2010 International Conference on Economics, Business and Management IPEDR vol.2 (2011) © (2011) IAC S IT Press, Manila, Philippines
Business Strategies for the Indian Cement Industry
A Business Intelligence and Analytical Perspective for the 21st Century Roshan Shankar Division of Computer Engineering Netaji Subhas Institute of Technology, University of Delhi New Delhi firstname.lastname@example.org
Division of Instrumentation and Control Engineering Netaji Subhas Institute of Technology, University of Delhi New Delhi email@example.com
Division of Computer Engineering Netaji Subhas Institute of Technology, University of Delhi New Delhi firstname.lastname@example.org
Division of Electronics and Communication Engineering Netaji Subhas Institute of Technology, University of Delhi New Delhi email@example.com
Abstract—Cement is the single most important and profitable product in the building material sector and with the consumption of cement in India to touch 600 million tonnes by the year 2020.-this is truly the California Gold Rush of the new century. With an 8% GDP growth rate, governmental infrastructure augmentation and population expansion, the Indian cement industry is a market of opportunities waiting to be tapped. A direct implication of this sectoral growth is the influx of multinationals like Holcim and Lafarge, which will drive Indian cement companies in the building industry to adapt new business strategies to complement the higher demand and competition. A cogent analytical research on governmental reports, industry data and cement MNC annual reports has been performed. On analysis and scrutiny of the distinct variables involved in this market, this paper investigates the current and future trends in the Indian cement industry and enumerates key business strategies that cement conglomerates will have to adapt to compete in the Indian building materials market. Keywords-Cement Indistry;India;Business Strategy;Building Industry;Market Research;
The growth of this sector can be determined by analyzing industry trends and governmental data. We will look at the business strategies specifically in terms of consolidation, globalization, targeted customer strategies, R&D, corporate governance, innovation and branding.
With the economic boom in India, the cement industry is experiencing a surge in demand. India has become the second largest producer of Cement in the world after China, as illustrated in Fig.1 with a total capacity of 224 MT (million tones) produced by about 125 large and 300 mini cement plants . In the next decade, with India’s GDP growing annually by about 8%, there will be paramount demand of infrastructure, and the Cement industry is expected to increase to 600 MT by 2020. The Indian cement Industry has shown remarkable growth and has steadily increased production at a high rate since the 4th Five Year plan at around 25-26 MT.As the demand for Cement surges, the Indian cement industry will have to enhance capacity of production to compete against the multinationals which are entering the Indian market. Success for a company will also include adapting Business strategies, to compete against the global players.
Figure 1. Worldwide Cement Production (Distribution)-2005
In emerging economies, particularly in Asia, demand will increase more significantly. Therefore, expansion will be there in growing economies and this is an important aspect of global strategy. There are three major macro-level overhauls that conglomerates need to integrate which are: A. Vertical integration: Most large global players have multi-product businesses in the building materials segment and a key focus is to maintain the strategy of vertically integrating core activities of cement, ready-mixed concrete and sand and gravel. Cement continues to play the leading role.
B. Management focus: The reorientation of the management style is based on...
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