Simulation Case

Beicco Ltd.
Company History
Jalomir was a customer oriented, oppor-
tunistic salesman who was eager to grow
In 1965 Mr. Jalomir Paanadorf, originally
his company. His slogan production can
of Finnish descent, founded a construction
never be the bottleneck was forcing the
materials company just outside Bangkok.
organization to reshape itself along large
He had been working in various steel
orders received from the Thai construc-
companies in Europe and discovered a
tion industry.
customer need that the large steel compa-
nies were unable to match: diagonal ties
From the very beginning the company
for sandwich wall elements. He was
aimed also to develop its own set of
drawn to Thailand mainly because of fa-
unique products, not only to manufacture
vourable climate but also because he
the products of the industry standard. For
found the people to be hard-working and
example, the column connections prod-
loyal.
ucts started in the 1980s.
The company soon started to manufacture
In 1989 the company developed an inno-
various connections products for the Thai
vative beam product, the Omegabeam.
precast industry, e.g. various reinforce-
The start of this composite beam busi-
ment details and fastening plates.
ness turned the company from selling
smaller components into offering frame
solutions to its construction company cus-
tomer segment.
In enlarge its business activities Beicco

established a sales office in Indonesia.
The companys current CEO Tobias

Paanadorf, the son of Jalomir, wants to
ensure that his company is more profitable
in the future. He was named CEO a few
years ago and is delegating the responsi-
bility of the composite beams business in
Cesim Oy
www.cesim.com 1
Thailand and Indonesia to you. Connec- have reached consistent product quality
tions may also come under your responsi- and have started to expand their focus to
bility but not initially. The CEO expects the international markets. Small compa-
quick results from the new management. nies may merge combining to form
stronger and more competitive companies.
Beicco is not considering mergers or ac-

quisitions. The company has a strong po-
sition in a few niche areas in connections
and composite beams where it is one of
the leading manufacturers. The markets
that have been assigned to your team have
good potential.
In the domestic Thai market the construc-

tion market is again growing slowly. Fur-
thermore, Beiccos situation in the Thai
Financial Position of the Company market is so strong that it has difficulty
increasing market share. Beiccos current
During recent years Beicco has been fi- share of the market is, however, under
nancially performing only at an average attack and needs to be defended.
level, although the company has grown a
lot. In other words, improving profitabil- Customers in Thailand rely on Beiccos
ity is the top priority for the new man- strong research and development (R&D).
agement team. An image stressing strength in R&D is
critical in the home market but has the
possibility to be successful also abroad.
Price elasticities of demand vary from

market to market. In Thailand there has
been clear evidence about the presence of
particularly price sensitive customers
amongst Beiccos target segments. The
management must find out how price af-
fects demand in Indonesia.
Marketing to Designers
Beicco is using two types of promotions:
general marketing and designer promo-
tions.
General marketing is targeted to construc-

The Market tion companies and pre-casters, and in-
Market analysts forecast tougher competi-
cludes activities such as trade exhibitions,
tion as more and more Asian companies
website, and advertisement.
Cesim Oy
www.cesim.com 2
on project basis. The composite beam
Designer promotion means activities to- market is, however, growing and it re-
wards structural designers. Sales work mains to be seen how fast this develop-
with structural designers has turned out to ment continues. A challenge to the com-
be a critical element in the demand for pany is to be able to maintain consistent
connections and composite beams. The quality and make sure that the customers
right amount of this work has a strong get what they expect.
correlation with the success of the com-
pany. Technical support is directed to this The future of the market is also heavily
segment and gives them incentives to fa- dependent on what research turns up and
vour Beiccos products over the competi- how fast individual construction compa-
tors. Beicco is also offering free-of- nies will start to use them. The demand is
charge a software package called Beicco thus difficult to forecast.
Designer to help the structural design-
ers in their work. The demand for connections is expected
to grow somewhat steadily. The markets
It is expected that the company can in- for connections are relatively easy to pre-
crease the number of design companies dict and are not expected to cause prob-
using Beiccos composite beams with lems for the management team in case
strong designer promotions. those will be included in your responsibil-
ities.
The combined efforts of the industry re-
garding general marketing and designer
promotions contribute to increased total
market size in both composite beam and
connections market.
The composite beam market size is af-

fected by the average price in the market,
however, the connections market size is
less influenced by the average price in the
market.
Products Production
The composite beam market has Beiccos manufacturing facilities are lo-
emerged in the 90s, although beams have cated in Thailand. There is no production
existed in some form for a long time. in Indonesia and products are exported to
Composite beams enable slim floor solu- the country from Thailand. The company
tions and the requirement is dependent on follows strict quality standards in its pro-
projects. duction.
In the scientific community there are also There is still a great deal of development
many who are concerned in? about? Beic- involved in manufacturing connections
cos structural and fire calculations and and learning effects are to be expected.
thus there can be technical obstacles even
Cesim Oy
www.cesim.com 3
Consequently, decreasing production
costs are expected in the future. Forecast-
ing the development of raw material
(steel) prices is more complicated.
The production of composite beams is

already very efficient and costs are ex-
pected to develop steadily.
Units of Decision Making

Sales and production figures are reported
in thousands of units. All prices are for
one unit. Selling prices are denominated
in USD. The company can invest in com-
posite beam capacity in 1000 unit capacity
steps and in connections capacity in
10 000 unit capacity steps.
Cesim Oy
www.cesim.com 4

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Beicco Ltd.

In enlarge its business activities Beicco

The companys current CEO Tobias

Beicco is not considering mergers or ac-

In the domestic Thai market the construc-

Price elasticities of demand vary from

General marketing is targeted to construc-

The composite beam market size is af-

The production of composite beams is

Units of Decision Making

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