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Case Study…

LaFarge: a concrete multinational

Lafarge is a French industrial company specializing in three major products: cement, construction aggregates, and concrete. On 10 July 2015 Lafarge merged with Holcim, a Swiss cement company. On 15 July the new company was officially launched around the globe under the name of LafargeHolcim, creating a new leader in the Building Materials sector. Lafarge was founded in 1833[3] by Joseph-Augusta Pavin de Lafarge in Le Teil (Ardèche), to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viviers. The limestone is white and argillaceous, and yielded an eminently hydraulic lime. In 1864 Lafarge signed its first international contract for the delivery of 110,000 tones of lime to the Suez Canal construction project.[3] In 1980 Lafarge joined with the Belgian coal, coke and fertilizer company Coppée to become SA Lafarge Coppée. Lafarge purchased a plant from the National Gypsum Company in early-1987.[4] Ten years later, it bought Redland plc, a leading British quarry operator.

Why LaFarge has become a multinational enterprise? What are the

benefits of this strategy?

LaFarge can meets its domestic saturation point often establishes facilities or offices in foreign nations in order to penetrate a new market. Entering foreign markets provides the corporation with an entirely new market in which to sell its goods or services.

LaFarge establishing foreign markets allows a multinational corporation to penetrate a larger population of potential buyers. Multinational status also increases the corporation’s growth potential by eliminating geographical boundaries.

Another advantages for LaFarge become a multinational enterprise.

a. one is to diversify themselves against the risk and uncertainties of the domestic business cycle. By setting up operations in another country, multinationals can often diminish the negative effects of economic swings in the country.

b. A second reason is to tap the growing world market for goods and services. This is part of the process of growth in an integrated world market, sometimes called “globalization”.

c. Using a follow the competitor strategy, a growing number of MNEs now set up operations the home countries of their mayor come petites. This approach serves a due purpose: (1) it takes away business from their competitors by offering customer other choices, and (2) it lets competitors know that, if they attack the MNE’s home market, they will face a similar response. This strategy of staking out global market share is particularly important when MNEs want to communicate the conditions under which they will retaliate.

d. A forth reason why LaFarge become an MNE is to reduce costs. e. A fifth reason is to overcome protective devices such as tariff and non-tariff barriers by serving a

foreign market from within. f. A sixth reason for LaFarge becoming an MNE is to take advantage of technological expertise by

manufacturing goods directly rather than allowing others to do it under a license.

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In what way is it clear that LaFarge makes decisions that are best for its

overall operations are not just those of its French operation, where the

company is headquartered?

Lafarge was founded in 1833[3] by Joseph-Auguste Pavin de Lafarge in Le Teil (Ardèche), to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viziers. The limestone is white and argillaceous, and yielded an eminently hydraulic lime.

In the world cement market LaFarge concrete is largest multinational enterprise. LaFarge is a French MNE that accounts for 10% of the world’s cement capacity. In recent year Lafarge’s annual revenues have been excess of $11 billion. LaFarge now has operations in 75 countries and employs almost 85,000 people. The company has 21% of its business in France, another 31% Western Europe, and 26% in North America with much of the remaining 22% being done in Asia. The company is the market leader in both the Philippines and Malaysia.

LaFarge hopes to bring its state-of the-art building technology and experience to China and make it one of the firm's major markets. At present, China is the largest producer of cement, accounting f one-third of the world's production. LaFarge hopes to bring its state-of the-art building technology and experience to China and make it one of the firm's major markets. At present, China is the largest producer of cement, accounting f one-third of the world's production.

LaFarge has both the capital and the experience to do this. As a result, while local operations are often fairly small, the company's overall operations are huge and its plans for the future call for continued expansion everywhere, especially in Asia.

LaFarge see that the China and India has covered a large cement market in the world. I think French

headquarter decision or operation is best for overall. Because, it’s think about full world countries and all branches how to get more good products in low cost and easily supply customers and get a eagerest market in all-over the world.

In what way does LaFarge use the strategic management process?

Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.

LaFarge Use The Five Stages of the Strategic Management Process…

• Identification of Lafarge basic mission

The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying three key facets: First, define both short- and long-term objectives. Second, identify the process of how to accomplish your objective. Finally, customize the process for your staff, give each person a task with which he can succeed. Keep in mind during this process your goals to be detailed, realistic and match

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the values of your vision. Typically, the final step in this stage is to write a mission statement that succinctly communicates your goals to both your shareholders and your staff.

• Analysis the external And Internal environment

Analysis is a key stage because the information gained in this stage will shape the next two stages. In this stage, gather as much information and data relevant to accomplishing your vision. The focus of the analysis should be on understanding the needs of the business as a sustainable entity, its strategic direction and identifying initiatives that will help your business grow. Examine any external or internal issues that can affect your goals and objectives. Make sure to identify both the strengths and weaknesses of your organization as well as any threats and opportunities that may arise along the path.

• Formulation of objectives and overall plan of LaFarge

The first step in forming a strategy is to review the information gleaned from completing the analysis. Determine what resources the business currently has that can help reach the defined goals and objectives. Identify any areas of which the business must seek external resources. The issues facing the company should be prioritized by their importance to your success. Once prioritized, begin formulating the strategy. Because business and economic situations are fluid, it is critical in this stage to develop alternative approaches that target each step of the plan.

• Implement of the plan

Successful strategy implementation is critical to the success of the business venture. This is the action stage of the strategic management process. If the overall strategy does not work with the business' current structure, a new structure should be installed at the beginning of this stage. Everyone within the organization must be made clear of their responsibilities and duties, and how that fits in with the overall goal. Additionally, any resources or funding for the venture must be secured at this point. Once the funding is in place and the employees are ready, execute the plan.

• Lafarge’s Evaluation and control of operations

Identification of Lafarge basic

mission

Analysis the external And

Internal environment

Formulation of objectives and

overall plan

Implement of the plan

Evaluation and control of operations

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Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues and making corrective actions when necessary. Any successful evaluation of the strategy begins with defining the parameters to be measured. These parameters should mirror the goals set in Stage 1. Determine your progress by measuring the actual results versus the plan. Monitoring internal and external issues will also enable you to react to any substantial change in your business environment. If you determine that the strategy is not moving the company toward its goal, take corrective actions. If those actions are not successful, then repeat the strategic management process. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.