1. How can Lafarge-Aget differentiate its position in the eyes of customers? Aget is operating in a commodity market. Is only way to avoid price wars and to gain more market share is by differentiating themselfs from the other suppliers by providing there customers additional value. Aget should invest in establishing a customer – supplier relationship. This relationship should address the following issues: * More frequent written/electronic communication – lower acquisition costs for firms * More frequent face to face communication , written / electronic communication- lower operation costs. * Being flexible towards the customer's needs – lower firms acquisition and operations costs. * Quality – lower firm's acquisition and operations costs. * Invest in closer facilities - lower firms acquisition costs 2. Although cement is a commodity at large, does pricing affect demand in the industry? The market demand for cement is elastic, so pricing plays an important role in the demand of cement. If suppliers higher their prices just a little bit, it will have a big effect on the demand, that will decline. But also the other way around, if suppliers lower their price, then demand will increase. But it is not the only factor that plays a role. Demand for cement also depends on macroeconomic factors such as: * Population growth
* GDP growth
* Interest rates
* Economic policies
Also the government can play an important role in this. In 2003, the demand for cement kept rising in Syria. The state-owned company then limited supplies by restricting imports. In this way the prices were kept high.
3. Amidst a commodity product and a highly competitive market how can Aget escape the commodity trap? Price is not the only thing that is important in the cement industry. For starters, there are quite some different kinds of cement. So it’s important for a company to have a broad product range for cement. Second, the quality of the...