Cement Industry Analysis

1089 Words5 Pages
Name: Hussein Osman Cement Industry analysis The cement industry situation has changed considerably after the negative environmental externality of the industry was put in the equation. Developing Countries now realized that with poor environmental regulation and cheap labor, this competitive advantage has a great weight. This analysis aims at a cross sectional view of the market in MENA region and then Egypt. Key Characteristics of the Industry * Capital intensive industry: The industry requires substantial upfront investments in fixed assets like plants and machines. * Energy intensive industry: Each ton of cement produced requires approximately 105KWh of electricity and 60-130 kg of fuel oil. * Over a period of time, the development of automated machine tools and material handling devices has reduced the amount of both skilled and unskilled labor. * Transportation costs: Land transportation costs can be quite significant for large shipment volumes. * Homogenous product: Since there are only a few fundamental varieties of cement (Ordinary Portland, Pozzolana, blast furnace) in terms of production process are low in the absence of any significant product differentiation. . * Construction industry affiliation: Cement consumption is closely related to construction activity which, in turn, is closely linked to macroeconomic like GDP Market analysis five forces Rivalry among Existing Players – High Competition among existing players is high, since all manufacturers produce similar product mix with almost no differences with respect to the product quality. Therefore, cement producers compete along other dimensions, such as cost optimization, distribution channels and pricing. In addition, customer loyalty is low and creating a brand identity is difficult, as customers will always prefer to
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