Political factors: -restriction and regulation of imports, exports and trade tariffs decide whether a company can compete globally: eg. GATT agreement in 1989, Mexico-open marketplace, enabled Cemex to expand globally. - governments may decide to nationalize or privatize the cement production; eg. Venezuela nationalized cement production. - political stability of a country will highly affect the performance of the industry
Economic factors -any firm in the industry is highly dependent on the economic performance of country/countries it operates in ( changes in expandable income, performance of firms within the country are affected). -emerging economies provide great opportunities for growth in the industry; expanding infrastructure. - fluctuating exchange rates also impact performance - rising costs of production and capital affect a firm’s competitiveness
- Demographics: can affect things such as the size of the labour force, the demand for housing, etc. all of which have an impact on the cement industry.
-The technology used in the production of cement is constantly evolving; innovations can impact cost and quality of products.
- Innovations in technology of information systems have an impact on costs of distribution and provide added value for the consumers.
Porter’s Five Forces (industry analysis)- The key determinant of a firm’s profitability is the attractiveness of the industry it operates in; 5 forces model assumes that industry attractiveness and the firm’s competitive position within the industry are influenced by 5 forces:
1. Entrance of new competitors:
Barriers to entry are relatively high:
a. High capital costs (capital requirements) +
b. Low efficiency industry: the minimum efficiency level is aprox. 1 mil. tons a year +
c. High transportation costs and logistics +
- the benefits of generating economies of