Case study

vision Our vision We seek to establish cement industry in the State of Kuwait and maintain its position as a leading Company in the production of various types of cement locally and regionally through excellence in terms of quality, customer service, price and production capacity. We also seek to make the Company the most trustworthy for its clients and partners in terms of production, solutions and services in the cement industry. Our Mission Our mission is to continue performing our role as key partner in the urban, industrial and economic development in the country, preserve the environment by providing environmental mechanisms and systems aiming to support the sustainable development of cement industry by using the latest environment friendly technology, make the Company the most attractive place for the national manpower, provide safe and stable work environment for workers and contribute to community service and development. Our Objectives Our objectives are to increase the volume of our sales and acquire significant share of the cement market in Kuwait, by communicating and providing the best services to our existing and prospective clients and building strong relationships with them, strengthening the Company’s position and establishing high confidence among clients by supplying the Kuwaiti cement to them with high quality and conformity to the Kuwaiti and international standards. Our Values We aspire excellent performance of our works and services by adhering to the values ​​of integrity, excellence, team work spirit, mutual respect and customer satisfaction, safeguarding shareholder’s rights and providing them best earnings, providing safe work environment for employees and caring for them, as well as adhering to social responsibility KSC adhere to the clan culture A working family, tradition and rituals, teamwork and spirit, self-management, social influence General environment analysis (i will put the important ones) Economic segment Inflation rate (needed to know the strength of the kuwati currancy in the future, because most raw materials are bought from outside, compare it to US inflation rate bcause thats what the payments are made with, we also want predicted inflation rate) https://www.statista.com/statistics/438867/inflation-rate-in-kuwait/

Interest rate (important for if the company wants to take loans, compare it to the usa) Unemployment rate (for us whats important are the laws regarding foreign workers, future might not be good because the goverment want to reduce foreign workrs and have more kuwaities in the company) Economic growth (bad, GDP growth for kuwait is not high, but there is the plans for building the new city) Political/Legal segment Labor law It is easy for the company to bring foreign workers and fire them, the company have to higher a percentage kuwati employees Taxation law No taxes in kuwait, see possible future changes, could be an issue in the future Antitrust law (laws that the government put againt monopoly) Currently the goverment own a percentage in KSC and uses it for its projects and for the “kuwatit cement support” but competitors demand more and more that these unfair treatments to them to stop which would be bad for the company Demographic segment Population size It is estimated that 600,000 kuwaiti are below the age of 20, almost double the current workforce, so there will be plenty of new houses to be built Income distribution Kuwait have a good percentage of middle class how get government land and support and can build house Age structure Lots of young people in kuwait, kuwaitis want to have their own houses Ethnic mix Lots of foreigners, but foreigners mostly live in apartments, with government seeking to prevent their numbers from increasing, there might not be much demand coming from them in the future

Sociocultural segment Levels of education Highly educated people, yet economy depends on oil Concerns about environment Bad concern for the environment, which is good for the company because cement manufacturing do lots of pollution Women in the workplace There is a trend seeking to put more women in the workplace yet by law women cant work in hazardous places, so cement factory is all men Shifts in preferences regarding product characteristics Some prefer cost, some prefer quality, not sure if there is another change Shifts in career preferences Physical sustainable segment Growing concerns for sustainable environment development No concern over it Global segment New global markets The potential to ship to iraq Broad base of production factors Since salaries in india are rising, lots of good workers no longer prefer to work and live in kuwait Different cultural and institutional attributes With the rise of living standards in india, lots of workers hate their living standards in kuwait, kuwait is considered to be the worst place for foreigners to live in Technological segment Growth of the internet Industry 4.0 can help develop the factory Information and communication technologies Need to utilize industry 4.0 for that Technological innovative products Industry 4.0 The Five Forces Framework (Michael Porter):

Bargaining power of suppliers Raw material suppliers Raw materials: (the company do have a good bargaining power with suppliers, the company purchase large quantity of limestone from the supplier, as with other materials, the company can always switch and by from lots of different places in the world if it gets better offers) (the company dont have to stick to certain raw material suppliers giving it a better negotiation position)

● Limestone (long term contract with the supplier, UAE) ● Bauxite(short term contract with the supplier, south africa) ● Iron ore ● Copper slag ● Sand

(get it from kuwait, the government gave them a land, so its cheap) Support materials:

● Gypsum ● Coal ● Tyre chips

(get it from kuwait, cheaper than coal) Maintenance suppliers For the maintenance suppliers, the suppliers have the upper hand because the company have to buy from the ones that provided the equipments “need to check” Bargaining power of buyers Buyers are: Government Tends to favor kuwait cement company Citizens Get their supported cement from KSC, dont have lots of bargaining power Companies Big construction companies have lots of bargaining power Rivalry among competing firms

● Few competitors (can foreign companies enter freely, if they can then competition can be bigger, I think that they can)

● Low switching costs ● Slow industry growth ● High exit barriers

(so competition is high)

Threat of new entrants Barriers to entry

● Companies can buy from outside the clicker and sell cement in kuwait ○ Low capital requirement

● Low switching costs ● Government policy against monopoly which is bad for KSC ● Hard to get good product differentiation so easy for competitors to enter

the retaliation expected from existing firms ● Big expected reaction from KSC because slow industry growth and have major stake,

but the issue is that KSC is in a bad financial position so may not be able to have a big reaction

Threat of substitute products Low risk, cement is a main ingredient for building in the kuwait Competitor analysis Kuwait cement company production: https://kuwaitcement.com/index.php/products/

● :( OPC Type I ) األسمنت البورتالندي العادي ● :( SRC Type V ) األسمنت المقاوم لألمالح رقم / 5 ● :(WOPC Type 1) األسمنت األبیض البورتالندي ● :((OWC – Class G (HSR Grade) أسمنت آبار البترول ● GGBS مادة

3000 bag: 1.350 Strengths Certifications weaknesses Acico company Production: http://www.acicogroup.com/ar/Sectors/Cement

● األسمنت البورتالندي العادي - النوع األول ● األسمنت المقاوم – من النوع الثاني ● األسمنت األبیض - النوع الثالث أو الرابع ● TGPS الجیبسوم (الجص) الطروادي المتنوع االستخدام

Future objectives:

Positiveness Since cement is not their main business and dont have as much stake in it, they may not be willing to fight for markershare like KSC Negativeness They have other business in which they can use its resources to help them compete in the cement industry

3000: 1.070 Kuwait portland cement company Production: https://portlandkw.co/ar/%d8%a7%d9%84%d8%a3%d8%b3%d9%85%d9%86%d8%aa/ 3000: 1.090 Hilal cement Production: https://www.hilalcement.com/ar/mntjtn

● (I) األسمنت البورتالندي العادي - ● (V) األسمنت المقاوم لألمالح - ● األسمنت األبیض -

Strengths Certifications

● ISO 9001 ● ISO 14001

Weaknesses 3000: 1.100 Current strategic issues They don't have a marketing department so no good marketing analysis They predicted that the demand will increase, thus invested millions of KD on a new cement line, demand did not increase and now they only operate on one line with not full capacity Their market share is getting less, and this year they announced a loss in profit They manufacture the product itself from the beginning, for every 21000 ton they bring, 16000 ton of cement get produced so there is lots of wastes giving the competitors an advantage as they can important finished cement with far less waste Their product do maintain high quality, but at a high cost. And their quality gap have been reduced with some of their competitors leading for them to invest in: They have to update their mills which costs them additional millions just to keep up with competitors They have ISO 9001, but so does the competitors now HR, employees are leaving Issues with foreign and kuwaities employees https://alqabas.com/article/528644-%D8%A7%D9%84%D8%B1%D8%A7%D8%B4%D8%AF-% D9%84%D9%88%D9%84%D8%A7-%D8%A3%D8%B3%D9%85%D9%86%D8%AA-%D8%A7 %D9%84%D9%83%D9%88%D9%8A%D8%AA-%D9%84%D8%AA%D8%B6%D8%A7%D8%B 9%D9%81%D8%AA-%D8%A7%D9%84 ذلك على الرغم مما تواجهه من منافسة سعریة شدیدة من االسمنت االیراني وغیره، اضافة الى ما یشهده سوق البناء من حالة ركود نتیجة التأخیر في بعض المشاریع التنمویة الحكومیة الكبرى، أو بدء التنفیذ من قبل المقاولین، والتأخر في إنجاز مشاریع البنیة التحتیة لبعض المدن السكنیة، وغیرها من المشاریع. وكذلك عدم الحصول على الترخیص الالزم من وزارة التجارة والصناعة بتصدیر االسمنت إلى السوق العراقیة، إلى جانب ما تمر به المنطقة من أحداث سیاسیة زادت من حالة الركود االقتصادي، والتي حالت دون تمكن الشركة .من تشغیل االفران والطواحین بكامل طاقتها االنتاجیة https://www.mubasher.info/news/3373962/%D8%AA%D8%AD%D9%84%D9%8A%D9%84-%D 8%B4%D8%AF%D8%A9-%D8%A7%D9%84%D9%85%D9%86%D8%A7%D9%81%D8%B3% D8%A9-%D8%AA%D9%87%D8%A8%D8%B7-%D8%A8%D8%A3%D8%B1%D8%A8%D8%A7 %D8%AD-%D8%B4%D8%B1%D9%83%D8%A7%D8%AA-%D8%A7%D9%84%D8%A3%D8%

B3%D9%85%D9%86%D8%AA-%D8%A8%D8%A7%D9%84%D8%AE%D9%84%D9%8A%D8 %AC Analysis: high competition is lowering the profit of cement companies Past strategic actions Using the government to get more support:

● Complaining about foreign competition ● Asking for import taxes to be lifted on its imported coal material

https://www.alraimedia.com/Home/Details?id=3b769bb0-4362-45b6-aff0-658263bdf541 Using alternative fuel from the local market: Tyre chips, garbage https://www.alanba.com.kw/ar/kuwait-news/municipal-council/933944/08-11-2019-%D8%AF%D 8%B1%D8%A7%D8%B3%D8%A9-%D8%A7%D8%B3%D8%AA%D8%AE%D8%AF%D8%A7 %D9%85-%D9%86%D9%81%D8%A7%D9%8A%D8%A7%D8%AA-%D8%A7%D9%84%D8%A 8%D9%84%D8%AF%D9%8A%D8%A9-%D9%83%D9%88%D9%82%D9%88%D8%AF-%D8% A8%D9%8A%D8%A6%D9%8A/ Cement mills upgradation To improve its quality and maintain a good standards Iraq expansion Expand to line 2 Consultancy Recommendations and solutions

● Waste reduction should be a top priority ● Entering the iraqi market ● Buy finished cement from other countries if its going to cost less

Forsaken differentiation strategy and adapt cost strategy

Corporate level strategy

Business level strategy

● Establish marketing department ○ Analyzing the market, customers, competitors

Because the cement is a homogenous product, seeking differentiation strategy is not the best, the company have enough differentiation points and dont need to have strategy for more “the government own part of it and use it, it is 100% made in kuwait”, but need to implement a cost strategy with prioritizing cost reduction Functional level strategy