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Cement Sector Competition Environment in Saudi Arabia Essay

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Updated: Apr 6th, 2022

Introduction

Saudi Arabia plays a major role not only in the Middle East but also across the globe. The manner in which it relates with other countries makes it a significant kingdom in the world. Among other resources, Saudi Arabia is endowed with oil, and its reserves are ranked fifth in the world. Oil exports have immensely contributed to infrastructural development in the country and the region. Besides oil, Saudi Arabia has the leading cement industry in the Arabian Peninsula, with an estimated capacity of fifty metric tons per year (Alawi, 2011). Saudi Arabia is also a major consumer of cement in the region because of its high population and high rate of cement consumption.

Cement industry

The cement market in Saudi Arabia derives its stability from domestic conditions, which favor it. Additionally, it is argued that the government’s support for the industry equally plays a major role in strengthening the market. In essence, the government has largely invested in infrastructural development, which is anchored on the industry. Its growing population is also considered to be a favorable factor as the demand for cement is always increasing. Furthermore, there is an exponential rate of urbanization in the country, which has led to significant growth in the industry as investors advance small towns into cities.

Saudi Arabia has numerous cement companies, which play crucial roles in maintaining the stability and advancement of the market. They include Yamama Cement, Saudi Cement, Qassim Cement, Yanbu Cement, and Riyadh Cement among others (Alawi, 2011). Like in any other business market that involves different players, Saudi Arabia’s cement industry experiences competition among key players. This competition is important in improving the standards of the market as every player aims at outshining the other. This is to say that Saudi Arabia’s cement companies have strategies, which they employ to ensure that they increase their market share.

For instance, Saudi Cement focuses on the quality of its products. The company produces two main products, which are Ordinary Portland and Sulphate Resisting Cement, based on American, European, British, and Saudi Arabia production standards. This ensures that its cement meets international requirements thus winning the loyalty of its customers and increasing its market share (Al-Nagadi, 2012).

To establish a competitive advantage, Saudi Cement and other players focus on market segmentation where they mainly focus on various needs of customers based on certain categories. These categories include but are not limited to pre-cast factories, ready-mix factories, builders, block factories, Saudi Aramco, and the Saudi government. This segmentation is important as it seeks to address the needs of individual consumers of cement.

Yamama Saudi Cement is also a leading manufacturer and a competitive player in the market. The company mainly focuses on type 1 and type 5, which are commonly known as Ordinary Portland Cement and Sulphate Resistant Cement respectively. It also produces other products like paper bags, which are used for cement packaging and clinkers. It is one of the oldest cement industries, having been founded in 1961. Its systems and products are also ISO certified, thus winning customers across the country (Al-Nagadi, 2012). Yamama Saudi Cement is also favored by its central location in the kingdom as customers can easily access it.

Conclusion

In general, Saudi Arabia’s cement industry is characterized by a host of competitive strategies. However, most players focus on the quality of products through the standardization of systems. As a result, the market has remained competitive, with players fighting for dominance.

References

Alawi, A. (2011). Saudi Cement Sector. Aljazira Capital. Web.

Al-Nagadi, M. (2012). Saudi Arabia Concrete construction industry. Saudi Building Code National Committee. Web.

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IvyPanda. 2022. "Cement Sector Competition Environment in Saudi Arabia." April 6, 2022. https://ivypanda.com/essays/cement-sector-competition-environment-in-saudi-arabia/.

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IvyPanda. (2022) 'Cement Sector Competition Environment in Saudi Arabia'. 6 April.

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