The company we’ve chosen as portion of the term undertaking required by the capable MKT Competitive Analysis and Strategies is Siam Cement Group Company Limited. We are taking a closer expression inside the company and its industry to acquire a better apprehension every bit good as provide recommendation for sustainable hereafter. Siam Cement Group or SCG is the biggest cement company in Thailand in footings of market portion ( 40 % ) and gross generated. It was established in 1913 and had since developed and alterations as engineering improve. while staying true to its nucleus doctrine. Outstanding client relationship and uninterrupted corporate societal duty over the class of its foundation has doubtless earned an priceless topographic point in Thai people’s bosom as the original domestic Thai cement company. The cement industry is in maturating phase.
The market growing rate is slow but continues to flux as clip alterations and the enlargement of substructure towards the ever-changing hereafter is guaranting to the company’s survivability. Extensive analysis of Micro and Macro environmental forces impacting the cement industry. as we can see from the inundation that has been blighting Thailand twelvemonth after twelvemonth. is needed to understand internal and external forces impacting the cement industry. SCG has performed exceptionally good compare to other rivals such as Siam City Cement and TPI Polene. but. SCG still has failings that need to be addressed. SCCC has become the fiercest rival for SCG. being 2nd in the industry. SCG is actively seeking to keep its place as the market leader while spread outing to gain more portions. Nevertheless. SCG’s fiscal strength and carefully managed strategic programs help them travel forth to keep a strong competitory place in the industry.
We commended several schemes that might better SCG’s public presentation based on internal and external forces analysis. Lowering cost of production is indispensable for competitory advantage in cement industry since cement has low distinction. SCG must construct the market and protect itself from others by utilizing place defensive scheme. An ideal protection is to better the weak distribution channel by enlisting more distributers. Associating chances with SCG’s strengths and bettering failings by avoiding menaces is a good start to better company’s public presentation. Section I: Industry Summary
Market Situation At the present clip. the market size for cement has extended by flow of demand accumulated since last twelvemonth after the implosion therapy crisis happened in late 2010. The natural catastrophe attacked many countries. a batch of houses. roads. farms. and mills are all sunken. stopped all concern activities in the state. After the inundation relieved in early 2011. the concern sectors started to work once more. The domestic demand of cement besides increased by this clip because the damaged edifices and roads are required to be repaired or unluckily some of them must be destroyed and rebuilt. This state of affairs is an chance for cement manufacturers to turn back to their place increasing their market portion from the domestic market. Other than that. recent governmental substructure projects—BTS. for illustration. are conveying a big sum of the building stuff demand every bit good as private houses undertakings such as condominiums.
In 2011. the entire production capacity of cement from Thai makers was 30. 91 prosodies dozenss or accounted for 82. 35 billion Baht in entire value of the merchandise. However. the industry growing rate of twelvemonth 2010-2011 was at 4. 21 % lower than the old year—2009-2010. with the rate of 8. 29 % because of the negative consequence of the terrible inundation that happened throughout the twelvemonth 2011.
Industry Sections and its size This industry section can be classified into 2 chief merchandises that are cinder and cement. Comparison by capacity. cinder contributed for 3. 20 % while the remainder 96. 80 % was derived from cement as shown in the figure below.
Segment Growth Rate
Above figure illustrates that Clinker was more affected by the diminution of overall industry demand in twelvemonth 2011. As you may besides detect from the figure below that. growing rate of cinder dropped dramatically in 2011. ensuing a negative growing rate of 18. 85 % from a positive growing rate of 16. 19 % in 2010. Meanwhile. the growing rate of cement is somewhat affected by the crisis. from 16. 19 % in 2010 to 5. 20 % in 2011.
Cement Market Share by Brands In Thailand. there are three major cement makers who wholly contribute to more than 80 % of entire cement supplied each twelvemonth. In 2011. SCG Cement is the market leader with market portion of 39. 1 % followed by Siam City Cement Group and TPI Polene with the market portion of 25. 0 % and 18. 1 % severally.
Advantage Matrix In order to cognize whether the company is viing in which type of industry — Stalemate. Volume. Fragmented. or Specialized. we have to see and compare two beginnings of advantage from which the companies exploit – distinction and size of production. Harmonizing to the advantage matrix. we conclude that the company competes in a volume industry. The chief merchandise here is cement which can non be differentiated much. Basically. cement is used to function building purpose so we can non comprehend the differences in cements easy. Although. group of adept representatives are established to inform clients sing extra benefits of the merchandises. the merchandise distinctions are still hard to recognize.
However. thanks to the construct of economic of graduated table ( EOS ) . a big size of cement that the makers bring forthing each twenty-four hours has helped take downing the cost of production per unit since the fixed cost of fabrication will be shared to the greater unit produced. Therefore. the construct of EOS has built a competitory advantages against other smaller manufacturers in which the three major manufacturers— SGC Cement. SiamCityCement. TPI Polene. can take down the monetary value of their merchandise but still acquire some net income while other companies who don’t have such advantage aren’t able to make so because they have higher cost per unit due to fewer units of productions. Last twelvemonth. SCG cement got the highest volume of cement production in Thailand at 23. 2 metric dozenss followed by SiamCityCement and TPI Polene at 14. 5 and 9. 0 metric dozenss severally. Environmental Scaning
PESTEL Analysis PESTEL theoretical account is use to analyse external macro-environment that can significantly indirectly act upon the industry. Measuring the impact of external forces can function as a usher to do the right determination on the way the company is headed and scheme to be implemented on the footing of chance. both available and unanticipated. and the menace. both present and coming. Political
* Tax decrease the authorities implemented for first clip place purchasers up to 10 % of belongings monetary value but non transcending five 100 1000 tical will let people to hold their ain houses. and accordingly force the demand of houses and cement wholly. * Zero involvement for five old ages policy for first clip place purchasers will dramatically promote people to purchase new house. which in bend encourage investors to put in plus more. which benefits SCG greatly. Economic
* Bank of Thailand has reaffirmed its determination to maintain the involvement rate policy unchanged at 3 % per annum to back up economic recovery after Thailand has been affected by major economic crisis in foreign states. This will assist SCG pull off its fiscal position easier. * Vietnam. one of the states that SCG invested in. was damaged by high rising prices and fiscal volatility. coercing its authorities to set about several stairss to protect Vietnamese Dong. Social
* Peoples are the most of import facet to be concerned when a house wants to develop new market in foreign states. but the job lies in merely a few of Thai people want to work in foreign states. Most of Thai people are conservativists. This challenges SCG to alter mentality and send people to work in ASEAN states. * Consumer behaviour has been altering with an increasing in penchant for eco-friendly merchandises. SCG stresses the importance of R & A ; D of high value-added merchandises and services. and were able to present “SCG Eco-Value” to capture this market section. Technological
* Innovative environmental-friendly cement created by Italcementi Corp. who’s reputed as one of the large five cement company in the universe. developed TX Active Technology in the twelvemonth 1999. When the cement is exposed to visible radiation. chemical reaction occurred will cut down air pollution by at least 45 % . SCG may purchase this engineering from the Nipponese house to run into demand of green consumers. * Electrical workss which uses coal as a chief beginning of energy has implemented a system to cut down S by utilizing limestone. Chemical reaction of limestone and S creates Gypsum. which is a cardinal ingredient usage to make cement. This cognition will assist SCG run their concern more expeditiously. Environmental
* There is a huge wealth of of import industrial ores and cherished metals waiting to be exploited throughout ASEAN states. Even though many big excavation companies are in the part. geographic expedition and development of natural resources have hardly begun. Another chance for Thai cement manufacturer to happen a new ideal natural resource topographic point. * During showery season. building undertaking ever put on clasp temporarily. But now that the usual seasonally weak gross revenues period has passed. the demand of building stuffs including. cement. starts to retrieve. Legal/Regulations
* Government constitution of minimal pay rate at 300 Baht get downing April 1. 2012 will increase fabrication cost of an industry section. including SCG. Meanwhile. more money will be injected into Thai economic rhythm and eventually. it will increase the overall money disbursement. which includes disbursement to buy cement every bit good. * Despite the fact that production cost of cement has been increasing by the higher monetary value of natural stuffs and transit cost. the cement providers can’t adjust the monetary value consequently because the blessing from Ministry of Commerce is needed in order to alter the cement monetary value. Micro-Environment Analysis
This subdivision is looking for the internal forces within the company. strengths and failings. derived from marketing mediators. providers. rival analysis and consumer analysis. Selling mediators
* In 1998. SCG established a subordinate logistic company alleged SCG logistic in the present clip. That company is responsible for transits of all SCG goods and its ain clients’ goods. This gives an chance to SCG to wholly command its ain transit procedure. * SCG distributes its merchandises to both little and large size client through its ain distribution shop. Home Mart. The shops create an chance for SCG to make its client locally and promote in-store test of its merchandise so that subsequently on it can bring forth more gross revenues. * If you have of all time heard of BOI just so you would likely heard of SCG marquee. This exhibition gives an chance for SCG to demo their technological promotion. Quite large chance to increase trade name repute.
Suppliers * SCG got a figure of legitimate grants from Tai Government to hold a particular right to pull out some peculiar types of ore such as limestone and Coal. This gives an chance for SCG to hold its ain sustainable beginning of stuffs. * Together with production. selling section and provider can place new a merchandise chance and a better merchandise design. * Due to natural catastrophe both in Japan and Thailand together with Europe crisis create a significant fluctuation in natural stuff monetary value particularly coal in 2011 which is consider as menace for the company. Rival analysis
The chief rivals of SCG Cement are TPI Polene and SiamCityCement. * In 2015. Thailand will fall in into AEC and it can be considered as both chance and menace for the company. It is an chance in a manner that it can spread out its concern more freely and easy to states under AEC rank. However. it means that foreign rivals can besides spread out their concern to Thailand which will likely prehend partial of market portion from SCG. * TPI Polene has wholly 3 fabrication works which are all located in Saraburi nearby the mine sites and that leads to the lowest transit cost for TPIPL comparing to SCG and SCC. * A subordinate company. SCG distribution. can assist ease concern of other SCG companies. It offers broad scope of logistic services both domestically and internationally. This gives a batch of competitory advantage over their rivals that don’t have their ain distribution systems. Customer analysis
* Customer demands and outlooks * Even though. the recent inundation in Thailand doesn’t straight impact cement industry. but it restrains many governmental building undertaking and that decreases demand of cement. As a consequence. it is menace to SCG because it concern didn’t grow as expected. * Another chance for SCG is that they has built a new type of shop called “SCG experience” to give a practical experience to clients and besides supply experts to give advices for free to do certain that they will come back and purchase subsequently when they’re traveling to construct their place. * Thailand market has expanded after the alleviation of inundation crisis last twelvemonth. Peoples need to mend their houses ensuing in higher demand of cement. So many companies see the chance and concentrating more on domestic market. * Customer behaviour
* Teenss and grownups prefer to populate in condominium and you can see that many undertakings were built or planned to be built in following 2-3 old ages particularly in the country along BTS line. This condominium roar will besides give an chance for cement industry to turn. * Many building houses prefer to hold long-run contract with building stuff maker because they want to acquire a stable monetary value of stuffs so it is an chance for SCG to develop new trading spouses. * Thailand is set to be one of Asia Pacific’s hotel investing hot spot in 2012 because of record sale in the first half of the twelvemonth. This tendency is an chance that cement market can bring forth more gross revenues. * Change in client tendencies
* Customers are more likely to take environmental friendly merchandises. The company is good cognizant of that issue so it tries to advance the merchandises labeling “SCG eco value” in which to show the thought that it is green for both production procedure and the merchandise itself. This is an chance to derive market portion in the new section. * New manner of house has emerged. This manner merely uses cement to construct house without colour picture on it. This tendency could be an attractive market for cement industry in the close hereafter. * Number of senior people will maintain increasing in the hereafter and they will demand more of easy to utilize and health-care merchandises. To take this chance cement makers may bring forth anti-bacteria cement for illustration.