Holcim Final Capstone Project, Spring 2011

Strategic Plan 2012-2014
HOLCIM Strategic Plan 2012- 2014
“Anyone can make the

simple complicated;
creativity is making the
complicated simple”
Charles Mingus
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Acknowledgment
At this stage of this report, we would like to express our sincere gratitude to all
instructors, advisors, and friends who contributed in the accomplishment of this work.
First of all, I would like to thank Dr. Ibrahim Allali, our instructor for his great help,
advice, and feedback; In addition to Mr. Imad Jabbouri for his enormous advice and
feedback during the project. Moreover, we would like to thank Holcim family; and
especially Mr . Samir Rais, who gently accepted to open the doors of the company, and
provide us with valuable information.
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Dedicas
To Our Dear Parents,
No acknowledgment could be up to your excessive sacrifices, your love and the
affection which you have never ceased to provide us with, that work is an expression of
our gratitude, and our huge commitment and our deep love.
To Our Brothers and sisters,
This work is an expression of our deep love and our great affection. May God give you
health, happiness and a long life so that you can realize all your dreams.
To our Professors,
A special dedication to express our highly gratitude for your enourmous help, assistance
and feedback.
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The Team
Kamilia Charkaoui :
k.charkaoui@aui.ma
Leila Hasnaoui Amri :

L.Hasnaouiamri@aui.ma
Mustapha Chrifi Alaoui :

M.chrifialaoui@aui.ma
Sara El Bourakkadi:
s.elbourakkadi@aui.ma
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Executive Summary
Our capstone project is a comprehensive analysis of one of the largest businesses in
the Moroccan constructions sector, Holcim. By using several evaluation tools such as EFE,
IFE, CPM, SWOT as well as other matrices to position the company, our team had developed
strategies to be carried out by the firm. The major strengths of Holcim are: third largest
market shares in the industry, strong distribution channels, and an strong production capacity.
On the other hand, its major weaknesses are: it is the most leveraged company in the industry,
a high production costs, and it provides no credit selling.
The SWOT matrix that merged these internal factors with the industry opportunities,
specifically, increase in population growth, expectation of high demand because of
infrastructure and projects, and cement is the most essential building material in Morocco, as
well as with the industry threats; such as, aggressive competition in the market, The cement
industry knows a surplus in the supply, and no strict regulations to forbid entrance of other
foreign companies to the Moroccan cement industry.
Based on our overall analysis, our gaols setting includes increasing the sales growth to
9% by the end of the year 2013 and maintaining our position in terms of market share (3rd
position 25%). In order to achieve these objectives we have mainly two major strategies. The
first one has to do with going from product oriented to client oriented, and it will be
implemented through three main sub strategies: provide the potential customers with a credit
selling option, use hedging contract with the BGC, and assign one Token/Tone (Value of 20
DHS), to remain competitive in the market. The second set of strategies is market penetration,
and it will be executed through distributing Holcim’s product in the non-exploitable regions
and signing a partnership with Marchika Med organization.
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Our aims are to help holcim raise its sales growth, and maintain its market share in the
industry, and we believe that these strategies generated by this project will be very effective in
pursuing those goals.
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Table of Contents:
Executive Summary.................................................................................................
Company Overview.........................................................................Company Overview
Holcim Ltd, Group.........................................................................Holcim Ltd, Group
Holcim Maroc:....................................................................................Holcim Maroc:
Mission & Vision Analysis.......................................................Mission & Vision Analysis
1- Mission statement analysis:.........................................Mission statement analysis:
2- Vision statement analysis:.............................................Vision statement analysis:
External Audit...........................................................................................................
1- Industry analysis:......................................................................Industry analysis:
2- PESTEL ANALYSIS:................................................................PESTEL ANALYSIS:
3- Porter’s five forces Model:............................................Porter’s five forces Model:
4- The External Factor Evaluation Matrix :........The External Factor Evaluation Matrix:
5- The Competitive Profile Matrix:..............................The Competitive Profile Matrix:
Internal analysis:......................................................................................................
1- Financial Analysis :................................................................Financial Analysis :
2- Distribution and Marketing Department:..........................Market Positioning Map
3- Management Department:.............................................Management Department:
4- Human Resources Department:..............................Human Resources Department:
5- Management Information System:.......................Management Information System:
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6- Holcim Maroc Operations:.............................................Holcim Maroc Operations:
I- Internal Fatcors Evaluation:.........................................Internal Fatcors Evaluation:
Issues and Objectives:..................................................................Issues and Objectives:
I- Major Issues....................................................................................Major Issues
II- Minor Issues....................................................................................Minor Issues
III- Long-term Objectives:.....................................................Long-term Objectives:
IV- Short-Term Objectives:..................................................Short-Term Objectives:
Alternatives Strategies:.........................................................................................................................30
1- SWOT Matrix...........................................................................................................................30
Recommendations:...............................................................................................................................33
I- The SPACE Matrix:.................................................................The SPACE Matrix:
II- QSPM MATRIX:..........................................................................QSPM MATRIX:
III- Recommendations:..............................................................Recommendations:
Implementation:.......................................................................................................
1- Product Development Strategies:..........................Product Development Strategies:
2- The Market penetration..................................................................................
Strategy 1..........................................................................................................
Strategy 2:.........................................................................................................
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Company Overview
Holcim Ltd, Group

Company Profile:
Holcim is a company whose core business is the manufacturing and distribution of
cement, in addition to the production, processing and distribution of aggregates (crushed
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stone, gravel and sand), ready-mix concrete and asphalt. Holcim has other services to offer to
its customers such as consulting, research, trading, engineering, and other services.
Company Operations and Strategy:

Holcim is a global company employing around 80,000 people, with production sites in
around 70 countries. Holcim has a market presence in every continent and is more
internationally spread than any other building materials company. The company’s business
strategy is based on continuous growth in emerging and developed economies. Holcim’s
three-quarters operational capacity comes from its subsidiaries all over the world, which
accounts for almost half of the Group’s net sales. Holcim’s market-oriented structures,
product innovations, skilled employees and efficient environmental management systems
enable it to record sales of over 21 billion Swiss francs in 2010.
From 2005 to 2008, Holcim Group had been named "Leader of the Industry" in the DJSI
Index and was recognized as the company with the best sustainability performance in its
industry for four consecutive years.
Holcim Maroc:
Holcim Maroc is a subsidiary of Holcim Ltd., one of the international leaders in
the production and distribution of cement, concrete and aggregates; with an annual production
capacity of 4.5 million tones. The company operates on the Moroccan territory, and it has
three plants: Oujda, Fez and Settat, has a center for grinding and bagging and distribution in
Nador and a center for bagging and distribution in Casablanca. Holcim Maroc has seperate
subsidiaries for its concrete named Holcim Bétons which operates under 10 manufactories
located in Fez, Nador, Settat, Casablanca, Rabat, and Tangier.
Holcim has been operating in Morocco for 33 years as one of the well-established cement
companies in the Kingdom since 1979.
 1979: Commissioning of the plant Oujda that starts with a production capacity of 1, 2
million tons per year.
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 1980-1982: Installation of two bagging centers in Fez and Casablanca with a respective
capacity of 500,000 tons per year and 350,000 tons per year.
 1989: Installation of grinding center in Fez with a capacity of 350,000 tons/year.
1990: Start of work for the realization of a complete line of production of clinker in Fez
and launch of the GRP activity with the installation of a concrete plant in Fez.
1993: Start of the unity of Fez, bringing the combined production capacity of CIOR 1, 9
million tons per year. And privatization has resulted in the sale of 51% of its share capital
in Swiss group Holcim Ltd. (formerly Holderbank), and listing in the stock market with
an initial price of 230 MAD.
 1997: Installation of a “Beton” plant in Rabat.
 1998: Installation of another “Beton” plant in Casablanca.
 1999: Construction of a second “Beton” plant in Casablanca and commissioning of a
Centre for grinding and bagging in Nador, and startup activity AFR (recovery of waste in
cement kilns).
2001: Cement Oujda receives the ISO 9001 and ISO 14001.
 2002: CIOR changes name and visual identity and becomes Holcim Morocco; Starting
Holcim Aggregates.
 2005: Startup of a bagging and a distribution center in Settat.
 2007: Startup of the cement plant in Settat.
 2008: Launch of the project to double production capacity of the plant in Fez. ISO 9001
and ISO 14001 acquisition for the Nador Center.
Mission & Vision Analysis

The first thing to start with when dealing with a strategic analysis of any type of company
is to make sure that the vision answers the question: What does the business want to become?
Whereas for the mission it should include the necessary components. In our case, we have
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analyzed both the mission and the vision statements to come up with the following proposed
mission and vision:
Mission statement analysis:

Holcim Maroc mission statement:
Our mission is to bring to the market products and proven solutions, successful and
sustainable accompanying the economic and the social development of Morocco in the
sectors of construction.
According to Vern McGinnis, a mission statement should define what the organization is
and what the organization aspires to be, it should be limited enough to exclude some ventures
and broad enough to allow for creative growth, it has to distinguish a given organization from
all other, and finally it must be stated in terms sufficiently clear to be widely understood
throughout the organization. Thus, let’s first make sure that the company mission actually
includes all the 9 components.
COMPONENTS YES / NO
CUSTOMERS No
PRODUCTS & SERVICES Yes
MARKETS Yes
CONCERN FOR SURVIVAL No
TECHNOLOGY No
PHILOSOPHY Yes
SELF CONCEPT Yes
CONCERN FOR PUBLIC IMAGE No
CONCERN FOR EMPLOYEES No
Table 1: MISSION STATEMENT EVALUATION.
Proposed Mission statement:

At Holcim Maroc, Our teams’ concerns are to continuously improve the mutually
beneficial relationships with our stakeholders through superior quality products and
services. In everything we do we are committed to act up on ethical standards to protect our
environment. To remain always among market leaders, we are devoted to bring to the
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market successful products and proven solutions that would support the economic and the
social development of Morocco in the sectors of construction.
Vision statement analysis:

The following is Holcim’s current vision statement:
Our Vision is to be the promoter of professional pathways and construction of
sustainable development in Morocco.
The vision statement always answers the basic question” what do we want to
become?” In other words, the vision statement shows to the general public which direction
the company is taking. The current vision statement is a good one, but we added what we
thought to be important.
Proposed Vision statement:

To remain among leaders in the Cement industry, our vision is to be the promoters of
professionalism in construction sector and supporters of sustainable development in
Morocco.
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External Audit
Industry analysis:
The cement industry is a structured and distributed across the country, the
liberalization of the sector and the investment made in the early 90’s allowed Morocco to
meet the needs of the market. It was at this time that the cement industry in Morocco has
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strengthened its upgrade. Since then, the profession is pursuing a strategy of sustainable
development, with the major objectives: improving performance, enhancing the
competitiveness and optimizing the value of consumption of natural resources. In the recent
years, the market has known a continuous growth in consumption of cement that is sustained
mainly by the real estates that is among the sectors that have the highest growth rates. This
increase in growth also follows the policy of major works, especially the accelerated highway
program and various other constructions: football stadiums, Plan Azur tourism development
zones, etc..
The cement market in Morocco is composed of four companies: Lafarge Morocco,
Morocco's Cement, Holcim Morocco and Asment Temara. They provide the entire market
supply of material consumption approximately 11.36 million, representing a utilization rate of
93%. But because of the tremendous increase in the demand of cement, all the actors have
noticed the need to do some new investments; mainly because there was a mismatch between
the supply and the demand (the demand has exceeded the supply). This was seen as an
opportunity that has attracted all the actors and some non-actors (Chaabi lil iskane, Addoha)
and has pushed them to either establish a new production plant or to simply double the
production capacity of the existing units of production in order to meet the domestic demand.
The annual production of 11.36 million tonnes in the past years is expected to be 24.2 million
by the end of this year. (See appendix, Figure1: Market Share)
The cement industry has known a continuous increase in consumption, according to APC
(Association profesionelles des cimentries), the cement consumption has known an increase
of 9.9%, 3.36%, 0.3% in 2008, 2009, 2010 respectively. Compared to the previous three years
which recorded growth rates relatively high (10.4 in 2006, 12.6 in 2007, and 9.9 in 2008),
those statistics shows us that the demand is going toward stability at an amount of 14.5 M
tones/ year, thus the market is going toward stagnation. See appendix, Figure 2:
APC:Conjuncture 2010
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The consumption growth rate of the cement industry has increased during the past
three decades, and the increase in the last decades (7,21%) is considered to be strong
compared to the decades 80 (2.4%) and 90 (4.7%). In addition, we can see that the
consumption has almost stagnated in 2010 with an amount of 14500 tones/year (+0.3%
compared with 2009), this is mainly due to the effects of the crisis already seen in 2009, the
structured programs for housing, the major infrastructure projects such as investments, and
tourism significantly slowed down. Moreover, the social housing schemes, which had drawn
heavily cement consumption in previous years, have been almost nonexistent in 2010. ( see
table 4: ciment consumption)
During the last years, the net profit margins that the cement industry attains are very
high compared to other industries in the country. CIMAR achieved a turnover of 2.8 billion
DH and a net profit of 1.7 billion MAD giving a net margin of 42%. Concerning Lafarge
Maroc, it displays a turnover of 4.5 billion MAD and a net profit of 1.16 billion MAD which
results in a net margin of 36.2%. For Holcim Maroc, its performance was not as the two first
ones; however, it was still considered as high. In 2009, Holcim has a net margin of 24.1%
originated from a turnover of 2.32 billion DH and a net profit of 560 million MAD.
So now we know that Major infrastructure project such as tourism investment have
significantly slowed; also we know that the public housing programs, which were heavily
fired up the cement consumption in the previous year have been almost nonexistent.
According to the APC, it’s said that the cement industry knows a surplus in the supply, this
mainly because all the actors were expecting an increase in the consumption in the coming
years, and based on their expectations, all of them have lunched the extension projects of their
existing plant. The arrival of the new actor, Chaabi lil iskane has also contributed in this
excess supply that our national market is suffering from, based on the last statistics, the excess
production is expected to be around 4.3 million tones of cement; and The majority of this
exceeding capacity is concentrated on the central and the eastern regions that are considered
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attractive to new investments. All this have pushed the actors to start a price war in order to
get rid of the excess inventory they have.
PESTEL ANALYSIS:
We will perform what is called the PESTEL analysis in order to analyze more the cement
industry, the pestel analysis consist of an analysis of the Political, economic, social,
technological, environmental, and legal factors that affect our company; so let’s first start
with the political factors.
Political, Governmental factors:

Morocco has known a series of recent developments on both internal and external fronts
that has reduced its political risk profile in the eye of foreign investors; the Moroccan
government has started many initiatives to combat issues such as: Corruption,
Unemployment, and Terrorism. Those issues are considered to be the main priorities in terms
of reforms. According to the Economy and finance minister, Mr Salahdine Mezouar, the
government’s 2011 appropriation bill foresees the creation of 18,800 new jobs through
building Schools, Hospitals and houses.
Moreover, The Moroccan government has signed a free trade agreement with the EU in
2002, concerning the import of Clinker and Cements that are initially subject to tariffs of
32.5%, the two parties agreed on a progressive 10-year exemption from those tariffs at a rate
of 10% per year; this means that in 2013 the tariffs for importing the cement and the clinker
will be almost 0% ( appendix). Besides, Moroccan cement companies are suffering from the
taxes that the government is imposing (0.10 MAD per Kilogram sold, 100MAD/tone.
Economic factors:
Morocco market economy proposes many advantages not only for national investors but
also to the international ones (low labor costs, strategic position). Morocco has entered many
free trade agreements especial with the United States and with the European Union; it is
becoming more and more cosmopolitan with investors from all over the globe looking at
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investments in many areas and this mainly because of our economic and political stability. We
have seen how the Moroccan economy had a remarkable performance in spite of the financial
crisis in the last three years. Concerning the cement industry, from the Professional
Association of Cement, it is considered as a strategic sector of the Moroccan economy since it
occupies a prominent place in the Moroccan economic factors, Contribution of 6% of the
industrial GDP with an annual turnover of about $600 million (APC, 2010).
According to Businessmonitor.com, Morocco was North Africa’s outperformer in
2009, recording an economic growth of 4,6% compared with 2,4% Tunisia, -0.9 in Libya, and
-3.3 in Algeria. Consequently, this can be considered as a sign of good economical status; in
addition, the continuous increase of the Moroccan GDP can be a sign of a high expected
purchasing power.
Social Factors:
The Cement industry is an industry that is indirectly affected by the social factors as
any other industry; we know that this industry is directly linked to the construction and
building materials sector, at the same time, it’s directly linked to the governmental
investments that are mainly affected by some social trends such as change in income, number
of births, number of death, demographics and culture. We highlight the Social housing, the
energy, and the tourism sector as the major infrastructure project that the government is
working on.
The way of life of Moroccans is changing, women have started to work and they also
contribute in the everyday life financing; people put more emphasis on educating their
children because they are more aware of its importance. In addition, the Moroccan population
is growing year after year and it is expected to reach thirty-eight million inhabitants by 2030
(InfoDuMaroc, 2010). If we look at those information, we can easily expect that the demand
for cement for the coming years will be much higher than what it is now, especially because
the government is lunching many development and tourism projects, also this coming
population will need houses where to live, and all this actually contribute to the higher
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demand of real estate which has a direct relationship with the cement industry.
Technological factors:
According to the Ministry of Industry, Trade and New Technologies, the Moroccan
government has launched a development program that is called “Le Maroc Numéric 2013”
with a budget of 5.2 billion MAD. This new development plan focuses on three main areas:
broadband internet access, the local chain of information technology, and the computerization
of small/medium enterprises. Today we can see that most companies are more and more
willing to computerize their management systems, almost all medium and large companies
have websites and programs that facilitate their everyday operations. Internet now has
changed the way we do business, it has brought many advantages in the business world, for
example, it facilitate communication within companies, it helps companies in advertizing their
products, and not only this, but it also helps the transfer of inventories between distributers. In
the cement industry we can see that all companies have a website that presents a deep
description of their businesses, finance, and human resources.
According to businessmonitor.com, two major power plant projects are being undertaken
which, when completed, are expected to provide two-thirds of the country’s energy needs by
2020( 38% of the Moroccan’s electricity). Which means that the energy cost in the near future
will diminish; this is a good sign because we know that the energy cost represent almost 34%
from the production cost of cement.
Legal factors:
The Cement is the first certified product in Morocco; it’s a product that was standardized
since 1974, with the creation of the Moroccan standards, NM 10.1.004 on hydraulic binders,
composition, specifications and conformity criteria. This standard has undergone various
revisions to take into account the specific needs of the Moroccan market. Moreover, the
public construction sector “Bâtiments et Travaux Publiques” is controlled by state laws.
Moreover, in the recent years the government has putted some barriers on the import of
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cement, this mainly for the purpose of protecting this industry from international competitors,
but for the export there is no legal preventions to export cement from Morocco.
Porter’s five forces Model:

Threat of substitutes
Cement and its complementary products are very important in the Moroccan buildings.
Wood and other building material which can be substitutes in other countries are not seen the
same way in Morocco. Cement is the main and essential building material in use. Taking a
look at the Moroccan market, we will notice that almost all buildings are build using cement.
The threat of substitutes can be reduced to zero in this case. However, types of cement are
facing an increase in variety. This latter is raging from discreet colour types to environmental
cements. This categorizing of cement can’t be considered as substitution; it is only product
differentiation. In conclusion and due to the limited number of substitutes, the threat is
minimal and can even be null.
Threat of new entrants

The threat of new entrants in the Moroccan Cement market is high. There are no strict
regulations to forbid entrance of other foreign companies to the Moroccan cement industry.
There are some companies that entered the Moroccan market such as Ciment du Maroc
belonging Italcementi Group. The most flagrant barrier to entry to this industry is the cost of
launching a new cement business. The start-up costs are tremendously high: machinery,
factories, etc. Combining the lack of regulations and the high start-up and functioning costs,
we will get a high threat of new entrants because even if the regulations aren’t that strict, the
costs remain a great obstacle for other new companies to operate in this industry.
Rivalry among existing firms

In the Moroccan Cement industry, rivalry among existing firms is very important because
of the current high demand. To meet this demand, the industry attracted national and
international companies. The most important competitors are: Lafarge, Ciment du Maroc,
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Asment, etc. The rivalry among existing firms is currently high and could be easily increased
due to the potential entrances to this industry.
Bargaining Power of Suppliers

For the cement industry and more precisely for Holcim, the suppliers have a medium
bargaining power. In fact, Holcim has suppliers at the national and international levels. Their
bargaining power is medium because if Holcim decides to switch suppliers it has the
possibility to do it but at certain costs. The costs aren’t the only factors making this bargaining
power to be medium, the limited number of suppliers for this industry is also limited.
Therefore, the bargaining power of suppliers is rated at a medium level since both Holcim
(Actually, any other company operating in this industry) and the suppliers have the same
equal level of power from a B to B perspective.
Bargaining Power of Buyers

In this overall industry, the power of buyers is low. Basically, the companies operating in
this industry aren’t that much. Therefore, buyers do not have that many companies to choose
from. The power of buyer is also low because of the production capacity. One firm isn’t
enough to respond to the entire Morocco’s demand.
The value of the Five Forces Model

After studying these forces, we can determine the attractiveness of the cement industry
by making the following table:
Competitive Force Low Medium High

Threat of substitutes X
Threat of new entrants X
Rivalry among existing firms X
Bargaining power of suppliers X
Bargaining power of buyers X
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The External Factor Evaluation

Matrix:
Note that Holcim’s total weighted score equals 2.65, which is considered to be above
the average mid-point of 2.5; thus Holcim is doing pretty well, taking advantage of the
external opportunities and avoiding the threats facing the firm. Company managers should not
take this as a good sign because there are many ways for improvement; Holcim needs to
capitalize more on the “export of the cement”, also Holcim managers must take into
consideration the fact that they can capitalize on developing a new variety product that would
give more value to customers. (Refer to appendix, Table1:EFE Matrix)
The Competitive Profile Matrix:

Lafarge has got the highest score, this can reflect the fact that it’s the market leader not
only in term of market share, but also Lafarge is the market leader in inventory management,
financial position, Production capacity, and Finally Management Experience. However, we
can see from the table above that Holcim is the market leader in terms of sales distribution,
Customer service. Thus, we are highly recommending the company to work on its inventory
system, its financial position, just to get closer from the market leader and the major
competitor Lafarge. (See appendix: Table2: CPM)
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Internal analysis:
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Financial Analysis :
Liqudity Ratios
– Current Ratio :
For this ratio, we know that it measures a company solvency by indicating its ability to
pay current liabilities out of its current assets. We decided on calculating this ratio and also
that of the competitors in order to be able to compare the company solvency with the solvency
of its competitors.
Holcim Maroc’s current ratio is below the one of the competitors by a significant
amount especially in 2010. Thus Holcim will have a problem meeting its short term debt
when they come due, and by this measure we can see that the company liquidity is weak.
(Refer to appendix, Graph 1: Current ration)
 Quick Ratio:
Another measure of the liquidity of a company is the quick ratio; it’s a conservative measure
of a firm’s liquidity, it measures the extent to which the company is dependent on the selling
of its inventories in order to pay its short term obligations. (see appendix: Graph 2: Quick
Ratio)
Again, Holcim is falls far below the rule of thumb of 1:1, which means that the
company doesn’t passes the test of liquidity especially when measured against industry
standards. Holcim realy depends on the selling of its inventory in order to be able to pay back
its short-term obligation. Thus, we are expecting large problems of liquidity in the near future,
this is why we are recommending the company to begin building a cash reserve as a
precautionary measure.
– Leverage Ratios:
Leverage ratios measures the financing supplied by a firm’s owners against that
supplied by creditors. In addition, Those ratios not only measures the degree of financial risk
in a company, but also they show the extent to which a company relies on debt capital rather
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than equity capital, to finance its operating expenses, capital expenditures, and expansion
costs.
 Debt to total assets:
This ratio measures the percentage of total assets financed by the company creditors
compared to its owners; we have seen that in the past three years, Holcim was highly
leveraged, creditors have provided 62.89%, 56.84%, 58.73% of the company total assets in
2008, 2009, 2010 respectively. This high debt are especially due to the large investments that
Holcim is taking, such as the new plant in Settat, and the doubling of production capacity in
the unit of Fes. Thus, the debt ratios of the two main competitors. (Refer to Appendix:
Graph3: Debt to Total Assets)
Thus, this graph confirms what we have just said about the company leverage, Holcim
appear to be overburdened with debt, which means that the company might have difficulty
borrowing additional money, especially from conservatives lenders.
 Debt To Equity ( Debt to net worth):
 Times interest earned:
This ratio actually measures the firm ability to make its interest payments on debt. It
tells how many times a company earnings cover the interest payment on the debt it is
carrying. Even if Holcim is highly leveraged, but still its ability to pay back its interest
payment tends to be high, Holcim earnings were 12 times greater than its interest over the
accounting period. This ratio is somewhat high which tells us that the company might have a
little difficulty meeting the interest payment on its loans, and creditors see this as a sign of
safety for the future. (see appendix, Graph 5: Times Interest Earned
Even if Holcim’s earnings are high enough to cover the interest payment on its debt,
but still compared with the competitors we can see that those last had a large capability in
2008 o pay the interest payment, for example, Lafarge earnings were 5651 times higher that
the interest payment. But as the time goes along and the number of investment has increased,
this has diminished.

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– Operating Ratios:
In every financial analysis, the operating ratios actually helps as evaluate the overall
performance and enable us to have an idea about how effectively the business employs its
resources. Those following ratios will help us identify the area that must be improved to
remain competitive in the market.
 Inventory turnover:
By calculating this ratio we will be able to measure the number of times inventories
are sold out and turned over during the accounting period (See appendix, Graph 9: Average
Inventory turnover)
The Inventory at Holcim is moving at a really high pace; but still within the industry,
the company is the last in terms of inventory turnover, this why, company managers have to
analyze their inventory and reevaluate the inventory control procedures. (Refer to Appendix,
Graph 5: Average inventory turnover)
 Average collection period:
This ratio measures the number of days its takes to collect Account receivable, by
calculating this ratio we were able to notice that Holcim has reduced the collection period
from an average of 30 days in 2008, 2009 to 15 days in 2010. However, we have seen that the
competitors have both increased their credit sales and also they have enlarged the collection
period to 40 days in 2010.( See appendix, Graph 10: Average Collection Period)
– Profitability Ratios:
 Net profit margin
This ratio measures the firm’s profit per every dollar of sales, from our analysis we have
seen that during the last three years the profitability over the sales was quasi-stable, but still
the comparison have shown us that Holcim is the least profitable company in the market.
(Refer to Graph6: Net Profit Margin in the appendix)
 Return on assets :
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This ratio shows us how much profit the company generate for each dollar of assets it
owns. We have seen that Holcim’s profitability over the assets has increased during the last
three years, which can be considered as a good sign for our company. In 2008 the profitability
over the assets was around 10%, it has increased until 13% in 2009 and in 2010 it has been
shrinked to 12.08%. If we see those numbers we can say that the company is actually doing a
good job in capitalizing over its assets; however, in reality it’s not the case as it’s the ranked
last in terms of asset capitalization in the industry; Lafarge is again the leader in terms of
assets capitalization. Refer to appendix, Graph 7: Return on Total Assets)
 Net profit to Equity Ratio:
This ratio measure the owner’s rate of return on investment, Holcim owners have earn on
average an amount of 28 cent per every 1 mad they have invested in the company, compared
with the competitors, Holcim comes second after Lafarge again, which is something good for
our image. (See appendix, Graph 8: Return on Stockholders Equity)
Market Positioning Map
Four main competing companies in building material sector in Morocco: Lafarge,
Ciments du Maroc, Holcim, and Asment Temara. One of the key elements in this sector is
28
growth potential and market share, and the market positioning map serves the need to analyse
these points. After the elimination of the gentlemen’s agreement, the competition will be more
severe, as each company will try to target the other company’s region in order to increase its
sales as well as its market share, the fact that will cause price war in the market.
Concerning the market share, Lafarge is first with 41%, then Ciments du Maroc is
ranked second and has 26¨% market share whereas Holcim has 25% and Asment has 8%.
Holcim could maintin or even increase its market share to get closer to Lafarge in the map. If
it fully takes advantage of the elimination of the gentlemen’s agreement and target other
markets/regions by benefiting from its high production capacity.
Strengths and Weaknesses:

Holcim major strengths and weaknesses are strong distribution channels, which is due
mainly to its market research and strong customer relationship management. Holcim
Holcim has been certified the ISO 9 001 and ISO 14 001 which allowed the company to gain
an important brand image in the building material industry. Another important strength is its
highly experienced workers who are the company’s major cause of its strong production
capacity
Internal Fatcors Evaluation:

The most important factors to be successful in Holcim Maroc are “the distribution
channel” and “the database that keeps truck of and maintain the customer relationship
management”. Also, we notice that the fact that Holcim was certified by the ISO 9001 and
14001 standards, this shows to the general public that Holcim is a company that is interested
by the quality of its production line, also it shows that we are caring about the environment;
thus, this can really enhance our image in the eyes of our customers.
The Internal factor Evaluation matrix stated that the company weighted score is 2.73,
which means that our company is actually strong internally, but even there is always ways for
29
improvement. The company must reduce its debt amount, also increase its sales; it should
offer a credit option to its customer in order to increase their utilization rate, and also to get
back its old customers that left the company for its competitors for that reason. (See appendix,
Table 3: IFE)
Distribution and Marketing

Department:
The distribution and marketing department in Rabat plans and controls the distribution
strategy to follow by all the Manufactories of Holcim in Morocco. The main activity of this
department is the distribution and marketing of the finished products. This department exists
in every manufactory of Holcim and markets the cement either in bags or bulks. Holcim
Maroc has two types of clients: clients with long-term or short-term contracts, and occasional
clients. The contractual clients receive their invoices either per week or after 15 days and pay
according to the terms of the contract, whereas the occasional clients receive their invoices
immediately and pay before the loading of the merchandise in the trucks.
Holcim has been certified the ISO 9 001 and ISO 14 001 in 2001 even before many of its
competitors which has made the company gain a good reputation when it comes to product
quality, and helps it gain competitive advantage over its competitors.
Advocating the modernization of distribution channels for building materials, the Group
Holcim Morocco has initiated the first distribution of building materials in Morocco named
"Distribution Batipro”. Through this network, based on professionalism, quality and
transparency, Batipro Distribution wants to federate independent distributors from different
backgrounds around a common ideal and make them share the same good business practices
for the benefit of improving their competitiveness and better customer satisfaction. The
ambition of Batipro Distribution is to be the first reference network in the industry
30
Management Department:
Holcim follows the strategic management concepts as that can be seen through its
established vision, mission and its position within the Moroccan stock exchange. Another
indicator is that Holcim establishes its short and long term objectives while keeping in mind
assessing its internal performance as well as competitors. Implementations of its strategies are
usually implemented in a well-organized way and time frame. Also, Holcim makes sure to
assess and evaluate its executed strategies on a regular basis in order to check the efficiency
and the effectiveness as well as the performance of its employees based on performance
standards, and taking counteractive actions. Furthermore, as part of the management
information system, Holcim has an important database warehouse that helps it keep track of
its customers and maintain its customer relationship management.
Human Resources Department:

This department manages the workforce of Holcim and makes sure to hire competent
employees in order to meet the requirements of each department in the company. The human
resources department is responsible for the training, recruitment, and communication with
employees.
Management Information System:

Holcim is using SAP: Software Applications Products, for its management information
system. SAP is the market and technology leader in business management software, providing
all-inclusive business software through SAP applications, services and SAP Products for data
processing. La FARGE who is the cement leader in Morocco has implemented the URBA
information system in 2010 to manage its internal operations and communication system. The
company’s management information system is weak compared to that of Holcim, as it doesn’t
include the management of the company’s customers’ relationship.
31
Holcim Maroc Operations:

The Raw Materials :
✔ Limestone
✔ Schist
✔ Iron ore
✔ Sand
Limestone, a key raw material, is derived directly from the quarry near the company’s plants.
The rest, is either taken from sources in the region or is imported.
The production Process :

Crushing Raw GrindingPreheatingCookingCoolingStorageCement Grinding
✔ Crushing: Involves the drying of raw materials in the form of large blocks. These
materials once dry they are put in a hammer crusher to be used in small dimensions.
✔ Raw grinding: Involves the grinding of the mixture of the constituents (without
gypsum) in an amount prescribed by the laboratory and performed by controlling the
flow of output. The resulting product is stored in a silo homo capacity of 600 tons that
enables the homogenization of the flour
✔ Preheating: involves a heat exchange between the flour and gases from the furnace in
a preheater named 'Tour DOPOL'
✔ Cooking: The resulting materials from preheating are put in a cylindrical rotary
furnace of 62m, 3.8m internal diameter inclined at a slope of 3% with a temperature
between 1200 °C and 1500°C. This step results in the Clinker formation.
✔ Cooling: The cooler is placed below the furnace and cools a total of 1230 tons per day
✔ Storage: The clinker is put then in storage with a capacity of 5000 tons.
✔ Cement grinding: The clinker is then put in a grinder. Limestone and gypsum are
added to the clinker depending on the required quantity.
✔ Bagging: The resulting cement is either put in bags of 50kgs or sold in bulks.
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Holcim Maroc’s overall production capacity is 4.5 tons annually which falls in between
that of its competitors. The production capacity of Lafarge Maroc is 6.5 tons annually and
Ciments du Maroc is 2.2 tons. Even though Holcim has a greater production capacity than
Ciments du Maroc it doesn’t support the company’s sales as Ciments du Maroc has greater
sales than Holcim.
Company Organizational Structure:
Issues and Objectives:

Major Issues
– Cement industry consumes large quantities of combustible and electricity, the
energy bill is the main expense of Holcim (Morocco). [Holcim Trading/ ONE].
– Importation tariffs of the clinker and the cement will reach 0% by 2013. [Signed
agreement with EU on October 1st, 2002]. [put the table in the appendix]
– New entrants such as Chaabi Lil Iskane and Addoha [Atlas] which have created an excess
supply of Cement in the market.
– Holcim is The most leveraged company in the market
Minor Issues
– Holcim’s Sales decreased in the east region (Oujda, -1.0%), and in the west region (Settat,
-1,6), and this due to the new entrants, and the fears competition from Lafarge.
33
– Aggressive competition, because the cement companies are no more distributing products
on regional basis due to the elimination of the “gentleman agreement”.
– The transportation costs become equal to the production cost, once the transportation
distance exceeds 300Km.
– The cement sector is characterized by a seasonality of activity, due to the slowdown in
construction sites during the religious holidays, and to high pluviometeric periods.
Long-term Objectives:
The major issues facing Holcim Maroc are the High production cost due to cost of
Energy, Excess supply in both Oujda and Settat units, importation tariffs will be almost 0% by
the year 2013, and finally, based on our analysis we have found that Holcim is the most
leveraged company in the market. Thus, the first objective for the company is to increase the
sales growth to 9% by the end of the year 2013, considering the opportunities it has. This
objective will be fulfilled by the strategies presented in the following section.
Concerning the high cost of production, the second objective for the company is to be the
cost leader in the market by the end of the year 2014. In the following section, we will
explain how this objective will be fulfilled.
Last but not the least; the last objective is to maintain our position in terms of market
share (Third position 25%).
Short-Term Objectives:
Regarding the Minor issues, we have seen that Holcim faced a decrease in the sales
volume in both east and west region, knowing that it is the only company that operates in the
east region; thus the first short-term objective is to maintain its leader position in this
region; by providing value to its customers. The strategies to reach this objective will be
discussed in the following section.
Knowing that Holcim has the largest production capacity in the west region, also knowing
that Holcim has a strong distribution channel ( Batipro, and a strong logistics chain), this can
34
be considered as a major strengths to increase the customer utilization rate in this
region.Moreover, because of the elimination of the gentleman agreement; our objective is to
increase our market share by 10% in the west region [Rabat Zemmour Zaer, Grand
Casablanca, Doukala Abda, and finally Marrakesh Tansift el Haouz].
Alternatives Strategies:
SWOT Matrix
Based on the SWOT matrix that can be found in the Appendix, we were able to construct
some strategies that would allow us to achieve our objectives.
i- SO strategies
by mixing both the strengths and the weaknesses, we were able to come up with the
following strategies:
a. Use the distribution channels to distribute the product in the Non-exploitable
Regions
by performing an external analysis for the ciment industry, we have seen that the major actors
used to operate under the “gentlemen agreement”, that has divided the market into three
regions, each actor was responsible for a specific region, and the competitors did not have the
right to operate in the others regions; kind of monopoly. However, in the last year, the Excess
supply has pushed the actors to eliminate this agreement. Thus, we are highly recommending
the company to use its distribution channels, they are considered to be strong, in order to
penetrate the non-exploitable regions. According to the APC (professional Cements
association), the sales in the north region have increased from 20% to 23%, which create an
opportunity for our company.
b. The Excess supply will be left for export( Central africa)
Based on market analysis, the cement industry knows an excess supply, and more
precisely, for Holcim, the Settat and Oujda units have reduced their capacity to avoid the
excess inventory. According to the World Bank report “CEMENT SECTOR PROGRAM
35
IN SUB-SAHARAN AFRICA”, in 2003, Sub-Saharan Africa cement production was around
26.6 million tones. However, in the last years, the International Finance Corporation (IFC)
found that the SSA consumed 60.6 Mt of cement knowing that the production capacity was
only 56.3 Mt. Indeed, it is clear enough that there is a real need for either a capacity extension
or import of ciment from abroad to offset the negative difference between the demand and
supply. As Holcim Group has facilities in both South Africa and Senegal, our team has
decided to export the excess of supply to those regions.
c. Partnership with the MarchikaMed Company
Under the high instructions of His Majesty the King Mohamed VI, Morocco has decided to
take benefit from the potential lagoon of Nador: Marchika. The major investors are the
Ministry of Economy and Finance and the Funds of Hassan II for the economic and the social
development. The Marchika MED organization was established to be the designer and the
operator of this great project of Tourism Development. Since Holcim Group is the only
cement manufacturer in the North East region (oriental), we decided to build a partnership
with this organization to supply them with the needed construction material. As a result of this
partnership, we are pretty sure that we will boost our sales and absorb the excess supply.
d. Develop a new type of product that will bring value to customers
According to the APC 2010 conjuncture, the cements with higher resistance has gained more
and more market share, the CPA 55 (+83%) increased from 806,424 t in late December 2009
to 1,474,850 at end of December 2010. However, the CPJ 45 and the CPJ 35 have recorded a
decline of 4% and 6% respectively. Indeed, the BPE and the construction industry recorded
simultaneously a better penetration. It is a slow but steady trend that continued in the field of
progressive industrialization of certain sectors of construction materials. The decision of our
team was to develop a new type of product that has a higher resistance and will bring more
36
value to our customers. Our future task is to contact the Research and Development
department to try to discuss the previous strategy.
e. Increase the users utilization rates via Batipros
Advocating the modernization of distribution channels for building materials, the Group
Holcim Morocco has initiated the first distribution of building materials in Morocco named
"Distribution Batipro”. Batipro distribution was one of the major strength that Holcim has;
thus, our team has decided to use this distribution channel in order to increase the sales of
Holcim. We decided on some promotions that we will explain in the implementation stage.
ii- WO Strategies
We have identified two (Weaknesses/ Opportunities) strategies that emphasize the
improvement of Holcim’s weaknesses to take advantage of its opportunities. The following
are the identified strategies:
a. Reduce the production cost to increase profitability and to remain competitive in
the market
From our analysis, we have found that the energy cost represent 38% of the production
cost; the concerned energies are the Electricity, and the PetCoke as a combustible that is used
to turn our machines. In addition, the cost of energy has increased in the last three years ,
electricity bills have increased by 18%, Petcoke price has increased as the Oil price has
increased. We have seen how the excess supply has pushed the cement producers to eliminate
the “Gentleman Agreement”, also it has pushed them to start price war. Thus in order for our
company Holcim to remain competitive in the market, and to increase its profitability; the
suggested strategy is to reduce its production cost; in the implementation stage we will talk
more about this strategy, and we will try to explain how we are going to implement this
strategy.
b. Use credit selling as a Strategy to get back old customers and attract new ones
37
According to Mr, Samir Rais, the Selling administrative and Credit manager, Holcim
has knew a serious issue of losing customers mainly due to the absence of credit selling. He
also added that 34% of their customers left Holcim and started to do business with Lafarge
because Lafarge gives them 40 days to pay their payables; Holcim in the past used to appeal
to an insurance company called ACMAR to protect it from the customer risk, but this last
does not cover the totality of Holcim credit selling and sometimes it does not cover the
totality of the ceiling credit asked by the commercial for several reasons. (Analysis of the
customer file passed on by the commercial).
Based on this, we established a credit strategy that would help us getting back old
customers and attract new ones. You may ask how we are going to cover ourselves from the
customer risk. As a team, we decided to assign a new task to the financial accountant that will
be perform a financial analysis to evaluate the solvency, leverage, and the profitability of the
interested customers; via this financial analysis, we will reduce the cost of doing business
because we are going to avoid the insurance costs that reached last year 10 million MAD.
iii- ST strategies:
As a team, we have been identified by using Holcim internal strengths to avoid or to reduce
the impact of external threats. Those strategies are as follows:
a. Provide more value to customers by helping them in managing their businesses
(Béton)
Holcim deals with 5 types of customers; one of them is the BPE/ Prefa. The
prefabrication, the BPE and the construction industry recorded simultaneously better
penetration over the last three years, Holcim generate 16% from its sales revenues from this
type of customers which can be considered as an important %. Knowing also that Holcim has
a division that is specialized in Concrete that is present on the market of the Eastern, Central
and North Central with 10 stations (Fes, Nador, Settat, 2 Rabat, Tangier 2 and 3 in
Casablanca). We decided to provide our BPE customers with the necessary raw materials
38
(Cement, Granulat….) and also some services if necessary. For example, if one of our
customers has a problem with the management of his/her business, we take charge of
redirecting and solving the problems with the help of our engineers who have both the
experience and the expertise in the field.
b. Assign One Token/Tone ( Value of 20 DHRS), to remain competitive in the
market
As we stated before, Holcim has 5 types of client, one of them is Distributors. One has to
know that distributors are the major source of revenue of Holcim with more than 47% of the
sales revenues. This type of client cannot be neglected. Thus, as a team, we have built another
strategy that will be directed to this type of customers besides the one of credit sales. We will
explain it in the following section.
iv- WT Strategy:
a. Joint venture with governement agencies such as CDG, CGI..
After that both Chaabi lil Iskane and Addoha have created their own cement units; the
remaining government agencies such as CDG, CGI, Al Omrane… represent a good
opportunity for our company. Agreement with this type of agencies will really allow us to
achieve our main objective that consist on maintaining our market share, and as the time goes
on, our sales also will increase. Al Omrane for example is one of the leading companies in the
real estate industry; and it consumes large amounts not only of cement but also of granulats
and concrete. Thus, we will not provide it with only cement but with all the needed
construction materials.
39
Strategies Formulation
The SPACE Matrix:

40
To construct this SPACE matrix, we rated the Elements with regards to the External and the
internal analysis previously discussed. Consequently, Holcim Maroc has fallen within the
Aggressive quadrant, H (0.752, 0.70). thus we can see that Holcim is in an excellent position to
use its internal strengths to take advantage of external opportunities, to overcome internal
weaknesses, and to avoid external threats. Therefore, the suggested strategies based on the
space matrix analysis are: Market Penetration, Market Development, Product Development,
Backward Integration, Forward Integration, Horizontal Integration, and finally related and
unrelated Diversification. Matching our previously developed strategies with the ones mentioned
above generates the following classification:
Market Penetration:
○ Partnership with the Marchika Med Company
○ Increase the users utilization rates via Batipro
○ Assign One Token/Tone ( Value of 20 DHRS), to remain competitive in
the market
Market development:
○ The Excess supply will be left for export( Central Africa)
Product Development:
○ Use credit selling as a Strategy to get back old customers and attract new
ones
○ Develop a new type of product that has a high resistance, which will bring
value to customers
QSPM MATRIX:
There is only one analytical tool that is designed to determine the relative attractiveness of
feasible alternative actions, the QSPM; this tool will be used in order to determine which is
best to be implemented best. As a result of this evaluation, we decided on implementing five
strategies that comes under two different categories; the first category is the product
41
development and the second category is the market penetration. Under the first category, we
have mainly 4 strategies: Tokens strategy, Hedging with BGC, Credit selling, and
Management services. On the other hand we have two main strategies, targeting non
exploitable regions and signing a partnership contract with Marchika Med organization.
Based on the QSPM Attractiveness scores, our team has decided on implementing five major
strategies which had the highest scores; three from the first category, and the two from the
second one: the Tokens strategy, Hedging contract with BGC, credit selling strategy. The
attractiveness scores for these strategies are, 3.33, 3,43, and 3,99 respectively. As for the other
two strategies: targeting non exploitable regions and the Marchika partnership have: 4, 32 and
4, 05, respectively. (See Excel File)
Recommendations:
Going back to our long-term objectives, the increase of sales by 9% by nearly the end of
2013 comes in the first position followed by maintaining our position in terms of market
share. Thus, all the following strategies were mainly developed to help us achieve our
objectives:
1st Objective: Increase the sales growth to 9% by the end of the year 2013.
○ Strategy 1: Distribute the product in the non-exploitable regions.
○ Strategy 2: Negitiation with the Marchika Med organization.
2nd Objective: Maintain our position in terms of market share (3rd position 25%).
○ Strategy 3: Provide the potential customers with a credit selling option.
○ Strategy 4: Use hedging contract with the BGC
○ Strategy 4: Assign One Token/Tone (Value of 20 DHRS), to remain
competitive in the market.
Concerning the third objective, to be the cost leader in the industry by the year 2014
we couldn’t get the cost information, managers at the company said that it is highly
42
confidential. As a matter of fact, we decided to forget about this objective for the moments,
and to focus on the other objectives and strategies.
43
Strategy
Implementation
To respond to change in our competitive environment and facing the
necessity to continuously improve our competitiveness, we have decided
to change our business functions by opting for a client oriented
organization, instead of being product oriented.
1 - The sales force will be organized according to the nature of the activity
of our client with one hand the technical segments (construction
44
companies, precast, BPE, Road companies....) and on the other hand the
distribution (Distributors and franchisees). This customer-focused
organization will enable us to develop synergies to create packages
tailored to the needs of our customers.
2 - A review of process support functions will go along with this change,
the sales organization will be implemented in two stages with an
intermediate phase. When the distributors will be still attached to the
technical segment, and the second phase is when this type of client will be
under the distribution direction (Batipro) to allow Batipro to consolidate its
position.
Consequently, the organization's executive committee will evolve business
functions cement, concrete and aggregates will be consolidated into a
marketing and sales director:
- Directions structured channels (Trading, Construction & Civil
Engineering, Roads & Infrastructure, BPE & Prefs Great project and large
accounts), these channels will occur throughout the Moroccan market.
- Maintaining strong coordination commercial/production to produce
BPE and Aggregate to supply respectively the Building & Civil
Engineering and Roads & Infrastructure.
- Strengthening of logistics and marketing activities in marketing and
sales direction.
After discussing the main fundamentals functions of our new business, we
opted as we mentioned before for a client oriented organization. This
customer-focused organization will enable us to develop synergies to
45
create packages tailored to the needs of our customers. Those packages
will be communicated in terms of strategies in the following section.
1- Product Development Strategies:
This category actually involves three strategies:
Strategy 1: Provide the potential customers with a credit option.
From our analysis, we have found that almost 16% of Holcim clients have left the
company and they started doing business with one of our major competitors
(Lafarge) for the simple reason that Holcim does not offer credit selling.
Regarding the intensive competition in the market and many other external
factors discussed before our team has decided on providing the potential
customers with the credit option.
The Allocation process will be divided into two parts. The first part is the
information gathering stage; the sales person is the one that is responsible for
this. The following list summarizes the types of information that we search for:
- The date of the creation of the company.
- Legal status (LIMITED COMPANY, SARL, Company of collective names etc.).
- Name of one or several leaders of the prospective customer.
- Legal Privileges if existing with the other entities.
- The partners of prospect (these last ones offer precious information on solvency and
payment time of the concerned company).
- Banks (even if they are subjected to the professional secret).
- The last three balance sheets and the account of the profits.
After this, if the client passes this stage then we will move to the next step; the credit manager
will perform a financial analysis via financial ratios to test the liquidity, the solvency, the
leverage, and finally the profitability. Table and figure in the appendix summarizes the
allocating process.
46
Client Status Situation Decision
Customer in Cash No Customer risk
Customer in account Customer guaranteed by Customer risk is insured and
ACMAR guaranteed by the Insurance
company
Customer not guaranteed by Case to be studied:
ACMAR Proposition of our credit
option. Agreement of the
ceiling credit amount that
could be offered by the
company.
47
a. Methodology of allocation:
48
IV. Follow up of the customers whose internal risk was granted:
Via the follow-up of the fallen:
Fallen Invoices Action
First month Raising the awareness of the commercial
30 to 60 days Reduction of the ceiling granted by 50 %
60 to 90 days Blocking of the customer and the transmission of the file to the
debt collection agency for amicable or judicial covering of the
outstanding debts.
In case of refusal of payment of the debt by the customer, this incident will be settled as
follows:
- The accountant is going to record the credit not paid off in the account of reserve.
- Preparation of the file by the ADV of the point of expedition concerned (order forms,
slips of sealed deliveries and invoices accused by the customer)
- Transmission of the file to the persons in charge of credits management whom are
going to pass it in their turn to the office of covering recognized for amicable covering or
judicial one.
Strategy 2: Tokens Strategy:
After analyzing the external market, we noticed that there is a severe competition
surrounding the industry which led to a price war. One of our major objectives is to maintain
the industry position and to remain competitive. As a team, we decided on a strategy that will
allow us to achieve our previously stated goals. Our strategy consists of price cut.
The Tokens promotion consists of the following: To its distributors, Holcim sales
manager gives what we called tokens for every one tone sold; this token has a value of 10
MAD that the distributors give to their clients in terms of discounts. Once the distributers
reach a total of 1000 token, they contact Holcim to get paid immediately. To promote this
strategy, we have decided to create new flyers dedicated to the Tokens strategy only.
49
However, after discussing this idea with three managers at Holcim Fes, they rejected it and
proposed direct communication with their distributers. They have argued that the flyers would
be costly and that the best promotion would be the word of mouth. They will contact their
distributers directly through the phone and let them know about the new service. These
distributers will then communicate this offer to their clients and the message will get going.
Strategy 3: Hedging
The next type of clients is the BCG (Bâtiment Genie Civil), the Big Clients (grand projets et
grand comptes), and Partners. To acquire this type of clients we have decided to use hedging
against the fluctuations of commodities prices of cement in order to fix the cement prices.
After analyzing the cost components of Holcim’s cement production we have found that the
major cost about 50% is incurred from the cost of the petroleum coke (Petcoke). (table)
Petroleum coke is a carbonaceous solid derived from oil refinery coker units and used
mainly in cement industries as a high energy fuel. Petcoke’s prices depend on the fluctuations
in the prices of its derivate the crude oil which causes fluctuations in the cement prices as
well.
Source: APC
Holcim like any other cement company bears some of these prices fluctuations and transfers
the rest to its customers. The customers are mainly entrepreneurs, who bid for different
projects by offering the lower costs for the suggested projects. These entrepreneurs calculate
their costs on the basis of the price fluctuations of the cement then they add their marginal
benefit. Some entrepreneurs who are optimistic and believe that the cement prices would
remain stable end up in a case of cement price increase loosing big amounts from their
marginal benefits. On the other side the pessimistic entrepreneurs, would normally increase
the average price of the cement and end up losing the bid on projects.
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In order to acquire these clients, increase our sales and hence maintain our market share and
our profit margin we have decided to hedge in three steps.
Step 1: Hedging Futures Contracts:
We have decided to hedge using the futures contracts. The futures contracts for Petcoke have
a size of 1550 tons, an initial Margin of around 16% and its symbol on the exchange market is
PTC.
Exchange & Product Name Contract Size Initial Margin Symbol

NYMEX Petcoke Futures 1550 tons 16% PTC
Holcim would calculate how much petcoke it needs to produce 1 ton of cement. If a customer
wants to buy 100 tons of cement to be delivered in a year, the price of the cement will be
calculated based on the cost of petcoke in a year. Once the sale is made, holcim will have to
hedge the amount of petcoke needed to produce the 100 tons of cement. Any profit in the
futures market will be used to cover the increased costs in the physical market and vice versa.
Holcim will have to go long when it makes the sale and close its position by going short when
it goes long in the physical market.
Step 2: Hedging Foreign Exchange Market:
Once the hedge of commodities price fluctuations is made, the company will have to hedge its
foreign exchange risk since the clients will pay in MAD and the prices of the Petcoke are in
U.S Dollars. For this reason, Holcim will use Forward contract to hedge the value of the
futures contract.
Step 3: Hedging Credit risk of the customers
In case the cement prices go down and the client defaults on its obligation, Holcim will incur
a loss (credit loss). To hedge against this risk, we have contacted an insurance company
ACMAR that is willing to insure at a low premium of 0.01% because it will only insure the
difference between the predetermined price and the market price.
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1- Other recommendations:
Market penetration strategies consist of two Strategies:
1. Distribute the product in the non-exploitable region:
The purpose would be to acquire new customers from those non-
exploitable regions. This will have a direct impact on our sales. Holcim is
present in three different regions on the Moroccan territory (west, central,
and Oriental) and one of our major strengths is the strong distribution
channel. Holcim can benefit from the elimination of the gentleman
agreement and therefore increase its sales.
2. Partnership with the Marchika Med organization:
Negotiation with the Marchica Med requires no implementation steps
1- Forecasting:
The forecast involves the impact of our strategies on Holcim’s future sales
and hence its market value. Our forecast tests the impact on sales of each
strategy then the impact of the strategies on Holcim’s market value as a
whole. The following table summarizes our calculations: (The detailed
calculations can be referred to in the excel sheet provided along with the
deliverables).
Equity MAD 2 498 087
000
Debt MAD 1 478 059
000
Total MAD 3 976 146
Asset 000
52
WACC 7,42% Cost of equity 0,0938

Total Expenses as a percentage of 77% Beta 1,1
sales
Net Profit Margin 23% Risk free 4,10%
Expected Growth Rate Of Demand 7% Market Return 8,90%
Expected Inflation Rate 3% Cost of debt 5,86%
Last year quantity of cement sold 3572069 debt ratio 0,3717
,23 32
increase in sales thanks to 5,00% Equity to total 0,6282
Hedging the strategy asset ratio 68

Price of cement Last year 987 tax rate 30%
(Average)
2011 2012 2013 2014 2015

Incremental Quantity of 178603 187534 196910 206756
Ciment
Price of Ciment (adjusted to 1036 1067 1099 1132
inflation)
incremental revenues 185095 200180 216495 234140
697 997 748 151

Incremental expenses 142523 154139 166701 180287
excluding taxes) 687 367 726 917

incremental tax expenses 0 0 0 0
Incremental Cash Flow 425720 460416 497940 538522
10 29 22 35
DCF 396323 428624 463557 501336
75 14 00 90
NPV of the strategy 178984
179
The previous table shows the impact of every single strategy on our sales.
For example, the first column shows the incremental quantity of cement
53
as results of the strategy. Then, we have assumed that the price of
cement will increase at least at the rate of the inflation (3%). The
incremental revenues are the product of the incremental quantity and the
price of the cement, whereas for the incremental expenses, we know that
the company has control over its cost and we considered them to be fix;
the total expenses represent approximately 77% of the sales, thus, the
values presented there are the product of Incremental revenues and the
77% (1- Net profit margin).
Worst case Neutral Best case
senario senario
NPV of strategy 1( Hedging) 100534547 1758128 30251355
61 6
NPV of strategy 2 (Credit 137303124 2161349 39706002
selling) 49 7
NPV of strategy 3 (Tokens) 175812861 2161349 25834308
49 5
Total increase in the firm value 413650532 6080827 95791666
59 8
Expected market value of the 115869905 1178142 12131256
company 32 2759 668

Expected market Price of the 2 752,25 MAD 2 MAD 2
stock MAD 798 882

Expected % increase in the 3,70% 5,44% 8,57% WA
value of the firm increase

Weight 0,3 0,4 0,3 5,86%
Inc revenues minus the Inc costs give us the incremental cash flows that
we have discounted by the Weighted Average cost of capital (WACC) to
54
get the NPV of the strategy. From the table, we can say that the discussed
strategies would increase the value of the firm on average by 5,86%.
Concerning the first strategy (Credit Sales), we assumed that the growth in
sales will be in the worst case 2%, 3% in the neutral scenario, and 5% at
the best scenario. For the hedging, we assumed 1.5%, 2.5%, and 4%
respectively. For the last strategy, Tokens strategy, we assumed that it
will increase or sales by 2.5% in the worst case, 3% in the neutral case,
and 3.5% in the best scenario.
Strategy Evaluation:
55
The balanced score card:

Areas of Measure Time Primary
Objectives or Targets Expectations Responsibility
Customers: - Market 3rd position -Afford credit
- Maintain share with 25% of the selling
Market Share market -Communicate the
- New Clients By 2013 Tokens strategy to
our clients
Financials: -Revenues 15% by 2016 -Target non-

- Increase -Sales 9% by 2013 exploitable
Sales Growth regions
-Partnership with
Marchika Med
Organization
Production/ -COGS By 2013 - Partnership with

Operations: BCG and Big
- Decrease clients
productions
costs
56
Conclusion:
During past years, Kingdom of Morocco has known a significant
growth in the construction and building sector. However, due to the
elimination of gentlemen agreement that dismissed the authority of each
company on its region, a severe competition occurred the fact that caused
a price war.
These facts are threatening Holcim Maroc, the third largest company
in the building materials industry. Therefore, the firm has to react to this
market change and benefit from its strengths and opportunities, and work
to get rid of its weaknesses, in order to maintain its market share and
increase its sales growth.
Based on our internal and external analysis and a good sue of
concepts and tool taught during our capstone course. Our team has
developed a set of strategies to be implemented by the firm. These
strategies includes: going from product oriented to client oriented, and
thereafter, under this umbrella we have 5 main strategies: hedging,
tokens, credit selling, targeting non exploitable regions, and partnership
with Marchika med Organization.
Our team has critically analysed all possible strategies,
implementation, success, and evaluation, and we believe that if Holcim
Maroc adopt these strategies it will enhance its position in the industry
and better face its competitors.
57
References:
– Government spending increase.
http://www.immobiliertanger.ma/english/blog/economic-news-of-
morocco/appropriation-bill-grants-interest-to-social-sectors/
– Central Africa ciment industry
http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/drupal-
acquia/wbi/FinalReportAfricaCementSector090420.pdf
– Marchica Med
http://www.marchicamed.com/index2.html
– APC 2010 conjuncture.
http://www.apc.ma/images/stories/statistique/conjoncture-ciment-2010.pdf
http://www.leconomiste.com/article/cimenteries-en-
boursebrrestructuration-mais-risque-de-surcapacite-aussi
Appendix:
Figure1: Market share distribution
58
Figure 2: APC: Conjuncture 2010
59
Weighted
Key External Factors Evaluation(EFE) Weight Score Score

Opportunities
The Population is growing 0,07 4 0,28
There are no legal restrictions on exporting cement
from Morocco 0,1 1 0,2

There is an expectation of high demand because of
infrastructure and private projects 0,08 3 0,24

There is a potential development of new varieties of
cement 0,08 2 0,16

Technological advancement 0,07 2 0,14
Cement is the main and essential building material in
use in Morocco 0,1 4 0,4

Threats
The demand has reached its maximum level at the
present time. 0,1 2 0,2

There is an Aggressive competition in the market 0,08 4 0,32
The cement industry knows a surplus in the supply 0,1 2 0,2
The actual market knows a price war in order to get rid
of the excess inventory the firms have 0,07 3 0,21

The development projects launched by the government
slowed down 0,08 2 0,16

There are no strict regulations to forbid entrance of
other foreign companies to the Moroccan cement
industry 0,07 2 0,14

Total 1,000 2,65
Table1: EFE Matrix
Lafarge Holcim Ciment du Maroc

Critical Succes Ratin Weighted Ratin Weighted Ratin Weighted
Factors Weight g Score g Score g Score

Market Share 0,15 4 0,6 2 0,3 3 0,45
Inventory System 0,08 4 0,32 3 0,24 3 0,24
Financial Position 0,1 4 0,4 2 0,2 3 0,3
Product Quality 0,06 3 0,18 3 0,18 2 0,12
Customer Loyalty 0,07 3 0,21 3 0,21 3 0,21
Sales distribution 0,12 3 0,36 4 0,48 2 0,24
60
Global Expension 0,1 2 0,2 2 0,2 2 0,2

Organizational
structure 0,05 3 0,15 4 0,2 3 0,15

Production capacity 0,06 4 0,24 3 0,18 1 0,06
Customer Service 0,1 3 0,3 4 0,4 3 0,3
Price competitive 0,06 2 0,12 2 0,12 2 0,12
Management
experience 0,05 4 0,2 4 0,2 2 0,1

Total 1 3,28 2,91 2,49
Tab
le2: CPM
Weighted
key Internal Factors Evaluation Weight Score Score

Strengths
Strong distribution channel 0,09 4 0,36
Holcim follows the Strategic Management
Model 0,06 3 0,18

Holcim has been certified the ISO 9 001 and ISO
14 001 0,08 4 0,32

Customer Relationship Management 0,07 3 0,21
Strong Brand Image 0,09 3 0,27
High Profit on Equity Ratio 0,05 3 0,15
High Experienced Workers 0,06 4 0,24
Batipro Distribution 0,08 4 0,32
Strong Production Capacity 0,06 3 0,18
Weaknesses
The most leveraged company in the industry is
Holcim 0,07 1 0,07

The company liquidity is weak. 0,07 2 0,14
No credit selling 0,08 1 0,08
Holcim is the least profitable company in the
market 0,07 2 0,14

High Production costs 0,07 1 0,07
Total 1 2,73
Table 3: IFE Matrix
61
Graph1: Current Ratio
Graph2: Quick Ratio
Graph 3: Debt to Total Assets
Graph 4: Debt to Equity
Graph 5: Times Interest Earned
Graph 6: Net Profit Margin
Graph 7: Return on Total Assets
Graph 8: Return on Stockholders Equity
Graph 9: Average Inventory Turnover
Graph 10: Average Collection Period
Importation tariffs.
Facture energitique The government launched a ten year investment plan (2005-2015) for
constructing 15000KM of rural roads and the creation of under passages in the city of
Casablanca. The housing and plan minister, Toufik Jhira, reported a state of crisis in social
62
housing which represents 70% of the national market and actions must be made to avoid a
disaster in this sector. The government encourages the construction of social houses since
their number is only 35000 in 200.
63
Fianancial Statements:
64
65
66
67
68
69
Ciment du maroc!
70
71
72
73
74
75
76
77
Lafarge:
78
79
80
81
82
83

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What is the strategic plan analyzing?

What is the strategic plan analyzing?

What are Holcim's major strengths and weaknesses?

What are Holcim's major strengths and weaknesses?

Strategic Plan 2012-2014

HOLCIM Strategic Plan 2012- 2014

“Anyone can make the

provide us with valuable information.

No acknowledgment could be up to your excessive sacrifices, your love and the

To Our Brothers and sisters,

Leila Hasnaoui Amri :

Mustapha Chrifi Alaoui :

a high production costs, and it provides no credit selling.

specifically, increase in population growth, expectation of high demand because of

foreign companies to the Moroccan cement industry.

and signing a partnership with Marchika Med organization.

pursuing those goals.

Company Overview.........................................................................Company Overview

Holcim Ltd, Group.........................................................................Holcim Ltd, Group

Holcim Maroc:....................................................................................Holcim Maroc:

Mission & Vision Analysis.......................................................Mission & Vision Analysis

1- Mission statement analysis:.........................................Mission statement analysis:

2- Vision statement analysis:.............................................Vision statement analysis:

1- Industry analysis:......................................................................Industry analysis:

2- PESTEL ANALYSIS:................................................................PESTEL ANALYSIS:

3- Porter’s five forces Model:............................................Porter’s five forces Model:

5- The Competitive Profile Matrix:..............................The Competitive Profile Matrix:

1- Financial Analysis :................................................................Financial Analysis :

2- Distribution and Marketing Department:..........................Market Positioning Map

3- Management Department:.............................................Management Department:

4- Human Resources Department:..............................Human Resources Department:

5- Management Information System:.......................Management Information System:

6- Holcim Maroc Operations:.............................................Holcim Maroc Operations:

I- Internal Fatcors Evaluation:.........................................Internal Fatcors Evaluation:

Issues and Objectives:..................................................................Issues and Objectives:

I- Major Issues....................................................................................Major Issues

II- Minor Issues....................................................................................Minor Issues

III- Long-term Objectives:.....................................................Long-term Objectives:

IV- Short-Term Objectives:..................................................Short-Term Objectives:

I- The SPACE Matrix:.................................................................The SPACE Matrix:

II- QSPM MATRIX:..........................................................................QSPM MATRIX:

1- Product Development Strategies:..........................Product Development Strategies:

2- The Market penetration..................................................................................

Holcim Ltd, Group

cement, in addition to the production, processing and distribution of aggregates (crushed

Company Operations and Strategy:

strategy is based on continuous growth in emerging and developed economies. Holcim’s

product innovations, skilled employees and efficient environmental management systems

enable it to record sales of over 21 billion Swiss francs in 2010.

industry for four consecutive years.

located in Fez, Nador, Settat, Casablanca, Rabat, and Tangier.

companies in the Kingdom since 1979.

million tons per year.

 1989: Installation of grinding center in Fez with a capacity of 350,000 tons/year.

an initial price of 230 MAD.

 1997: Installation of a “Beton” plant in Rabat.

 1998: Installation of another “Beton” plant in Casablanca.

 1999: Construction of a second “Beton” plant in Casablanca and commissioning of a

 2005: Startup of a bagging and a distribution center in Settat.

 2007: Startup of the cement plant in Settat.