Background and challenge
A leading global cement player asked L.E.K. Consulting to develop a detailed cement and ready-mix concrete (RMX) strategic plan for one of its key countries of focus, in the context of:
- Increasing pressure from new entrants in the cement market — relying on imported clinker
- Significant market share gains by independent RMX players in several key regions, largely at the expense of vertically integrated cement players
- The client’s need to close a large production plant, due to a raw material shortage
Approach and recommendations
L.E.K. modeled the impact of new cement entrants on the client’s market positions and profit pool, and analyzed the success factors of past new entrants. We then developed a target screening framework specific to the RMX industry, taking into account market disruption and regional import dynamics, in order to best coordinate the cement and RMX strategies.
Finally, L.E.K. assessed the return on investment of multiple cement footprint scenarios (greenfield project, import-based model, etc.) to anticipate the necessary closure of one of the client’s plants.
Results
The client was able to present its shareholders with an actionable strategic road map, supported by an in-depth assessment of the strategic options at hand, including clear recommendations on matters that were previously subject to intense internal debate.
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