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Vikram Parekh Submitted byMayank Mathur Madhukar Thorat Kumar Kashyap Laxmi Khandayat (ITM XMBA-24)
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Flow
Introduction Strategic Management Process Mission Vision Values Overview of Cement Industries Key Industry statistics & Dynamics Market Analysis PESTLE analysis SWOT analysis Competitors Analysis -Porters 5 Forces Model Analysis Of Company Value Chain Strategies
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Movie
INTRODUCTION
o ACC was formally established on August 1, 1936. Sadly, F E Dinshaw, the man recognized as the founder of ACC, died in January 1936; just months before his dream could be realized. o The country's first notable merger at a time when the term mergers and acquisitions was not even coined. oThe historic merger of ten companies to form a cement giant now merged with Holcim in year 2005
F. E. Dinshaw the founder of ACC
Mission
Mission : Leadership Maintain relationship of the Indian cement industry throughout the continuous
modernization and expansion of its manufacturing facilities and activities and through establishment of a wide and efficient marketing network Profitability-Achieve a fair and reasonable return on capital by promoting productivity throughout the company Growth- Ensure a steady growth of business by strengthening our position in the cement industry. Quality- Maintain high quality of our products and services and ensure its supply their supply at fair prices. Equity- Promote and maintain fair industrial relations and an environment for the effective involvement, welfare, and development of staff at all levels. Pioneering- Promote research and development efforts in the areas of product development and energy , and fuel conservation and to innovate and optimize productivity. Responsibility- Fulfill ACCs obligations to society, specifically in areas of integrated rural development and in and in safeguarding the environment and natural ecological balance
Values
Core values of ACC Cement: Empathy : Empathy begins with listening ... paying close attention to the world around us , understanding, appreciating and meeting the needs of those ACC serves , including consumers, retail customers, shareholders and each other as employees. Originality : Being Authentic and Innovative and Integrity. These values are linked. As we look at ACCs history, we see a story of how its core values work together and are the source of its success Core Competencies : its ability to synthesize, integrate and harmonize its diverse world-class engineering, procurement, manufacturing and distribution skills to meet the expectation of their customers.
Large Cement Plants Cement plants: 183 Installed capacity: 234.3 mtpa Cement production: 168.3 mtpa
Mini & White Cement Plants Cement plants: 365 Installed capacity: 11.1 mtpa Cement production: 60mtpa
Key Industry statistics & Dynamics India is the worlds second largest cement producer after China Total turnover of the Indian cement industry y is estimated at USD25 billion in FY11 Major players contributed about 97 per cent to the installed capacity during FY11
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Market analysis
ACC, with an installed capacity of 22.63 MTPA, enjoys an 11% market share in India, which with its total installed capacity of 207 MTPA, is the second largest cement producing country in the world Its key competitors are as follows:
Company
ACC Ambuja Cements Binani Cements Birla Corporation Limited CCI Century Textiles Grasim India Cements Jaypee Group Kesoram Industries Lafarge Madras Cements Ultratech Cement Zuari Cement
Note: Only companies with cement production capacity >3 MTPA included here. There are likely to be other competitors not 10 included here.
PESTLE Analysis
Social The cement manufacturing units- with a slight regional imbalance - is spread all over India Indian consumers prefer buying branded cement like ACC , ULTRATECH, JAYPEE CEMENT, LAFARGE CEMENT etc. It has been seen in the past, as well, that mini cement plants with low brand value and image are not able to survive against the cement giants Looking at the growth rate of Indian cement industry and capacity expansions, it is expected that cement industry will create good number of jobs in the next 4-5 years Technological It can be seen that the wet process is rapidly replaced by the dry process. It reflects increasing needs for energy conservation and suggests what the true cement plant of the future should be Technological development in the design of cement kiln and furnace can promote use of cement kiln for utilization of wastes like tires etc. which can help in reducing the usage of costly fuels like coke, coal etc. thereby reducing the manufacturing cost of cement Enhanced technology will be needed to substitute coal with low cost and eco friendly alternative fuels like fuel from bio-mass wastes including fruit of Jatropha Carcus, Pongamia and Algae Effectively finding the location of limestone reserves and efficient mining practices can lead to reduction in per tonne cost of limestone
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PESTLE Analysis
Legal Land acquisitions for limestone mining land, setting up of integrated units and grinding units requires proper legal procedure Environmental In India, the permissible stack dust emissions from various sources for existing cement plants is 150 mg/Nm3 and 100 mg/Nm3 for plants located in critically polluted areas. However, the limit for new plants in our country is 50 mg/Nm3 which is at par with some of the developed countries Since the cement production is an energy intensive process with very high emission, it has to use state of art equipment to have energy efficiency and meet environmental standards Under PAT scheme, each particular unit (Designated Consumers (DC)) will be given Specific Energy Consumption (SEC) target to meet over a period of three years. Any additional saving will qualify for earning Energy Saving Certificates (ESCerts), which could be traded, with DC's who could be short of targets. This trade can be made bilaterally or through exchange. Perform, Achieve & Trade (PAT) scheme is promoted under the National Mission on Enhanced Energy Efficiency (NMEE) which will help energy intensive large industries units in India to enhance cost effectiveness in terms of energy efficiency.
Perform, Achieve & Trade (PAT) scheme is promoted under the National Mission on Enhanced Energy Efficiency (NMEE) which will help energy intensive large industries units in India to enhance cost effectiveness in terms of energy efficiency.
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SWOT Analysis
SWOT Analysis of ACC Cements
SWOT Analysis explores the relationship between the environmental influences and the strategic capabilities of an organization compared to its competitors. The importance of SWOT is revealed by the value of the strategies it generates.
STRENGTHS.
It is having a good image and brand loyalty among consumers. Service is good Perceived to be of very superior quality cement when compared to others Selling from the very first day the establishment came in to being & sells easily They have same price prevailing for wholesale at dealers/stockiest / retailers end.
SWOT Analysiscontd
OPPORTUNITY. Rapid growth is taking place in North East , Bihar and Madhya Pradesh (Central India ).
People are opting for more stable structures and intensive use of cement is taking place, even government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets. As Indian core industry is also growing at rate of nearly 8-10% per annum, it is having a good future. Foreign direct investment in infrastructure sector is going to increase in coming years, which will increase the demand of cement. Roads are undergoing through a transformation process through which the traditional method of road building is being replaced by modern concrete roads.(Golden Quadrilateral WORLD BANK assisted project connecting the nation through a network of roads . )
THREATS: .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. Players such as Ultratech , Jaypee Cement , Prism Cement, and Birla Samrat are eating up considerable market share. 16
Bargaining Power of Suppliers Very High Monopolistic control of external cost element (coal, power, taxes transportation results in high bargaining power with the government
Inter Firm Rivalry Intense Large number of players, intermittent overcapacity; marginal product differentiation; high storage costs; and, high exit barrier in form of significant capital investment has led to stiff competition in the industry.
Bargaining Power of Buyers Limited The individual house owners do not make bulk purchase. So, have less bargaining power.
Threat of New Entrants- Limited High capital investment, broad distribution network and oversupplied market deter new entrants. However, technology and manpower are easily available.
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Support Activities
Human Res ourc e Management: : Freedom to ac hiev e, enriching sk ills & enhancing ex periments , Fair compens ation, ESOS Tec hnology Dev elopment: R & D ac tiv ities for new products , c onservation of res ourc es , rec y c ling of w as tes , reduction in emis s ions & improved performance of c oncrete Proc urement: Purchas ing Proc edures , C entralized proc urement for imported items , loc al purc has e of fas t mov ing items , Purc has e of R aw Materials
M a r g i n
Inbound Logis tic s : Effic ient Material Handling Sy s tems Order Proc es s ing Sy s tems Inv entory Control Management of Inv entories
Operations : Manufac turing Proc es s es Mining Crus hing R.M . Grinding Blending Py ro proc es sing Grinding and Pac k ing
Outbound Logistic s : Dis tribution C hannel Sales & D is tribution Proc edures Ev aluation of C hannel Dis tribution Ware Hous es
Mark eting & Sales : C us tomer Satis fac tion Mark et Planning C ons umer Behav ior Pric ing Polic y Promotion Mix Adv ertis ement
After-Sales Serv ic e: Cus tomer Support Departments Complaint redres s al forums Seminars Cons truc tion guidelines Quality Ex hibitions Fac ility to driv ers
Primary Activities
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Strategies (I/O)
Internal Strategy
ACC has created and developed an environment that ensures continual improvement in the business processes. In the same direction, this integration will help in proactively meeting the expectations of customers, stakeholders and the requirements of the regulators while on the other hand will be useful in utilizing its resources more efficiently and effectively. they are committed to achieve customer satisfaction by ensuring excellence of performance in all its offerings and services
Horizontal Integration: Forward Integration.
It involves addition of parallel new products to the existing product line. This may happen internally or externally, internally, a company may decide to enter a parallel product market in addition to the existing product line. Externally, a company combines with a competing firm. Several small cement firms combined and formed Associated Cement Companies (ACC).
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Recommendation
ACC Cement is highly focused on its future objectives & expansion plans, but at the same time it has to maintain a balance between the present plan & the future one. On the basis of strategic analysis following recommendations will help in achieving its future goals effectively & efficiently: It must focus & remain on its Vision & Mission in order to attain its objective. It should focus on expanding its market in order to expand its market shares. It should also try to maximize the shareholders wealth. It should not choose those projects which may dilute its brand name, just for the sake of gaining market shares. It should not do overpromise as it will deteriorate its goodwill. It must focus on its competitors strategy(ies) in order to gain a competitive edge. It should try to go for diversification to minimize risk factor & to explore new market as well.
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Conclusion
Keeping pace with changing times and an ever-growing need for specialized services, ACC has begun offering its marketing expertise and distributaries facilities to other producers in cement and related areas. However a precondition of all such agreement is quality control supervision to be carried out by an ACC expert located at the franchisees plant. Each of the regional Marketing offices has a customer services cell that is manned by qualified civil engineers. These, in addition to handling after-sales servicing, function as advisory bodies that can help customers, make the right choice of cement for a specific area of application. ACC can provide expert advice on getting the best value from cement and offer assistance on related issues in civil construction projects. Besides this, technical books/booklets on cement, concrete and building construction and maintenance must be made available for the benefit of the customers. In addition to this, ACC distribute publish free leaflets/ booklet, which profiles the latest information on concrete research, design, construction and maintenance. We feel ACC is forging ahead on its set mandate & is on its way to become one of the leading cement suppliers in the International markets too .
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Questions ?
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Thanks
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