Back Ground Information Brief History Kuwait Ce.docx

Back Ground Information
Brief History
Kuwait Cement Company is a Kuwait Based company
established in November
1968. The establishment of the company was done by
experienced economists, due
to the need of such company in mist of the rising of modern
construction of
buildings and houses at that time. Since then the company has
been a major supplier
in the construction industry. The State of Kuwait has definitely
supported and
encouraged this type of investment and establishment and any
establishment that
would have an impact of reducing the crucial reliance on oil.
Objectives
Their objectives since establishment as stated by the chairman
Rashed Abdulaziz
AlRashed on their website are as follows:
1- “Preserve the quality of its products.”
2- “Stabilize the cement prices in the local market.”
3- “Implement its ambitious plans of building an advanced and
integrated industry that would serve

the country and its citizens.”
Organizational Structure
(The company follows a hierarchy structure, which is a
traditional organizational
structure. Creating many levels of management and authority,
lacking flexibility in
decision making and increasing time and duration of any
decisions and information
to travel from entry level up to senior management.)
The Corporation major shareholders are three large investors in
Kuwait, the first
one is Kuwait Investment Authority owning 29.363% of the
shares. Kuwait
investment authority or KIA is a very successful and powerful
company is the
finance and investment industry in Kuwait. it currently amongst
its many
investment activities, manage the General Reserve Fund and the
Future Generations
Fund. The second major shareholder is the National Industries
Group (NIG) owning
26.121% shares, “NIG manages several and manifold activities
in investment and shares, in
Building Materials, Petrochemicals, Oil & Gas Services,
Mechanical Industries, Utilities, Real estate
Infrastructure, and Financial Services. Through the asset
management expertise in managing
financial portfolios, equity shares, and direct investment has
brought home creditable and laudable
profits to its shareholders…” (About, National Industries
Group). The third major shareholder is Al-

Rashid Trading Contracting Company with 7.459% Shares. Al-
Rashid Trading has representatives on
the board of directors.
Board Of Directors
The Executive Management
Chairman: Rashid
Abdulaziz Al-Rashid
Dr. abdulaziz Rashid
alrashid
Basil saad alrashid
Tamadir ahmad
alhouti

Jamal yousef
albabtain
Khalid Abdullah
alrabiah
Rasha abdulrahman
al mulhim
Abdullah
mohammad saad
Yacoub mohammad
alsagir
Yousef bader
alkharafi
CEO-
Abdulmutalib
esmael
behbehani
Debuty CEO -
Mishaal abdul
muhsin alrashid
COO- Rajesh
kumar sinj
Debuty COO-
Saad yousif
alsuwaidan.

Subsidiaries
KCC did expand and build or create three subsidiaries, all
operate in the
construction industry.
1- Kuwait Cement Ready-Mix Company (KCRM).
This subsidiary is fully owned by KCC, it was
launched in 2010 due to increasing demand in
ready-mix cement. It main objective is to update
the cement ready mix quality as well as offer high quality
services to
accompany the products.
2- Shuwaikh Cement Company.
This Subsidiary provides clinker, limestone, gravel, sand and
cement. This company is KCC’s way of expanding their
offerings and targeting larger variety of customers.
3- (Amwaj International Real Estate Company.)

Financial Analysis
The follow data was extracted from investing.com, It shows the
Annual financial
performance for Kuwait Cement Company for the years starting
2015 up to 2018.
Kuwait Cement Company (KCEM) summarized income
statement
As shown above the company’s financial performance got
slightly better in 2016,
but it dropped significantly in 2017 and kept on falling ever
since. Looking at the
revenues it is clear some losses occurred, but that does not
explain the slump in
both net income and the operating income therefore we can say
with some
confidence that there are some major costs and expenses that
did not contribute to
the revenue, in other words there are some expenses wasted and
not used to add
any cash flow into the company.
Looking at the below data, the balance sheet shows the company
carrying a quite
large percentage of debt in its equity especially for a company
this old. Moreover,
the company did in fact pay back some of this debt in 2018
which may explain part

of the low financial performance. If we look at the amount of
assets, it appears they
had lost another big amount of assets worth almost 4 million
KWD, and looking at
the total equity which have dropped we can only say these lost
assets were not sold
for cash.
The below data shows the summarized cash flow statement of
Kuwait Cement
Company, the data supports our analysis and findings extracted
from the income
statement and the balance sheet. Since they have lost assets it is
normal to observe
an equivalent drop in the operating activity in 2018. In addition
we do see an
increase in operating activity in 2017, while there was a huge
loss in the operating
income, this is due to couple of projects the company worked on
during 2017 and
2018 which we will mention later on in this report. The drop in
both investing and
financial activity means that the company in 2017 and 2018 was
paying larger
amount of debt than amounts invested or generated in general.

5 forces of porter
Rivalry
The cement industry of Kuwait is growing. Kuwait cement
company is the largest
company as well as the oldest. The company has the government
support in away
that creates some assurance in the form of a certain revenue
security. The company
is the only supplier for cement the government deals with and
that obviously makes
sense since they own shares of the company.
In regards of how competition and rivalry is with individual
customers or private
sector companies, it is increasing. There are many players in the
marketing who are
providing competing quality as well. Kuwait cement company
used to have the best
quality that no other player in the market can provide but they
lost that card now.
Quality is not and should not be used as a competitive
advantage anymore. The price
of the same quality cement offered by competitors is a lot
cheaper than the price
KCEM asks for.
Competing companies
Barrier of entry

We do not observe huge barrier to enter the cement market, and
retaliation is not
likely to happen. The largest company (KCEM) as we have seen
by analyzing and
researching does not care what competitors are doing. It seems
like they follow very
outdated management systems and operations. We did not find
any reaction
towards their many small in size competitors with their
competing quality and very
challenging prices. Retaliation from the other participants is
likely but it will not be
strong enough to create a barrier.
Threats of new entrants
Since the barrier of entry is not high, threats of new entrants is
relatively high. This
is due to high investment a cement company needs to be
established and operated.
If the investment is available, a company can successfully
operate. In fact, since the
largest player seems to be losing good financial performance,
we predict that they
will soon be losing market share is no change to fix the
problems they are having
which we will discuss in another section of this report. Given
this loss of market
share, an opportunity arises for a new leader.
Threats of substitutes

Bargaining power of Suppliers
Bargaining power of customers
capabilities / core competencies / competitive advantage,
Strategic business units,
Offerings (goods & services)
vision
Our vision
We seek to establish cement industry in the State of Kuwait and
maintain its position as a
leading Company in the production of various types of cement
locally and regionally through
excellence in terms of quality, customer service, price and
production capacity. We also seek to
make the Company the most trustworthy for its clients and
partners in terms of production,
solutions and services in the cement industry.
Our Mission
Our mission is to continue performing our role as key partner in
the urban, industrial and

economic development in the country, preserve the environment
by providing environmental
mechanisms and systems aiming to support the sustainable
development of cement industry by
using the latest environment friendly technology, make the
Company the most attractive place
for the national manpower, provide safe and stable work
environment for workers and contribute
to community service and development.
Our Objectives
Our objectives are to increase the volume of our sales and
acquire significant share of the
cement market in Kuwait, by communicating and providing the
best services to our existing and
prospective clients and building strong relationships with them,
strengthening the Company’s
position and establishing high confidence among clients by
supplying the Kuwaiti cement to
them with high quality and conformity to the Kuwaiti and
international standards.
Our Values
We aspire excellent performance of our works and services by
adhering to the values of
integrity, excellence, team work spirit, mutual respect and
customer satisfaction, safeguarding
shareholder’s rights and providing them best earnings,
providing safe work environment for
employees and caring for them, as well as adhering to social
responsibility
KSC adhere to the clan culture
A working family, tradition and rituals, teamwork and spirit,
self-management, social influence

General environment analysis
(i will put the important ones)
Economic segment
Inflation rate
(needed to know the strength of the kuwati currancy in the
future, because most raw materials
are bought from outside, compare it to US inflation rate bcause
thats what the payments are
made with, we also want predicted inflation rate)
https://www.statista.com/statistics/438867/inflation-rate-in-
kuwait/
https://www.statista.com/statistics/438867/inflation-rate-in-
kuwait/
Interest rate
(important for if the company wants to take loans, compare it to
the usa)
Unemployment rate
(for us whats important are the laws regarding foreign workers,
future might not be good
because the goverment want to reduce foreign workrs and have
more kuwaities in the
company)
Economic growth
(bad, GDP growth for kuwait is not high, but there is the plans
for building the new city)
Political/Legal segment
Labor law
It is easy for the company to bring foreign workers and fire
them, the company have to higher a

percentage kuwati employees
Taxation law
No taxes in kuwait, see possible future changes, could be an
issue in the future
Antitrust law
(laws that the government put againt monopoly)
Currently the goverment own a percentage in KSC and uses it
for its projects and for the
“kuwatit cement support” but competitors demand more and
more that these unfair treatments
to them to stop which would be bad for the company
Demographic segment
Population size
It is estimated that 600,000 kuwaiti are below the age of 20,
almost double the current
workforce, so there will be plenty of new houses to be built
Income distribution
Kuwait have a good percentage of middle class how get
government land and support and can
build house
Age structure
Lots of young people in kuwait, kuwaitis want to have their own
houses
Ethnic mix
Lots of foreigners, but foreigners mostly live in apartments,
with government seeking to prevent
their numbers from increasing, there might not be much demand
coming from them in the future

Sociocultural segment
Levels of education
Highly educated people, yet economy depends on oil
Concerns about environment
Bad concern for the environment, which is good for the
company because cement
manufacturing do lots of pollution
Women in the workplace
There is a trend seeking to put more women in the workplace
yet by law women cant work in
hazardous places, so cement factory is all men
Shifts in preferences regarding product characteristics
Some prefer cost, some prefer quality, not sure if there is
another change
Shifts in career preferences
Physical sustainable segment
Growing concerns for sustainable environment development
No concern over it
Global segment
New global markets
The potential to ship to iraq
Broad base of production factors
Since salaries in india are rising, lots of good workers no longer
prefer to work and live in kuwait
Different cultural and institutional attributes
With the rise of living standards in india, lots of workers hate
their living standards in kuwait,
kuwait is considered to be the worst place for foreigners to live
in

Technological segment
Growth of the internet
Industry 4.0 can help develop the factory
Information and communication technologies
Need to utilize industry 4.0 for that
Technological innovative products
Industry 4.0
The Five Forces Framework (Michael Porter):
Bargaining power of suppliers
Raw material suppliers
Raw materials:
(the company do have a good bargaining power with suppliers,
the company purchase large
quantity of limestone from the supplier, as with other materials,
the company can always switch
and by from lots of different places in the world if it gets better
offers)
(the company dont have to stick to certain raw material
suppliers giving it a better negotiation
position)
● Limestone (long term contract with the supplier, UAE)
● Bauxite(short term contract with the supplier, south africa)
● Iron ore
● Copper slag
● Sand
(get it from kuwait, the government gave them a land, so its
cheap)

Support materials:
● Gypsum
● Coal
● Tyre chips
(get it from kuwait, cheaper than coal)
Maintenance suppliers
For the maintenance suppliers, the suppliers have the upper
hand because the company have
to buy from the ones that provided the equipments “need to
check”
Bargaining power of buyers
Buyers are:
Government
Tends to favor kuwait cement company
Citizens
Get their supported cement from KSC, dont have lots of
bargaining power
Companies
Big construction companies have lots of bargaining power
Rivalry among competing firms
● Few competitors
(can foreign companies enter freely, if they can then
competition can be bigger, I think that they
can)
● Low switching costs
● Slow industry growth
● High exit barriers

(so competition is high)
Threat of new entrants
Barriers to entry
● Companies can buy from outside the clicker and sell cement
in kuwait
○ Low capital requirement
● Low switching costs
● Government policy against monopoly which is bad for KSC
● Hard to get good product differentiation so easy for
competitors to enter
the retaliation expected from existing firms
● Big expected reaction from KSC because slow industry
growth and have major stake,
but the issue is that KSC is in a bad financial position so may
not be able to have a big
reaction
Threat of substitute products
Low risk, cement is a main ingredient for building in the kuwait
Competitor analysis
Kuwait cement company
production:
https://kuwaitcement.com/index.php/products/

● :( OPC Type I ) ‫تنمسلأا‬ ‫يدنلاتروبلا‬ ‫يلا‬‫اد‬‫ع‬
● :( SRC Type V ) ‫تنمسلأا‬ ‫مواقملا‬ ‫حلاملأل‬ ‫مقر‬ / 5
● :(WOPC Type 1) ‫تنمسلأا‬ ‫ضیبلأا‬ ‫يدنلاتروبلا‬
● :((OWC – Class G (HSR Grade) ‫تنمسأ‬ ‫رابآ‬ ‫لورتبلا‬
● GGBS ‫ةدام‬
3000 bag: 1.350
Strengths
Certifications
weaknesses
Acico company
Production:
http://www.acicogroup.com/ar/Sectors/Cement
● ‫تنمسلأا‬ ‫يدنلاتروبلا‬ ‫يداعلا‬ - ‫ول‬ ‫األ‬ ‫نوع‬ ‫ال‬
● ‫تنمسلأا‬ ‫مواقملا‬ – ‫ي‬ ‫ثان‬ ‫ال‬ ‫نوع‬ ‫ال‬ ‫من‬
● ‫تنمسلأا‬ ‫ضیبلأا‬ - ‫ع‬ ‫راب‬ ‫ال‬ ‫أو‬ ‫ث‬ ‫ثال‬ ‫ال‬ ‫نوع‬ ‫ال‬
● TGPS ‫موسبیجلا‬ (‫)صجلا‬ ‫يداورطلا‬ ‫عونتملا‬ ‫مادختسلاا‬
https://kuwaitcement.com/index.php/products/
http://www.acicogroup.com/ar/Sectors/Cement
Future objectives:
Positiveness
Since cement is not their main business and dont have as much

stake in it, they may not be
willing to fight for markershare like KSC
Negativeness
They have other business in which they can use its resources to
help them compete in the
cement industry
3000: 1.070
Kuwait portland cement company
Production:
https://portlandkw.co/ar/%d8%a7%d9%84%d8%a3%d8%b3%d9
%85%d9%86%d8%aa/
3000: 1.090
Hilal cement
Production:
https://www.hilalcement.com/ar/mntjtn
● (I) ‫تنمسلأا‬ ‫يدنلاتروبلا‬ ‫يداعلا‬ -
● (V) ‫تنمسلأا‬ ‫مواقملا‬ ‫حلاملأل‬ -
● ‫تنمسلأا‬ ‫ضیبلأا‬ -
Strengths
Certifications
● ISO 9001
● ISO 14001
https://portlandkw.co/ar/%d8%a7%d9%84%d8%a3%d8%b3%d9

%85%d9%86%d8%aa/
https://www.hilalcement.com/ar/mntjtn
Weaknesses
3000: 1.100
Current strategic issues
They don't have a marketing department so no good marketing
analysis
They predicted that the demand will increase, thus invested
millions of KD on a new cement
line, demand did not increase and now they only operate on one
line with not full capacity
Their market share is getting less, and this year they announced
a loss in profit
They manufacture the product itself from the beginning, for
every 21000 ton they bring, 16000
ton of cement get produced so there is lots of wastes giving the
competitors an advantage as
they can important finished cement with far less waste
Their product do maintain high quality, but at a high cost. And
their quality gap have been
reduced with some of their competitors leading for them to
invest in:
They have to update their mills which costs them additional
millions just to keep up with

competitors
They have ISO 9001, but so does the competitors now
HR, employees are leaving
Issues with foreign and kuwaities employees
https://alqabas.com/article/528644-
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‫ود‬ ‫رك‬ ‫ة‬ ‫ال‬ ‫ح‬ ‫من‬ ‫ناء‬ ‫ب‬ ‫ال‬ ‫سوق‬ ‫شهده‬ ‫ی‬ ‫ما‬ ‫ى‬ ‫ال‬ ‫ة‬ ‫ضاف‬ ‫ا‬ ،‫یره‬ ‫وغ‬ ‫ي‬ ‫یران‬ ‫اال‬
،‫برى‬ ‫ك‬ ‫ال‬ ‫یة‬ ‫كوم‬ ‫ح‬ ‫ال‬ ‫ة‬ ‫نموی‬ ‫ت‬ ‫ال‬ ‫ع‬ ‫شاری‬ ‫م‬ ‫ال‬ ‫عض‬ ‫ب‬ ‫ي‬ ‫ف‬ ‫یر‬ ‫تأخ‬ ‫ال‬ ‫یجة‬ ‫ت‬ ‫ن‬
‫ب‬ ‫ق‬ ‫من‬ ‫یذ‬ ‫ف‬ ‫ن‬ ‫ت‬ ‫ال‬ ‫دء‬ ‫ب‬ ‫أو‬ ‫ع‬ ‫شاری‬ ‫م‬ ‫جاز‬ ‫إن‬ ‫ي‬ ‫ف‬ ‫ر‬ ‫تأخ‬ ‫وال‬ ،‫ین‬ ‫قاول‬ ‫م‬ ‫ال‬ ‫ل‬
‫یة‬ ‫ت‬ ‫تح‬ ‫ال‬ ‫یة‬ ‫ن‬ ‫ب‬ ‫ال‬
‫صول‬ ‫ح‬ ‫ال‬ ‫دم‬ ‫ع‬ ‫ك‬ ‫ذل‬ ‫وك‬ .‫ع‬ ‫شاری‬ ‫م‬ ‫ال‬ ‫من‬ ‫یرها‬ ‫وغ‬ ،‫یة‬ ‫ن‬ ‫ك‬ ‫س‬ ‫ال‬ ‫مدن‬ ‫ال‬ ‫عض‬ ‫ب‬ ‫ل‬
‫ر‬ ‫صدی‬ ‫ت‬ ‫ب‬ ‫ناعة‬ ‫ص‬ ‫وال‬ ‫تجارة‬ ‫ال‬ ‫وزارة‬ ‫من‬ ‫زم‬ ‫االل‬ ‫یص‬ ‫ترخ‬ ‫ال‬ ‫ى‬‫ل‬ ‫ع‬
‫نت‬ ‫سم‬ ‫اال‬
‫داث‬ ‫أح‬ ‫من‬ ‫قة‬ ‫نط‬ ‫م‬ ‫ال‬ ‫ه‬ ‫ب‬ ‫مر‬ ‫ت‬ ‫ما‬ ‫ب‬ ‫ان‬‫ج‬ ‫ى‬ ‫إل‬ ،‫یة‬ ‫عراق‬ ‫ال‬ ‫سوق‬ ‫ال‬ ‫ى‬ ‫إل‬
‫ا‬‫ا‬ ‫ود‬ ‫رك‬ ‫ال‬ ‫ة‬ ‫ال‬ ‫ح‬ ‫من‬ ‫زادت‬ ‫یة‬ ‫س‬ ‫یا‬ ‫س‬ ‫كن‬ ‫م‬ ‫ت‬ ‫دون‬ ‫ت‬ ‫ال‬ ‫ح‬ ‫ي‬‫ت‬ ‫وال‬ ،‫صادي‬ ‫ت‬ ‫ق‬ ‫ل‬
‫ة‬ ‫شرك‬ ‫ال‬
.‫نم‬ ‫لیغشت‬ ‫نارفلاا‬ ‫نیحاوطلاو‬ ‫لماكب‬ ‫اهتقاط‬ ‫ةیجاتنلاا‬
https://www.mubasher.info/news/3373962/%D8%AA%D8%AD
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AA-
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AC
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AA-
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AC
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%AC
Analysis: high competition is lowering the profit of cement
companies
Past strategic actions
Using the government to get more support:
● Complaining about foreign competition
● Asking for import taxes to be lifted on its imported coal
material
https://www.alraimedia.com/Home/Details?id=3b769bb0-4362-
45b6-aff0-658263bdf541
Using alternative fuel from the local market:
Tyre chips, garbage
https://www.alanba.com.kw/ar/kuwait-news/municipal-
council/933944/08-11-2019-%D8%AF%D
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A8%D9%8A%D8%A6%D9%8A/
Cement mills upgradation
To improve its quality and maintain a good standards
Iraq expansion
Expand to line 2

Consultancy
Recommendations and solutions
● Waste reduction should be a top priority
● Entering the iraqi market
● Buy finished cement from other countries if its going to cost
less
Forsaken differentiation strategy and adapt cost strategy
Corporate level strategy
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AA-
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AC
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https://www.alraimedia.com/Home/Details?id=3b769bb0-4362-
45b6-aff0-658263bdf541
council/933944/08-11-2019-
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council/933944/08-11-2019-
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council/933944/08-11-2019-
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council/933944/08-11-2019-
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council/933944/08-11-2019-
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Business level strategy
● Establish marketing department
○ Analyzing the market, customers, competitors
Because the cement is a homogenous product, seeking
differentiation strategy is not the best,
the company have enough differentiation points and dont need
to have strategy for more “the
government own part of it and use it, it is 100% made in
kuwait”, but need to implement a cost
strategy with prioritizing cost reduction
Functional level strategy
company
Case-oriented project (Case study). You have to study the
company “Kuwait Cement Company
- KSC” which is currently facing competitive difficulties in the

marketplace and examine it. The
purpose is to come up with some recommendations to be
implemented in order to address the
company
What to write about
Company profile
Provide the following information about the company profile:
Vision & mission statement
External environment analysis
General environment analysis
Industry environment analysis
● Five key success factors in the industry the company is
operating
Competitor environment analysis
Internal environment analysis
Financial analysis
● Annual sales
● Annual profits
● Market share

● Other useful financial information
Company structure / company info
● Background of the company
● CEO information
● Five keyResources / capabilities / core competencies /
competitive advantage
● Strategic business units
● Offerings (goods & services)
SWOT analysis
Summary of the previous analysis presented in SWOT analysis
The conclusions of the previous analysis
Current strategic issues
Describe the issues that the company is facing relating to:
● Marketplace
● Products
● Finance
● management/leadership
● ...ets

Past strategic actions
● List 10 strategic actions that have been made by the company
in the recent years
addressing the issues that it is dealing with
●
● For each strategic action, give a brief description, explain
whether the strategy was good
or bad and why
Recommendations and solutions
● Propose different strategic actions (recommendations) the
company must take in the
future to get back to success or to ensure its future success
● For each strategic action, you must explain why the company
should take it, and what
benefits the company can get from it in the near future
References

Back Ground Information Brief History Kuwait Ce.docx

Back Ground Information Brief History Kuwait Ce.docx

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