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1. Argue the potential influence of competitive forces upon the cement industry.
4. For 2008, Aget is contemplating adding two new dry-process kilns for an
investment of 10.7 million . That investment is expected to increase current
capacity by 18%.
a. Assuming the most current operational cost levels, what sales must it generate to recoup
the above investment?
b. If we assume 2004 prices of 45.91 /mt. what does the new break-even level do to the
utilization rate, given its new capacity level? What can you say about its effect upon
Agets pricing?
c. It is expected that the dry-process technology will help achieve an increase
of 22% in production cost efficiencies, compared to current levels. How might
such an increase affect price competitiveness?
d. Assuming that Agets sales by 2008 will have grown at the forecasted global
market rate increase of 22.6% over those of 2004, what will be its production
and utilization rate?
5. How can Aget differentiate its position in the eyes of its customers? That is:
(a) How can it use segmentation to help upgrade its commodity (cement)?
(b) How can Aget determine what the value of the product is in the
customers mind?
6. If Aget does capture 20% market share in the markets of Lebanon, Kuwait &
UAE, as estimated, at what sales units and revenues will it break-even?
What is the B/E market share?
7. In case Aget reduced price by 10%:
a. What effect would such price reduction have on Gross margin?
b. By how much must sales increase to avoid a loss in gross profit?
c. What can you say about the potential implications of such price reduction, upon the
industry and the market?
(The instructor might want to raise the issue of the effect of cutting prices to increase utilization,
and/or, when operating under full/close-to-full capacity)
10. Amidst a commodity product and a highly competitive market how can Aget
escape the commodity trap?
11. What are the economics of transport acquisition by Aget?
12. How might Agets contemplated move to increase utilization, by introducing a
12% price cut, affect its capacity utilization levels considering potential competitor
reaction?
13. (a) How might Aget affect its customers buying behavior?
(b) In your view, who do you think is the most critical/most influential role
in the buyers Buying Center (BC) or (DMU), and how should Aget
manage a customers DMU proceedings?
(c) What framework would you suggest to Aget for managing its customer
relationships?
14. How can Aget develop a profitable customer relationship, dealing in a commodity
market? That is, can it prevent a market share decrease without cutting prices?
(The instructor might bring the students into discussing how the bundling of cement
might be achieved)
15. How could Aget use subornation or lubrication in achieving its goals in its bid to
enter into Lebanon, Kuwait and UAE?
(The instructor may want to offer to the students an open forum for expressing their
opinion about such business tactics)
16. (a) How does a parallel market work?
(b) How can Aget protect itself from the adverse effects of parallel markets?
(c) How can price escalation affect Agets potential for market share in a new foreign
market?
(The instructor may elect to offer for debate whether Aget should establish physical presence, i.e.,
operations, in Lebanon, Kuwait and UAE, or opt to export)
17. What criteria would you say classify Aget as a global or as a transnational company?
Dupont A
Kone