and every concept related to

strategic management which enabled us to see how

every thing taught in class is being practiced by organization

in corporateworld.

We also want to express our deepest gratitude towards

“MR.Taufiq yousuf (CFO) and “Mr. Faisal jaffer (asst HR manager ) “

lucky cement who shared valueable information with us ,essential

for the creation of this report .


THANK YOU SIR

We just want to take some time to express how much we enjoyed being in your class this semester

Thank you so much sir for your support and encouragement through this semester We can’t think of a teacher who could have made this subject and semester any more special than you did

You truly are a standout teacher because of your sheer dedication to your students. Being able to count on you for extra help and clarification was really special to us and shows how much you care about the success of your students. This assignment proved to be a tremendous learning for us. This subject was never taught to us in the manner you taught

We especially loved the way you always related the lessons to real-life examples that allowed lecture to make more logical sense to students and always give us something to relate the lessons to. It made it so much easier to recall the lecture we needed it for research assignment.

Sincerely,

Humera M Hanif

MadihaRazzaq

Ameera Jahangir

CONTENTS PAGE NO

6


EXECUTIVE SUMMARY

BRANDS OF LUCKY CEMENT 7

8

STRENGTHS +WEAKNESSESS +OPPORTUNITIES +THREATS 9

IFE, EFE, CPM MODELS 10----12

SWOT matrix + SPACE matrix 13 ----16

QSPM 17

VISION + MISSION + STRATEGIES 18-----20

CONCLUSION + BIBLIOGRAPHY 21 -----22


VISION AND MISSION

INFORMATION GATEHERED

INPUT STAGE

MACHING STAGE

DECISION STAGE

ANALYSIS

INTRODUCTION

RECOMMENDATIONS

Executive SUMMARY:-The purpose of this report is to analyze the strategic management practices at organization along with in depth understanding of applying recommended strategic management processes.in this regard we have chosen LUCKY CEMENT LTD a leading cement manufacturing company based in Pakistan. It is also listed in all the major stock exchanges of Pakistan

After surveying and observing the management particularly strategic procedures,p practices, and policies at Lucky Cement we have conducted a detailed analysis of internal as well as external environment of organization

We developed IFE matrix and calculated a weighted score of 3.00 which shows company is effectively utilizing its strengths and overcoming its weaknesses we also developed EFE matrix and calculated a weighted score of 2.55 which shows company’s strategies effectively taking advantage of existing opportunities and threats in the industry

SPACE matrix shows that company is on aggressive strategy. BCG model shows company is in STAR quadrant.QSPM matrix Shows Company is working on two different strategies I.e. MARKET DEVELOP MENT and MARKET PENETRATION. All other relevant matrices are also developed

On the basis of above information we have arrived on specific recommendations from strategic management point of view. We have supported our suggestions on the basis of strategic management theories, metrics and exhibits presented in the report

INTRODUCTION :-


Cement Industry of Pakistan:-

All Pakistan Cement Manufacturer Association (APCMA) is a governing body for cement industry. APCMA plays a significant role in protecting the cement industry to the government in respect of formulation of government policies for the cement industry.

As per records of APCMA (2013-2014)

Installed production is capacity was 44.7 million tons 33.4 million tons cement produced in FY 2013-2014 Main export markets are Afghanistan, srilanka Africa In 2013-2014 capacity utilization was 75% whereas consumption was 175 kg.

History of lucky cement :-

Lucky cement was founded in 1994 by Mr. Abdul RazzaqTabba. The company initially started factories in pezu district of KPK (Khyber pukhtunikwah).it now also owns a factory in KarachiLucky cement has been sponsored by one of the largest business group in Pakistan the younus brothers (YB) group. The YB group is engaged in diversified manufacturing activities including textiles, weaving, spinning, and power generation. Currently lucky cement has the capacity of producing “25000 tons” per day of dry cement processes

BRANDS OF LUCKY CEMENT:-

The company currently is producing five brands of cement

Lucky cement Lucky star Lucky sulphate resistant cement (SRC Lucky slag cement (OC) Ordinary Portland cement (OPC)


VISION:- We envision being the leader of the cement industry in Pakistan, identifying and capitalizing on new opportunities in the global market, contributing towards industrial progress and sustainable future, while being responsible corporate citizen

MISSION:-Our mission is to be a premium cement manufacturer by building a professional organization, having state-of-the-art technology, identifying new prospects to reach globally and maintain service and quality standards to cater to the international construction needs with an environment-friendly approach.

INFORMATION GATHERED:Strengths:


1) Financially strong2) High product quality3) Infrastructure near ports 4) Highest export share 5) High pay scale 6) Large dealer network 7) Employee development

Weaknesses:-

1) High transportation cost2) Low advertising and exposure3) Increasing general and admin expense4) Capital intensive industry5) Increased production cost 6) Highly Localized and regionalized markets 7) Low gratuity and PF funds

Opportunities

1) Upcoming national building projects2) Increasing demand for cement in gulf region 3) Market development and penetration 4) Infrastructure development 5) Population increase causing increase in real state 6) Increase production to reduce cost and achieve economies of scale 7) Global expansion8) Undiscovered markets of northern regions of Pakistan

Threats: -

1) Governmental regulations 7) Fluctuation in currency rates2) Price competition 3) Alliance opposition4) Fluctuation in demand5) Political instability 6) Increase production cost

INPUT STAGE:-


INTERNAL FACTOR EVALUATION (IFE) MATRIX

The above IFE matrix lists the top 12 key factorsof lucky cement .lucky cement is doing best on

“export share” and “high product quality “ whereas lucky cement is having major problems with its “regionalized and localized market” and “transportation” .

EXTERNAL FACTOR EVALUATION (EFE) MATRIX


STRENGTHS WEIGHT RATING WEIGHTED SCORE

Revenues increased 0.09 4 0.36High product quality 0.12 4 0.48High pay scale 0.10 3 0.30Highest export share 0.20 3 0.60Inventory turnover up 3.58 to 4.00

0.05 3 0.15

Larger dealer network 0.08 4 0.32Employee development 0.06 4 0.24

WEAKNESSESLow advertising 0.05 2 0.20Increase in cost of production 0.10 1 0.10High transportation cost 0.07 1 0.07Highly regionalized and localized market.

0.08 1 0.08

TOTAL 1.00 2.90

OPPORTUNITIES WEIGHTS RATINGS WEIGHTED SCORE

Increase in infrastructure development 0.20 3 0.60

Unexploited markets in North Pakistan 0.05 3 0.15Increase in population causing growth in housing sector

0.10 4 0.40

Global expansion 0.15 4 0.60Increase production to reduce cost and achieve economies of scale

0.07 3 0.21

THREATSGovernment regulations 0.15 2 0.30Fluctuation in market demand 0.08 1 0.08Price competition 0.10 3 0.30Political Instability 0.03 3 0.09Rising input costs 0.07 2 0.14TOTAL 1.00 2.87

From the above EFE matrix the most important factor to being successful in lucky cement is government regulations as indicated by the 0.15 weight. .also the lucky cement is doing excellent in “global expansion” indicated by the weight “ 0.15”

The total weighted score of “2.87” is quite above than average score of 2.5

COMPETITIVE PROFILE MATRIX (CPM)


2.87 222rwr2

LUCKY CEMENT DG KHAN CEMENT PIONEER CEMENTCRITICAL SUCCESS FACTORS

WEIGHT RATING SCORE RATING SCORE RATING SCORE

Advertising 0.10 3 0.30 4 0.40 2 0.20

Product quality 0.20 4 0.80 3 0.60 3 0.60

Price competitiveness

0.15 4 0.60 4 0.60 4 0.60

Management 0.15 4 0.60 3 0.45 4 0.60

Financial position 0.15 4 0.60 2 0.30 2 0.30

Customer loyalty 0.10 3 0.30 2 0.20 3 0.30

Global expansion 0.10 2 0.20 1 0.10 1 0.10

Market share 0.05 3 0.15 2 0.10 2 0.10

TOTAL 1.00 3.5 2.75 2.80

The most important factor being successful in the cement industry “product quality “as indicated by weight of 0.20

From this table “lucky cement “is strongest in “product quality, managementand financial position” indicated by rating of “4”

DG khan cement is strongest in advertising (rating of 4)

Over all “lucky cement “isstrongest asindicatedby the total weighted average score of “3.5”

MATCHING STAGE:SWOT ANALYSIS:-

“SO “strategies “wo ” strategies


2.80

STRENGTHS

1. Financially strong

2. High product quality

3. Highest export share

4. High pay scale

SETUP NEW FACTORIES IN NORTHERN REGIONS OF PAKISTAN(S1 , O1 )

INCREASED EXPORTS TO GULF REGIONS

( S1 ,S2,O2)

BUILD UP EXPOSURE AND BETTER BRAND IMAGE THROUGH RIGHT PROMOTIONAL MIX

( W1 , O1 ,O2 )

DIVERSIFY IN GULF REGION ((w1,o22 )

WEAKNESSES

1. Low advertising and exposure

2. Low gratuity and PF funds

3. Increasing general and administrative expenses

OPPORTUNITIESOPPORTUNITIES

1. Upcoming national projects

2. Demand for cement in gulf region

3. Expansion in cement industry

“ST “ strategies “WT “ strategies

OVERCOMING COMPETITOR’S PRESSURE THROUGH MORE QUALITY (S2,T2)

RESOLVE ALLIANCE OPPOSITION THROUGH TOP MANAGEMENT INVOLVEMENT (S1,T3)

REDUCE GENERAL & ADMIN EXPENSES TO COPE WITH NARROW COMPETITION(W3,T2)

CONSIDER EMPLOYEE’S PERKS TO AVOID HASSELS OF LABOUR UNIONS (W2,T3)

THREATS1. Govt

regulation on slots

2. Price competition

3. Opposition alliance


The concept of determining strengths,weaknesses,opportunities,threats is the fundamental concept behind SWOT model.to present the model in a more understandable way scholars came up with SWOT matrix.it is only a graphical representation of SWOT framework.

SPACE MATRIX (STRATEGIC POSITION AND ACTION MATRIX)

Increase in net sales revenue 4

Continuous increase in stock value (Rs 130/=) 6


Increased Earning price share-EPS (Rs 2.1 per share) 5

Total: 15

Industrial Strengths:RatingIncreasing competition in construction sector 4

Increasing domestic demand for cemente i.e. 92% 5

Enhancement in the budget for Annual Development Plan 5

Increasing growth rate 3

Total: 17

Environmental Stability:Rating

Allowance of subsidized cement imports & lesser rebates -4

Cut throat competition has created instability. -3

Currency rate difference has given much loss. -3

Increasing rate of inflation. -4

Rapid technological Change. -3

Total: -17

Competitive Advantage: RatingStrong distribution network. -2

High quality products. -3

High export share. -4

Market development in Gulf countries. -2

Govt. Project as DGP Army. -3

Total: -14

THE SPACE matrix :-


Since the lucky cement lies in the “aggressive quadrant” it means it is excellent position to use its internal strengths to take advantage of external opportunities and overcome internal weaknesses and avoid external threats .therefore market penetration ,market development ,product development,backward,forward,horizontal integration or diversification can be the most feasible .

DECISION STAGE:- QSPM (quantitative strategic planning matrix)

STRATEGIC ALTERNATIVESGlobal

expansionExposure and brand image by right

promotional mix

KEY FACTORS WEIGHTS AS TAS AS TAS


OpportunitiesUpcoming national building projects

0.15 1 0.15 4 0.60

Demand for cement in Gulf region

0.20 4 0.80 1 0.20

Expansion in cement industry due to house building loans by banks

0.10 1 0.20 4 0.40

ThreatsGovernment regulations 0.15 4 0.60 3 0.45Price competition 0.10 2 0.20 3 0.30Alliance opposition 0.15 2 0.30 3 0.45Fluctuating currency rates

0.10 4 0.40 2 0.20

1.00StrengthsStrong financial position 0.15 3 0.45 4 0.60High product quality 0.12 3 0.36 4 0.48Highest export share 0.20 4 0.80 3 0.60High pay scale 0.10 3 0.30 4 0.40Larger dealer network 0.08 2 0.16 3 0.24

WeaknessesLow advertising 0.10 1 0.10 3 0.30Increasing General & Administration expenses

0.05 - - - -

Low gratuity & PF funds 0.10 1 0.10 3 0.30Increased production cost

0.10 1 0.10 4 0.40

1.00 5.2 5.92

The Sum Total Attractiveness Score is 5.2 for strategy ” GLOBAL EXPANSION” and 5.92 for strategy “ BUILD UP EXPOSURE & BRAND IMAGE BY RIGHT PROMOTIONAL MIX”.

Opportunities are highly attractive in building brand image by right promotional mix. Threats show more concerns with global expansion. Government regulations, price competition and currency rates are most attractive threats to be reduced. Financial position, product quality and pay scales are attractive to build up brand image whereas export share shows highly


5.92

attractive to capitalize the strengths. Advertising, gratuity funds and production costs are highly attractive to improve the weaknesses.

ANALYSIS:-

Evaluation matrix of mission statement:-S.NO COMPONENTS AVAILABILITY

1. Customer Yes

2. Product/service Yes

3. Market yes4. Technology Yes

5. Concern for survival growth, profitability

yes

6. Philosophy7. Self-concept yes8. Concern for public image yes9. Concern for employees No

Proposed Vision:-

“To transform lucky cement into a model cement manufacturing company engaged in nation building through most efficient utilization of resources and optimally benefiting all stakeholders while enjoying public sector and goodwill in local and international market.”

Proposed Mission:-

“Our mission is to be perceived by our customers by providing highest quality of cement using state of the art technology and retaining personnel of exceptional ability while maintaining its leading position aims to build up on its present state of profitability with a view to maximize shareholders wealth and care for global environment.


analysis :-All the strengths, weaknesses, opportunities and threats were indicated by respondent (CFO) along with ratings as well. However weighs were given by us on the bases of industry.

Of the information obtained we sorted out different strengths, weaknesses, threats and opportunities for the purpose of developing models.

In “IFE “matrix lucky cement has received a total of 2.90 indicates a greater score compared to the average weighted score of 2.5. It also depicts that lucky cement is above average in its overall strengths. However there still remains a room for improvement to achieve the highest score of “4”

In “EFE matrix” lucky cement has scored a total of 2.87 which shows that company is pretty well performing by taking advantage of external opportunities and avoiding the threats facing the firm. Lucky cement must capitalize on “unexploited markets of northern regions of Pakistan “and increase production to reduce cost” and increase in infrastructure opportunities and the “fluctuation in market “Threat

In competitive profile matrix (CPM) lucky cement has got the highest score of “ 3.5” but it’s close competitor “DG cement” has got the highest score in “advertisement” therefore lucky cement should go for more and more advertisement in order to give exposure to consumers and creating effective brand loyalty

The matrix shows that lucky by being financially strong and with the opportunity of upcoming national projects leads to setup factories in northern regions of Pakistan. Being financially strong & high product quality, Lucky cement should devise a strategy to diversify in gulf region as having demand for cement thereCompany can minimize the price competition and maintain its product quality by overcoming competitor's pressure through more quality.The company have the ability to consider employee's perk to avoid Hassel's of labor by disengaging the opposition alliance and by minimizing the low gratuity & provident funds.

We also found that lucky cement lies in first right quadrant of SPACE matrix.it implies that C

COMPANY is staying at close is their basic competencies. The industry is growing and company is financially stable with profound competitive advantage. Lucky cement is in “market penetration “through aggressive selling and market development (new factories being set and exports to gulf region).

The QSPM analysis indicates lucky cement should build up better brand image by promotional mix.


RECOMMENDATIONS

RECOMMENDED STRATEGIES:

After conducting thorough research study and keeping in view the external and internal environment of the company, we suggest Lucky Cement Pvt Ltd to go for these strategies:


1. Market Penetration : Currently construction and cement industry is at top. After natural disasters, number of construction projects have been initiated by the Government. Moreover keeping in view the rising trend of house financing through banks and investment in estate and property, we recommend Lucky Cement to go for market penetration.

2. Market Development : During recent years, the demand for cement has drastically increased in Gulf region. In order to cater to the increasing demand and to develop new markets, Lucky Cement should increase its exports towards Gulf region and also in other countries, hence developing a market in a new geographical segment.

GENERAL RECOMMENDATIONS:

1. Lucky Cement despite of being the industry leader, still has not captured the brand image as its other competitors. The reason is the lack of publicity and advertisement. Lucky Cement should concentrate on the consumer market through better promotional mix programs.

2. Although the pay scale of employees currently working with Lucky Cement is quite high, in comparison with its competing cement manufacturing organizations, still the turnout rate is very high. The reason being low gratuities and benefits after retirement due to which most of the employees quit. In order to retain its valuable Human Resource, Lucky Cement should pay attention towards this area.

3. Lucky cement need to implement contingency planning to cope with the future constraints.

CONCLUSION:-

Lucky cement like any other responsible organization is redefining its business operations in a fundamental way. It is working to promote sustainable development and integrating its endeavors of profitable growth with the initiative of environment all protection &uplifting the quality of life of the present &the future generations .The company have undertaken


projects that will enable them to meet the need for global sustainable development while enhancing share holder value.

The org is moving towards its growth mode and can aggressively employ the strategies of market development market penetration product development backward and forward integration as per need of demand of the org.

BIBLIOGRAPHY: _-

Strategic management (concepts and cases) by Fred.R.David ( thirteen edition )

Annual report 2013-2014 – lucky cement Ltd

All Pakistan cement manufacturing association manual 2014

www.Lucky-cement.com


www.pakistaneconomist.com

www.dgcement.com


http://www.dgcement.com/

http://www.pakistaneconomist.com/

Sr report on strategic management concepts for lucky cement

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ife matrix

efe matrix

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