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Business Policy and Strategy Dgkhan Cement Company
Business Policy and Strategy Dgkhan Cement Company
LAS15MBAM0020
1
Original Vision and Mission Statement
VISION STATEMENT:
“To transform the company into modern and dynamic cement manufacturing company with
qualified professionals and fully equipped to play a meaningful role on sustainable basis in the
economy of Pakistan”.
MISSION STATEMENT:
“To provide quality products to customers and explore new markets to promote/expand sales of
the Company through good governance and foster a sound and dynamic team, so as to achieve
optimum prices of products of the Company for sustainable and equitable growth and prosperity
of the Company”.
2
Proposed Vision and Mission Statement
VISION STATEMENT:
Our vision is to be the rolling partner in nation’s development, by making standards that meet
the expectations
MISSION STATEMENT:
Customer
Satisfying the customer with best experience.
Product or service
DGKCC’s mission is to be the most succesful cement manufacturing company.
Markets
In pakistan.
Technologies
Latest Techonology.
Concern for survival growth
We will meet customers highest expectations of quality.
Philosophy
Individually & company accountabilty.
Self-concept
Best qualitity producet.
Concern public image
To be very known among the citizenship.
Employees
We provide oppurtunities of growth & enrichment to our employees.
3
External Factors Evaluation (EFE) of DGKCC
The MOU b/w Pakistan & Iran on Eco. Corporation signed. 0.05 3 0.15
Due to the stable growth of economy it leads DGK towards stable growth. 0.04 4 0.16
Shutting down the one of the Lucky cement plant becomes the opportunity 0.05 3 0.15
for DGK to take his place.
Opening a new plant in Karachi is the opportunity for the DKG to increase in 0.06 4 0.24
the production and its sale.
Threats
Cement industry adopt to adopt latest technology in Tiruchi 0.06 4 0.24
Due to US bomb attack in Afghanistan the DGK cement export effect 0.04 3 0.12
Taxes increased due to taken fresh loans of $25 billion in last three years 0.05 3 0.15
TOTAL 1 3.12
4
Internal Factors Evaluation (IFE) of DGKCC
Weight Rating Weighted
Strengths Score
Weakness
No physical presence near seaport & southern areas of Pakistan. 0.05 2 0.1
Total 1 2.77
5
CPM (Competitors Profile Matrix)
LUCKY BESTWAY
Critical Success DGK Cement
Cement Cement
Factors Weight Rating W.Score Rating W.Score Rating W.Score
In, IFE matrix only internal factors are evaluated and in EFE matrix only external
factors are evaluated but CPM include both internal and
external factors to evaluate overall position of the firm with respective to their major
competitors.
Rating
Weight
Weighted Score
Total Weighted Score
Rating:
7
Rating represents the response of the firm towards the critical success
factors. Highest the rating the better response of the firm towards the
critical success factors, rating range from 1 to 4.
Weight:
Weight attribute in CPM indicates the relative importance
of factor to being successful in the firm’s industry. The weight
range from 0.0 means not important and 1.0 means important, sum
of all assigned weight to factors must be equal to 1.0, otherwise the
calculation won’t be considered correct.
Weighted Score:
8
Boston Consulting Group (BCG) Matrix
Industrial Growth
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 −𝑝𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 11154688−9790055
I.G= × 100
Ordinary Portland 𝐼. 𝐺 = ×
𝑝𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 100 = 13.93%
9790055
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 −𝑝𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 9856636−8855587
I.G= × 100
Sulphate Resistant 𝐼. 𝐺 = ×
𝑝𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑦𝑒𝑎𝑟 𝑠𝑎𝑙𝑒 100 = 11.30%
8855587
Division Sales 2016 Profit & loss (PKR. Thousand) Profit & loss %
Ordinary Portland 3,111,346 11,762,688.17 11,762,688.17*100/29703758 = 39.6%
9
Boston Consulting Group (BCG) Matrix
RELATIVE MARKET SHARE POSITION
13.93% SR 34.2%
11.30%
INDUSTRY SALES GROWTH RATE
Clinker 26.2%
Medium
10
BCG MATRIX
The BCG model is based on the product life cycle theory that can be
used to determine what priorities should be given in the product
portfolio of a business unit. To ensure long term value creation, a
company should have a portfolio of products that contains both high-
growth products in need of cash inputs and low-growth products that
generate a lot of cash.
Placing products in the BCG matrix result in 4 categories in a
portfolio of a company:
12
Y axis X axis
FP +4.2 +4.8 IP
SP -2.2 -1.4 CP
Total +2 +3.4
13
Space Matrix:
Aggressive
Conservative
Defensive
Competitive
In space matrix, CP and IP values are plotted on x-axis
-1 -2 -3 -4 -5 -6
14
The above scale shows that, EP/SP and CP rating scale from -6 (worst)
to -1(Best). IP & FP rating scale is from +1 (worst) to +6 (Best). After
rating each factor of EP, CP, IP and FP average is taken of the rating and
then total of all average is taken. By taking total of Y-axis and x-axis the
net result will be marked on the space matrix and it will show the
competitive position of an organization.
AGGRESSIVE:
Market Deviation
Market Penetration
Product Development
Integration
15
SWOT Matrix
Strengths : Weakness:
1. Solid brand equity 1. No physical presence near
2. Extensive dealer network. seaport & southern
3. Easy access to financial markets. areas.
4. Product Quality 2. Limited skill set of
5. High production Capacity human capital
6. Own Power Generation 3. Low promotion strategy
7. Plant’s geostrategic importance 4. Reliability on weather
8. Parent company’s diversified 5. Transportation Cost
business segments 6. Health concern for
9. Excellent credibility & employees
creditworthiness. 7. Autocratic Decision
making
8. Job dissatisfaction
9. No performance appraisal
10. Fluctuating energy cost
Opportunity: SO WO
Increase nationally sale 7% Market
1. Demand of Cement increase (s2,s5,o1) Development(w5,o4)
10% due to new New plant in African Training of
developing projects in continent employee(w8,o5)
the country (s1,,s3,03) Hiring new blood
2. Increase in the demand of Market penetration (W8,O6)
Cement Export increase (s2,o4)
by 5.72%. Increase foreign sales 6%
3. Establishing (s4,s5,o2)
manufacturing
facilities in attractive foreign
markets, especially in African
continent.
4. Market in Southern Pakistan.
5. Due to the stable growth of
economy it leads DGK
towards stable growth.
6. Literacy rate in Pakistan rise to
59.9 percent.
Threats: ST WT
1. Cement industry adopt to Market development (t5,s7) High Promotion Campaign
adopt latest Increase Dividend for (T4,W3)
technology in Tiruchi shareholders (T5,S9) Hire new HR manager
2. Lucky cement as strong Invest in (w9,t3,t8)
potential competitors. Maintenance. (T1,s9) Training of
3. Unhealthy industry employee(w8,t2,t3)
SWOT
competition.Matrix:
4. Chinese investment in Dewan
group.
5. South Africa imposes duties
on
Cement.
16
The Strength-Weakness-Opportunities-Threats (SWOT) is an
important matching tool that helps the manager to develop four types of
strategies: SO (Strength - Opportunity), WO (Weakness –
Opportunities), ST (Strength - Threats), and WT (Weakness – Threats).
Matching key Internal and external factors.
SO strategies use a firm’s internal strength to take advantage of
external opportunities. Managers would like their organization to be in a
position in which internal strength can be used to take advantage of
external trends and events.
17
The Internal–External (IE) Matrix
IFE Of OPC
Weight Rate Weighted Score
Strengths
Product Quality 0.10 4 0.40
High Production Capacity 0.09 3 0.27
Own Power Generation 0.06 4 0.24
Easy access to Financial Market 0.08 3 0.24
Solid Brand Equity 0.12 2 0.24
Weakness
Not Near Seaport 0.09 4 0.36
Low promotion Strategy 0.18 4 0.72
Transportation Cost 0.09 4 0.36
Limited Human Capital 0.10 3 0.30
No Performance Appraisal 0.09 4 0.36
1 3.49
EFE Of OPC
Weight Rate Weighted
Score
Opportunity
A growing market 0.09 2 0.18
Increased consumer spending 0.1 3 0.3
Legal changes which make selling abroad easier 0.09 2 0.18
Change in society 0.18 1 0.18
Income level is at constant increase 0.09 4 0.36
Threats
Government policy ban on some activities 0.12 4 0.48
Taxation rules which reduce the firm's income 0.08 2 0.16
Change in consumer habit 0.06 4 0.24
Increasing costs might be possible 0.09 3 0.27
New product change demand 0.1 4 0.4
1 2.75
18
IFE Of SRC
Weight Rate Weighted Score
Strengths
Product Quality 0.10 4 0.40
High Production Capacity 0.09 3 0.27
Own Power Generation 0.06 4 0.24
Easy access to Financial Market 0.08 3 0.24
Solid Brand Equity 0.12 2 0.24
Weakness
Not Near Seaport 0.09 2 0.18
Low promotion Strategy 0.18 3 0.54
Transportation Cost 0.09 3 0.27
Limited Human Capital 0.10 4 0.40
No Performance Appraisal 0.09 3 0.27
1 3.05
EFE Of SRC
Weight Rate Weighted
Score
Opportunity
Govt. infrastructure spending 0.09 3 0.27
investment in industrial projects 0.1 4 0.4
commercial construction activity 0.09 2 0.18
new technologies are available at reasonable costs 0.18 4 0.72
emerging exports markets 0.09 3 0.27
Threats
imports from Pakistan affecting markets in north India 0.12 4 0.48
excess overcapacity can hurt margins as well as prices 0.08 3 0.24
consolidation through mergers and acquisition 0.06 2 0.12
varied rates of royalty 0.09 4 0.36
rising oil prices 0.1 4 0.4
1 3.44
19
IFE Of Clinker
Weight Rate Weighted Score
Strengths
Product Quality 0.10 4 0.40
High Production Capacity 0.09 2 0.18
Own Power Generation 0.06 4 0.24
Easy access to Financial Market 0.08 2 0.16
Solid Brand Equity 0.12 2 0.24
Weakness
Not Near Seaport 0.09 2 0.18
Low promotion Strategy 0.18 1 0.18
Transportation Cost 0.09 3 0.27
Limited Human Capital 0.10 4 0.40
No Performance Appraisal 0.09 3 0.27
1 2.52
EFE Of Clinker
Weight Rate Weighted Score
Opportunity
future growth potential 0.10 4 0.40
rising local demand 0.09 4 0.36
construction boom in Pakistan 0.06 2 0.12
focus on cost optimization 0.08 4 0.32
availability of finance 0.12 3 0.36
Threats
low per capita consumption 0.09 2 0.18
high incidence of taxes 0.18 4 0.72
decline in profitability 0.09 4 0.36
high input cost 0.10 3 0.30
inadequate bulk loading facility at ports 0.09 1 0.09
1 3.21
20
The Internal–External (IE) Matrix
4.0
High
3.0 to 4.0 SR 34.2%
EFE TOTAL W. SCORES
3.21
3.0
2.75
Medium
2.0 to 2.99 POR 39.6%
2.0
Low
1.0 to 1.99
1.0
21
The Quantitative Strategic Planning
Matrix (QSPM)
New plant in High Promotion Outsourcing
African continent Campaign
Demand of Cement increase 10% due to new developing projects in the 0.08 1 0.08 4 0.32 3 0.24
country
Increase in the demand of Cement due to Export increase by 5.72%. 0.08 4 0.32 2 0.16 3 0.24
The MOU b/w Pakistan & Iran on Eco. Corporation signed. 0.05 - - - - - -
Due to the stable growth of economy it leads DGK towards stable growth. 0.04 - - - - - -
Shutting down the one of the Lucky cement plant becomes the opportunity 0.05 1 0.05 4 0.20 2 0.10
for DGK to take his place.
Opening a new plant in Karachi is the opportunity for the DKG to increase in 0.06 1 0.06 4 0.24 2 0.12
the production and its sale.
Increase in utilization of cement due to CPEC projects. 0.09 1 0.09 3 0.27 2 0.18
Establishing manufacturing facilities in attractive foreign markets, especially 0.06 4 0.24 3 0.18 2 0.12
in African continent.
Threats
Due to US bomb attack in Afghanistan the DGK cement export effect 0.04 3 0.12 1 0.04 2 0.08
Taxes increased due to taken fresh loans of $25 billion in last three years 0.05 - - - - - -
Total 1
22
New plant in High Promotion Outsourcing
African continent Campaign
Weakness
No physical presence near seaport & southern areas of Pakistan. 0.05 1 0.05 2 0.10 4 0.20
23