In the contemporary business world, many industries have been characterized by a very high level of competition. This has posed a great danger, especially to the new organizations venturing in the market. The cement industry in the US is one of the main industries that have been characterized by an increased level of competition where each organization is determined to win the largest share in the market.
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The cement industry in the United States forms one of the strongest economic bases for the country. The United States is ranked among the top cement manufacturers all over the world (Economy Watch par 4). Other leading manufacturers include India and China. There are a total of 39 cement companies which are currently operating in the United States (Economy Watch par 2). These companies have a total of 115 plants, which are distributed in 36 states in the country.
A significant fraction of the country’s cement production is contributed by the largest company in the US cement industry. The industry has been largely characterized by large scale investment. This is because the industry is more effective in large scale operations. It requires a significant amount to install fixed capital requirements. This is one of the main factors that have locked many players from the industry.
Despite the high risks associated with an investment in the cement industry in the United States, there are many opportunities available. A new factory in the industry can significantly improve its performance in case it utilizes the available opportunities effectively. However, this will be largely determined by the management. One of the main opportunities available for the company is the unexploited market. There are several market opportunities available for the company.
In the cement industry, the issue of environment is very critical. ILK Cement will ensure that all the necessary measures are taken into consideration to maintain an environment friendly production process. This will be realized by the adoption of modern technology that minimizes the level of environment pollution.
For instance, the factory will guarantee minimum carbon dioxide emissions in all its plants. Therefore, ILK Cement has an opportunity of extending its market networks in such areas. One way through which the organization will exploit such market is by venturing into the foreign market. There are large unexploited foreign markets. These will significantly contribute to the company’s success.
Another advantage of the company is that it has an opportunity to apply the current technology in its plants. Most of the aged companies habitually apply the old technology in their plants. Therefore, ILK Cement is advantaged because it will apply the modern technology in all its plants. The level of technology applied in an organization can significantly affect its performance (Economy Watch par 4). Technological improvement has led to increased efficiency and effectiveness in many organizations (Clark 48).
Therefore, ILK Cement has an advantage over its rivals on the ground that the cement industry in the US is closely related with the construction industry. The rate of growth of the cement industry will largely be determined by the rate of growth of the construction industry.
When the construction industry is performing poorly, the cement industry will automatically be affected. However, cement is a compulsory material in almost every form of construction. Therefore, the demand for cement increases with increase in demand for construction. It has been observed that maximum cement consumption in the US usually takes place in October and May (PR Newswire par 4).
The cement industry in the US has recorded significant growth over the past. The industry recorded tremendous upward growth since the year 2006 (Economy Watch par 5). This trend has been maintained until recently where the industry continues to record an upward growth. ILK Cement intends to grow along with the industry.
To achieve this growth, ILK Cement intends to extend its market in the global market. This will include joint ventures as well as foreign acquisitions. Through the market acquisition, the company will be in a position to enjoy the benefits of the already developed brands. This will significantly contribute to the growth of the organization. Through the acquisition, ILK Cement will also be in a position to expand its market faster than while venturing into a new market independently.
The cement Industry requires a significant amount of initial investment. ILK Cement intends to use a total of about $450 million as its initial investment in the industry. This will cover all the expenses required in the installation of the necessary equipment. This amount of initial investment is high because the company will apply the recent technology will be relatively expensive.
As already noted, there are several players in the US cement industry. Some of the main competitors in the industry include Aggregate Industries US, Texas Industries, CEMEX Inc., Lafarge North America, and Ash Grove Cement Company. These companies contribute to a significant fraction of the total US cement production. They are involved in tough competition with each other, where each aims at acquiring the largest market share.
The costs of transport in the cement industry are usually very high. The transportation costs for cement are larger than its actual value (Clark 52). As a result, most of the companies in the industry tend to cluster in the lone region. This is to enable them to minimize their shipping costs to maximize profits. The target customers will be the construction companies as well as private entities. Therefore, the company will open several stores all over the market to facilitate distribution to customers.
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Clark, John. “Concept of Too Strong Competition: The U.S. Cement Industry as a Possible Case Gerald Aranoff.” Eastern Economic Journal, Vol. 17, 1991. pp. 45-60
Economy Watch. “Cement Industry.” Economy watch, 2011. Web.
PR Newswire. “US Cement Industry Analysis.” Pr news wire, 2011. Web.