MBS 4th semester Case Question Solution of July 2022 Makeup
Carefully read the following situation prudently and answer the questions that
follows: [30]
Udaypur cement industry is the leading cement industry operating since 2044 BS as an undertaking of the government of Nepal. It is located in Udaypur district of the eastern part of Nepal. The production capacity of an industry is 800 metric tons per day. The objectives of the company are mining and mineral-based import substitution and export, production of various types of cement, fulfilling a national need to cements and contributing the industrial, economic development and employment promotion. It is larger cement industry in Nepal. The industry sells its product called under the brand “Gaida Cement”, which is one of the best and assured quality cement in Nepal. The product has many more features e.g. less time required to set, consistency in quality, less construction cost, high soundness level, and balancing the physical and chemical properties. The industry has high-quality of raw materials sufficient for more than 300 years in its present production capacity. It has 176 dealers, almost located in the eastern part of Nepal, and 60 percent of dealers located in Udaypur districts and Kathmandu valley. The dealer of industry hardly found Lumbini, Gandali, Karnali, and Sudurpaschim provinces. The survey showed that the price of the product is 15 percent higher than the other cement.
The industry is operating at about 50.54 percent of its installed capacity, which is less than the national average of the cement industries. The annual per-employee loss is 100 thousand. The net worth of the company is negative and the company has been suffering a loss in the last couple of years. The loss of the company was Rs 330 million last year. The industry is providing direct employment for 350 people throughout the year. The industry is contributing to building schools, providing cement at subsidized prices to locals, and employing locals. However, the company continually loses its market share, the average market share of the company is 2.04 percent of total cement demand.
The annual installed capacity of 55 cement industries stands at 15 million tons while the domestic demand is 9.05 million tons. Domestic cement industries produced 7.49 million tons while 1.56 million tons of cement was imported last year. Significant quality has still been imported primarily because of issues like certification, quality inconsistency, and bulk supply ability issues related to domestic cement industries. There exists significant excess capacity in the cement industries of Nepal. The average capacity utilization of industries stands at 50.41 percent, with the government-owned cement industry at 50.12 percent, the locally owned cement industry at 63.78 percent, and the FDI-based cement industry at 45.81 percent. The demand for cement is projected to double in the next three years. The per capita consumption of cement is low in Nepal (303 kg) compared to other countries like China (1716 kg), South Korea (1102 kg) and Bhutan (734 kg). The demand for cements is likely to increase in the coming years, as large investment in infrastructure is needed in the country. It is projected that the annual demand for cement will increase to 25.88 million metric tons by 2024/25.
Annual demand of cement (Metric tons)
Year | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
Demand MT (million) | 13.27 | 15.42 | 18.69 | 22.42 | 25.88 |
As Nepal is in the process of developing infrastructure, the demand for cement is likely to go up. Several mega projects and national pride projects such as Gautam Buddha Regional International Airport, Budhigandaki Hydropower Project, Pokhara Regional International Airport, and so on are under construction. Similarly, the Upper Marshyangdi Hydropower-2, Kaligandaki study by the Ministry of Industry, commerce, and Supplies has projected the installed capacity of the Gorge Hydropower Project, and the AnkhuKhola Hydropower Project is already in the pipeline. The cement industry increase to 20 million tons by 2023/24. Huaxin cement industry with a production capacity of 3000 MTD, Garud cement industry with a production capacity of 3000 MTD, and Tianyi cement industry with a production capacity of 720 MTD1 are under construction and are expected to start production by 2022/23.
The industry has high-quality products and is popular in the market. The production capacity of the cement industry has been underutilized. Due to low margins, dealers are reluctant to offer their interventions, low networking, and poor managerial staff are common problems that exist in Nepalese products to customers. Traditional technology, inefficient human resources, and high political public enterprises like udaypur cement. The government Yellow Book highlighted that operating in an enterprise model, continued increases in unfunded liability of the government, Promotion of corporate governance, fiscal risk to government, and increase in unproductive liability are key challenges of public enterprises. The government committed to introducing government-owned cement industries by introducing a strategic partner, using updated technology, introducing a favorable policy in certification, and converting into a public limited company to enhance managerial capacity to encourage its export in the adjoining states of India given that the nearby states of India do not have limestone.
MBS 4th semester Case Question Solution of July 2022 Makeup
Questions:
a. Develop Strengths, Weaknesses, Opportunities, and Threats (SWOT) profile of Udaypur
Cement Limited.
b. Suggest the corporate, business, and functional strategy of Udaypur cement industry.
c. Develop the vision and mission statement of the company based on the above information.
d. Develop any four objectives (marketing, finance, production, and strategic objectives one from each function).
Answers:
a. Development of Strengths, Weaknesses, Opportunities, and Threats (SWOT) profile of Udaypur Cement Limited:
Udaypur Cement Limited
SWOT Profile
Strengths | Weaknesses |
Public company Large capability Strong input source Strong distribution network | Poor capacity utilization Poor profitability |
Opportunities | Threats |
Increase demand Government support Export potentiality | High competition Increasing FDI |
b. Corporate, business, and functional strategy of the Udaypur cement industry can be shown below:
Corporate Strategy:
The following is the corporate strategy of the Udaypur cement industry:
i. Stability Strategy:
This strategy is pursued in a Relatively Stable environment of the existing business. This strategy is aimed through no change, pause, or sustaining profit sub-strategies.
ii. Growth/Expansion Strategy:
This strategy is pursued in a highly competitive and changing environment. It is concerned with managing a portfolio of businesses and allocating resources to them.
Also, visit Related posts: Click Here!
iii. Retrenchment Strategy:
This strategy is pursued in a threatening environment by Reducing product, market, and functions which decrease the pace of activities with negative cash flow. It is aimed at reduced market share, dropping product lines, and divestment. The Sub-Strategies of the Retrenchment strategy include: reversing the negative trend to increase efficiency, dropping the unprofitable products, reducing the workforce, Selling of Portion of Assets, and Closing down by selling Assets.
iv. Combination Strategy:
This Strategy is pursued in a changing environment where the organization has several SBUs. It simultaneously uses a combination of stability, expansions, and Retrenchment Strategies for different parts of the organization. The old Market, function, and products are continued, dropped, or expanded according to the various stages of the product life cycle.
Business Strategy:
The following is the business strategy of the Udaypur cement industry:
i. Cost Leadership Strategy:
This business strategy relies on offering products at a low cost thus becoming the least expensive producer or provider of goods and services in a particular industry. To achieve this, companies need to cut costs across the entire value chain, so they can offer their products or services at lower prices than rivals.
ii. Differentiation Strategy:
Differentiation strategy focuses on offering products or services perceived as superior or distinct from competitors. Companies pursuing differentiation aim to provide unique value, features, quality, innovation, customer service, or brand image that sets them apart in the eyes of customers.
iii. Focused Cost Leadership Strategy:
Companies using this business strategy gain an advantage in cost within a particular market segment. They concentrate on serving a specific group of customers with affordable products. This allows them to optimize their operations, processes, and products to create cost-efficient solutions that meet the specific needs of their customers.
iv. Focused Differentiation Strategy:
A focused differentiation strategy concentrates on delivering unique and specialized products or services to a specific market segment. Companies try to differentiate themselves in the targeted niche through superior quality, innovation, customization, customer experience, or unique features.
v. Integrated Strategy:
Also known as a hybrid strategy or integrated cost leadership/differentiation strategy, it combines elements of both cost leadership and differentiation strategies. Companies implementing this strategy simultaneously deliver superior value to customers through unique and differentiated offerings while maintaining cost efficiency and operational effectiveness.
Functional Strategy:
Functional strategies are plans developed and executed within specific departments or functional areas, such as marketing, operations, finance, and human resources. The purpose of these strategies is to improve each function’s abilities to support the overall business strategy. By converting broader business goals into specific plans and tactics, functional strategies ensure that different organizational departments work efficiently together.
Vision Statement
To create value on a sustained basis for all stakeholders through the standards of transparency, accountability and responsibility, innovation, and leadership in cement manufacturing while fulfilling corporate social responsibility.
Mission Statement
Our mission is to create long-term value and provide market-focused solutions to all our clients and partners through the development and conversion of natural resources into quality products.
Objectives
- Adopt the best industry practices in all aspects of the operation
- Actively manage and build our business with high-quality assets and services
- Strive towards a high-performance organization in which every individual accepts responsibility and is rewarded for results
- Gain the mutual trust of the shareholders, employees, customers, suppliers, and communities through positive communications and by consistently delivering
on the commitments.
Frequently Asked Questions (FAQ’s)
Development of Strengths, Weaknesses, Opportunities, and Threats (SWOT) profile?
Strengths
Public Company
Large capability
Strong input source
Strong distribution network
Weaknesses
Poor capacity utilization
Poor profitability
Opportunities
Increase demand
Government support
Export potentiality
Threats
High competition
Increasing FDI
Corporate, business, and functional strategy of any Company?
Corporate Strategy:
The following is the corporate strategy of the Udaypur cement industry:
i. Stability Strategy:
This strategy is pursued in a Relatively Stable environment of the existing business. This strategy is aimed through no change, pause, or sustaining profit sub-strategies.
ii. Growth/Expansion Strategy:
This strategy is pursued in a highly competitive and changing environment. It is concerned with managing a portfolio of businesses and allocating resources to them.
Also, visit Related posts: Click Here!
iii. Retrenchment Strategy:
This strategy is pursued in a threatening environment by Reducing product, market, and functions which decrease the pace of activities with negative cash flow. It is aimed at reduced market share, dropping product lines, and divestment. The Sub-Strategies of the Retrenchment strategy include: reversing the negative trend to increase efficiency, dropping the unprofitable products, reducing the workforce, Selling of Portion of Assets, and Closing down by selling Assets.
iv. Combination Strategy:
This Strategy is pursued in a changing environment where the organization has several SBUs. It simultaneously uses a combination of stability, expansions, and Retrenchment Strategies for different parts of the organization. The old Market, function, and products are continued, dropped, or expanded according to the various stages of the product life cycle.
Business Strategy:
The following is the business strategy of the Udaypur cement industry:
i. Cost Leadership Strategy:
This business strategy relies on offering products at a low cost thus becoming the least expensive producer or provider of goods and services in a particular industry. To achieve this, companies need to cut costs across the entire value chain, so they can offer their products or services at lower prices than rivals.
ii. Differentiation Strategy:
Differentiation strategy focuses on offering products or services perceived as superior or distinct from competitors. Companies pursuing differentiation aim to provide unique value, features, quality, innovation, customer service, or brand image that sets them apart in the eyes of customers.
iii. Focused Cost Leadership Strategy:
Companies using this business strategy gain an advantage in cost within a particular market segment. They concentrate on serving a specific group of customers with affordable products. This allows them to optimize their operations, processes, and products to create cost-efficient solutions that meet the specific needs of their customers.
iv. Focused Differentiation Strategy:
A focused differentiation strategy concentrates on delivering unique and specialized products or services to a specific market segment. Companies try to differentiate themselves in the targeted niche through superior quality, innovation, customization, customer experience, or unique features.
v. Integrated Strategy:
Also known as a hybrid strategy or integrated cost leadership/differentiation strategy, it combines elements of both cost leadership and differentiation strategies. Companies implementing this strategy simultaneously deliver superior value to customers through unique and differentiated offerings while maintaining cost efficiency and operational effectiveness.
Functional Strategy:
Functional strategies are plans developed and executed within specific departments or functional areas, such as marketing, operations, finance, and human resources. The purpose of these strategies is to improve each function’s abilities to support the overall business strategy. By converting broader business goals into specific plans and tactics, functional strategies ensure that different organizational departments work efficiently together.
Develop the vision and mission statement of the company based on any
Vision Statement
To create value on a sustained basis for all stakeholders through the standards of transparency, accountability and responsibility, innovation, and leadership in cement manufacturing while fulfilling corporate social responsibility.
Mission Statement
Our mission is to create long-term value and provide market-focused solutions to all our clients and partners through the development and conversion of natural resources into quality products.
Develop any four objectives (marketing, finance, production, and strategic objectives one from each function).
Adopt the best industry practices in all aspects of the operation
Actively manage and build our business with high-quality assets and services
Strive towards a high-performance organization in which every individual accepts responsibility and is rewarded for the result
Gain the mutual trust of the shareholders, employees, customers, suppliers, and communities through positive communications and by consistently delivering on the commitments.