Strategic planning in the development of cement industry

 Amir Noorbakhsh

ABSTRACT

Purpose - The main purpose of this study is developing an appropriate and coherent objectives and strategies for the development and the production of the cement industry.

Design/methodology/approach - This research is focused on the significant trends that surely effect on the economic structure of the cement industry. In this regards, subjects such as the available technology, the rehabilitation, the management, the manpower resources and the decision making process have studied. In fact the cement industry plays a very important role in the economic and the social development. Therefore determining the appropriate strategic for cement industries is also so important.

Findings - In this study, a model which generates the strategies has been developed for the cement industry. It is also applicable for every sector of industries. The main problems in this planning which should to be paid attention are the role of each cement plants as an element and the role of factories generally. After developing the strategies, a list of operational plan is generated for each strategy.

Originality/value - Development can not be achieved outside the scope of planning, so new methods and strategies should adopted for managers. The originality of this article is to study and develop the goals and strategies of the cement industry.

Keywords - Strategic planning, The cement industry, Aims of the cement industry

Paper type – Research paper

1. Introduction:

According to national and regional crises that have occurred during recent years, the necessity of government intervention and the use of national support have been realized to the form of macro programming. Development is achieved only in the context of planning, so this study adopts ways that managers have what program and what are their strategies, to present the more awareness as far as possible. The strategic plan is a response to the long-term effective planning and implementation of the strategies. Unlike conventional methods, this kind of planning In addition to internal factors has considered external factors and environmental deals. Therefore, it can be a tool to determine the future activities. Changes of environmental conditions is including such as the oil crisis, economic and social changes, political and so on.

Programs with strategic thinking designed for the final profit organizations and authors who presented a model of strategic planning focus on a company individually. Those companies, in formulating and evaluating strategic plans within available resources, strengths and weaknesses and environmental factors have led to the development of the company in connection with the planning branch of industry is not paying enough attention. Strategic planning is organized effort and systematic to make fundamental decisions and basic actions that these  form the company and the interactions of an organization with other institutions in the legal framework (Plan and Budget Organization,1999 and E. Lawrence, 1999). A strategic plan has seven identified elements (Iran Data Processing Company, 1997 and George A. et. al. 1999):

1. The mission of the organization (determining what?)
2. The strategic Analysis (determining why?)
3. The strategy (determining to which direction?)
4. The long-term goals (defining when and how?)
5. The Integrated programs (determining when and how?)
6. The financial forecasts (determining the estimated financial the above elements)
7. The executive Summary (determining the above elements)

Production is the most important element of any economic system. In other words, the production functions form the contents of each economic system. Thus, first of all it is necessary to investigate the production element of the system for measuring the accuracy of the economic system. Because the production of useful goods or services in addition to the above-mentioned vehicles and equipment require planning as well (P. Forbes, 1999).

In this study is that with the support and experience of existing, well-organized and organized efforts to help the cement industry professionals to take decisions and measures taken fundamental, presents a picture of the country's cement industry to identify new strategies and helps the industry in identifying strengths and weaknesses and the opportunities and threats. In this research, the performances in key areas such as production, consumption, foreign trade, and other economic indicators were evaluated on the basis of its analysis of the factors could be identified. Therefore, this paper presents a clear picture of the problems and bottlenecks in the  cement industry.

The overall purpose of this research is developing an appropriate and coherent objectives and strategies for the development of the cement industry. So the lack of strategies corresponding to the new environment of plants can develop major problems in the cement industry and makes its development risky. Development can not be achieved outside the scope of planning, so new methods and strategies should adopted for managers. The aim of this article is to study and develop the goals and strategies of the industry.

2. Research methodology

In this study informations about the production and consumption of cement in the world and the raw materials used in cement production and how cement has produced from it have presented using books, magazines and websites, and then, the performance of the cement industry (past and present performance of key variables such as production, consumption, foreign trade, exchange and Price) will be evaluated using the information of both the cement and its process and the planning and strategic management, and some problems, limitations and strengths and weaknesses of the industry will be found using the current situation. New strategies of the industry will be to identified using proposed methodology, and opportunities and threats that the cement industry has faced will be determined. Finally, the results of this study in terms of concepts, the evaluation of the views of experts in the cement industry, understanding of the internal and the external industry environment, followed by the statistical analysis and the proposed methodology and the proposed strategy will be discussed extensively.

3. The mission of cement industry:

The missions and purposes of the cement industry explain the concept of this industry. The mission of an industry must have the following characteristics (Hamidizadeh, MR., 2002; Sheikh Abu Masood, A., 2003 and Shani, M., 2004):

• Long-term
• Permanent
• Should be a result of shared values and beliefs.
• Should not be only a quantitative mission, but should also be have a qualitative value.
• should not be limited to the industery itself, but also should have a consideration for the fields outside that specific industry.
• should have been defined specifically for that industry.

Therefore, taking into consideration the genral purposes of the industry and identifying the internal and external factors, one can suggest the following missions and objectives for the cement industry:

3.1. Mission:

To provide different types of cement with high quality and low prices for different sectors of society.

3.2. Objectives:

• Expansion of geographical coverage and access to new markets
• Guidance and support for the development of international markets and export
• Improving the quantity and quality of products
• Achieving self-sufficiency in the field of technology and ability to produce efficintly and economically
• Promoting suitable consumer culture

4. Aims of the cement industry:

Although the missions and purposes of the cement industry explain the concept of this industry, considering the analyses performed for identifying the inner and outer environments of the industry, the following basic aims can be suggested. The aims are set in such a hierarchy that one can start with the missions and move on to the qualitative objectives and determine the course of action. Afterwards, one can tend to define the quantitative objectives and determine the extent of the progress (Aria Nezhad et. al., 1992).

In this section, in order to define each one of the quality objectives the following factors are recommended. Considering the objectives and basic goals mentioned above one can present a collection of qualitative goals in factories and industry, which is presented in tables 1 and 2.

Table 1. lists of the goals of quality (factory)

Table 2. lists of the goals of quality (industry)

The strategic outcomes that the mission and the aims of the institution should yield are investigated. These results reflect the desires and expectations of the industry in its different fields of activity in a broad sense. Therefore, one can determine the necessary strategies and policies needed for acieving the desired outcome, by determining the aims. According to the targets that are mentioned above, preparation for achieving the aims is outlined in the following sections.

5. Modeling and formulation of strategies:

Following issues that were discussed in previous sections, the next important

identifying active forces in the defined framework and summarizing briefly them in simple terms that indicate a causal relationship between them. Therefore, it is necessary to develop a model that has taken a comprehensive perspective of the status of a branch of industry, and could present a visible illustration of the complex environmental and local issues, and this model should effect strategically. Therefore, different methods can be used to identify key factors that affect the decisions directly in the process of modeling, and the strategies that must be taken for it to be identified with the knowledge and full understanding about the different options (Saebi, M., 1999).

5.1. Strategic planning scenarios of the industry:

Although factors affecting the industry can not specifically be studied and also can not clearly be stated, we can see trends in process, and analyse their effectiveness and impact to model them expressively.

Opportunities and threats inherent in the industry are vague in the competitive world due to unfamiliarity of competitors and their relative position. Today, trade and commerce are more aligned with economic trends, therefore, the  outcome of domestic and international economic trends and its effects in the industry should be examined. Also the political and international forces are important for each branch of industry, such as changing relationships between developing countries export, the relationship between private and public institutions in national policies and so on.

5.2. Factors that affect the cement industry (domestic and foreign):

• International environment (regional)
• Public environment (including laws - socio - economic - political - national - cultural)
• Operating environment (including customers - the market - technology - suppliers - creditors)
• Internal environment (including financial - administrative - technical - organizational - Management - Business - personnel)

respectively is including international environment, the general environment, the general environment, operational environment and internal environment.

In such a competitive market, objectives are optimal use of the opportunities and strengths so as to overcome internal weaknesses and environment threats.

To avoid a family of the manufacturing industry from narrow-mindedness and aggressive behavior to each other and to achieve the maximum common benefit without resorting to force and collusion with appropriate methods, that require the analysis including the following:

• the conditions according to which, each of the companies pursue the objectives of the company and also the industry purposes.
• circumstances in which the profits and benefits resulting from the collective efforts to be returned to its manufacturing plants.
• circumstances on which any of the companies operate based on their domestic and foreign abilities.
• circumstances in which the conduct and performance of companies are deliberate and predictable, and many other cases of this type can be named.

It is obvious that planning for such behaviors will lead to a comprehensive strategy that we are going to model it in this series.

For this purpose, a comprehensive overview of the industry are discussed. Therefore, the method of strategy formulating in this study has been developed from general to components. For example, after the formulation of the strategic nature of the industry and determination of the direction of its movement, Industrialist can make tailored decision to each industry sector and can follow strategic lines in accordance with the condition of the factory. Then, every plant can be studied as a whole within its competitive environment, and functional level strategies such as strategies of production, commerce, etc., and formulate plans of action tailored to each sector (It should be mentioned that strategies and plans of action for each factory are outside of the scope of this study). It is essential for the users of model that up to date the model and follow steps of performance.  For this purpose, strategic management should be constantly evaluated and updated accurately, and takes new decisions at the same time with changes of the model elements, and according to changes, organizes executive and operational measures.

• Since different models of organizational strategic planning, business and convention task is studied, thus any model as a provider of complete version cannot be seen for the strategic planning branch of industry. In this regard, a number of problems in traditional models can be considered as follows:
• Excessive generalization of models and utilization of tools based on the upper and lower levels, which is a simplification.
• Existing models do not provide the opportunity to examine all the factors affecting the industry.
• In traditional models are more considered competitors, buyers and sellers, and are less emphasis objectives and internal facilities.
• Most models provide an incomplete picture of the relationship between the products, services and markets.
• In the existing models the criteria for judging the acceptability of planing are not determined.
• existance of complexities and ambiguities in analysis of some information needed for the existing models and in the definition and innacurate measurement of parameters.
• lack of attention to the fact that the strategic branches of industry need more than market shared test, profitability, and so on (distinctly and individually).
• Simple and general strategies which are suggested by existing models usualy do not reflect the variety of possible options.

5.3. Development of the proposed strategic planning model of a branch of industry (Power – age model):

The industry evolves and grows after its emergence. After some ups and downs, its vital energy declines and enters a new period of its life which is imitation and decline (Figure 1). This cycle exists for all the industry and also for factories within each industry. Although different units and industries can experience different time and place conditions in different stages of the final cycle.

Figure 1. the cycle of Industry

In order to determine in which stage of final cycle the industry is, one needs to categorize the problems of the industry and analyze behavioral characteristics of it (analysis of strengths and weaknesses, opportunities and threats). Afterwards one can develop appropriate strategy in accordance with the conditions and characteristics of each period.

The power - age strategic planning model is a tool that facilitates performing this tasks. Table 3 shows the decision matrix of this model.

Table  3. the matrix of Power – age model

6. The strategic concept of the cement industry

The strategic concept of the cement industry has two parts, the stability and the development. This confirms the theory that although the average of the cement industry is the stable but its magnitude of the changes is stable or developing.

Two types of strategies have been developed. General strategies, including strategies that should the industry must follow them in different periods of its life, and specialized strategies are due to the specific conditions and characteristics of the cement industry and internal environment and surrounding it. Therefore this part of the research is included strategic options and issues of the industry. Obviously, mechanisms should be used in order to evaluating and selection of strategies, that will be discussed in the next section. Finally, proposed strategic plan will be presented.

7. Evaluation and selection of the strategies

Evaluation and selection of the strategies are very important due to its fundamental role in acceptance or rejection of the strategies and their prioritization. For this purpose, strategies must be prioritized according to each degree of importance.

Aims of this section are the following:

• Selection of best options for the purposes of selecting the best in the industry
• Selection of top choices according to procedures

Table  4. descriptions of the strategies

7.1. Prioritization of strategies from a stand point of matching with the objectives and procedures:

In this section, prioritization of strategies from a stand point of matching with the objectives and procedures is investigated, because of its importance for choosing the strategies. For this purpose, after recognition and analysis of the aforementioned environmental factors, and after determining the objectives and missions of the industry, it is possible to recognize the procedures and assumptions and their positive and negative effects on the strategies. Each one of the procedures have a different effect depending on the type of activity and external environment of the industry. We will use the following tables for determining the priority of the strategies from a standpoint of matching with the objectives and processes. Using the Table 5, and assigning weights to the objectives according to experiences of experts, matching of the strategies with the objectives is investigated using a scale of one to five. Finally, after calculating the weighted scores and their sums, it is possible to determine the priorities of the proposed strategies. Moreover, in order to investigate the effects of the procedures, Table 6 presents the most important recognized procedures of the cement industry, together with their assumptions. A scale of +5 to -5 is used to illustrate the effectiveness of the procedures. It is possible to investigate the priority of the strategies from a standpoint of their matching with the procedures, calculating the positive and negative effects of each one of the procedures. Table 7 serves the aforementioned purpose.

Table 5. prioritizing strategies after adaptation of the objectives

Table 5. prioritizing strategies after adaptation of the objectives (continue)

Table 6. effect of processes on cement industry

Table 6. effect of processes on cement industry (continue)

Table 7. prioritizing strategies after adaptation of the processes

Table 7. prioritizing strategies after adaptation of the processes (continue)

After the calculation of adaptability of each proposed strategies accoording to the procedures and the objectives, combination priorities of strategies can be outlined as follows. Obviously, the given priorities do not lead the implementation of strategies solitarily, but those are a tool to help managers to make correct decisions. Two selected priority was discussed In the section of the evaluation and the selection of strategies. Aassessment of strategies do not follow any particular method and perhaps the most accurate, the most determined and the most comprehensive assessment methods cannot predict certain problems that may arise during the implementation of a strategy.

8. Conclusion:

According to research literature in this study for the strategic planning and the identification of the cement industry, a series of strategies were developed using the proposed method. In other words, the aim of this study is to create a set of strategies to help components of the industry, which would use opportunities and strengths in order to eliminate the limitations and weaknesses.

According to the procedure that is proposed to development of the strategy, finally, the strategies for responding to the fundamental needs of industry to set objectives and missions have been developed. The proposed strategies are including:

• Developing,implementingandimprovingoperationalsystems,includingmaintenance,productionplanningandcontrol,qualitycontrol,etc.inordertooptimizingproduction,increasingmachineavailability,increasingproductivity,reducingwaste,etc.
• Exchangeand utilization ofresearchresultsandthedevelopmentwithinthecementindustryinordertoincreasngefficiencyandeffectivenessinallareasoftheindustry.
• Rehabilitationandmodernizationofexistingequipmentwithnewtechnologyin order toincreasingcapacity of equipment and production,reducingenergyconsumption,improvingproductivityandreducingcosts.
• Design,establishmentandstrengtheningofqualitycontrolsystems and ensuringthequalityofproductstoimprovethequalityofproductsinaccordancewiththe nationalandinternationalstandardstofacilitatethedevelopmentofexportsandincreasingproductivity.
• Continuousreductionofcostsandreducingthecostofproduction.
• Utilizing of thenewtechnologytoreplaceoldand worn-outproduction and strengthening themonitoring system andevaluationin order to componentsandenergyconsumptioncontrol.
• Theuseofnewtechnologytoreplaceagingequipmentandstrengthenthemonitoringandevaluationofthe oldproductionlineinordertocontrolconsumptionandenergycomponents.
• Planningandorganizingfortheoptimalutilizationof power and expertism facilitiesandpromotingthecapacityofthefacilitytoachieveindustrialself-sufficiency.
• To removeorreducethesurplussectorsandactivities.
• Considering competitionindomesticandinternationalmarkets.
• Marketingandsalesabroadand giving global trust incementexports.
• planning,implementingandcontrollingthesalesandmarketingactivitiesand acceleratinginobtainingmarketinformationandattractingcustomerstoincreasecompetitivecapacityindomesticmarketsandincreasingprofitability.
• Promoting properconsumption culture,usingadvertisingsystems,efficientsalesanddistribution.
• Revisingtheorganizationalstructureofmanufacturers in accordance with major and minor objectivesset.
• Developing,modifyingandcompletingrulesandregulationsand necessary procedurestosupporttheinvestmentandattractingforeigninvestors
• Partnershipandalliance in activities,research,investment,stock,andsoon.
• Determining the price so that sales and earnings will be maximized.
• Strengtheninghumanresourcesplanning.
• Optimizationofallprocessesaccordingtothecommunicationmethodsandexchanginginformationbetweenprocesses.
• Developmentandestablishment ofinformationsystems and increasingoperationalcoordinationbetweenthecementplantsasafamilyofindustry.
• Increasingrevenuesandimprovingprofitabilityand roviding financial resources.
• Prioritizingthe projectsbasedonreturn of their investments and performing theprojectsbasedupontheprioritiesaccording to suppliablesourcestoreduceimplementationtimeandinvestmentcosts.
• Evaluatingthecompany'sfinancial(costof production factors,assets,depreciation,etc.)basedon dollar exchange andaccuratecalculationofthecostofdepreciationinordertoimprovethe reported profit,taxcutsandimprovingliquidity.
• Strengtheningthe planning systemandbudgetingfortheconstruction of cement in accordance with programs of plants construction and operation.
• strengtheningindustrialhygieneand controlling infectiontoreducethedamagetotheenvironmentandpeople.
• The development,improvementandconsolidationofmanagements and expansion of productivity.
• Improvingthelevelofknowledge,experienceandskillsofthelaborforceto productivity andoptimizing oftheuseofmachinery,equipment,increasingproductionefficiency,reducingwaste,improvingqualityandproductivity
• To select,organizeandoptimizetheuseofrawmaterialsuppliersand domestic and foreign creditors, in a appropriate way forthe companies productionsystemandthecommunity conditions.

The most important element of any economic system is production. In other words, the content of any economic system is including the production functions. So to evaluate the accuracy of the economic system, first of all it is necessary to study the elements of  production in that system. To perform that we need planning in addition to the facilities and resources. On the other hand, in competitive today's world, success in an industry is depended on the way that it manage the resources. This requires a comprehensive and systematic planning and setting purpose. Evaluating the limitations and potential of the industry and obligations issues due to the effect of international factors should be included program performance.

9. References:

Aria Nezhad, Mir Bahador Gholi, production planning, south of Tehran Azad University Press, 1992.

1999. Lawrence, strategy Thinking, 1999.

George A.Steiner, Strategic planning, What every manager must know, 1999.

Hamidizadeh, MR., strategic planning, Samt press, 2002.

Iran Data Processing Company, documentation of the evolution of the system, the system advisers, 1997.

1999. Forbes, Handbook of strategy planning, 1999.

Plan and Budget Organization, planning system: the third program, Iran, 1999.

Saebi, M., strategic management (strategy process), State Management Training Center, 1999.

Shani, M., Strategic Planning for Managers, Industrial Management Organization, 2004.

Sheikh Abu Masood, A., strategic planning and its application in management, Arkan Press, 2003.