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MGT401 (Business Strategy)

Group Term Paper

Submitted by: Group-3

Name ID
Tashfia Iqbal 18104107
Sanjana Subah Ophelia 17104007
Hafsa Habib 17104099
Md. Imtiaz Khaleed 17204097
Md. Mariful Islam 17304077
Section: 04

Submitted to:

Wasif Sayed Choudhury

Adjunct Faculty

BBS, BRAC University

Date of submission: 18th September 2021

Table of Contents
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Topic Number Topic Name Page Numbers

1 Executive Summary 03

2 Introduction 03

3 Shah Cement Value Chain Analysis 04-05

4 Cement Industry and Shah Cement Analysis 06-08

5 Diversification Strategy 09

6 References 10-11
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Executive Summary

Shah cement is a famous brand in the country that is running its cement business for more than 15 years.
This term paper is about that how Shah Cement is approaching their business and emerging their
company within the country. They have established their business by their value. Their overall
management of supply chain in every sector, their operational activities as well as their sales and
marketing policy and services they are giving which improve their company make them country’s largest
cement company. Behind their success they have competitor in their way also they have potential to deal
with consumer demand which makes them more successful in a country. In this project there is a detailed
information about how they operate their business in this industry.

Introduction

Shah Cement is the main concrete brand in Bangladesh for more than 15 years. It's a worry of Abul Khair
Group; one of the biggest gathering of organizations in our country. The brand turned into the market
chief during the main year of presentation and solidified its authority consistently. Unrivaled innovation
combined with center around quality and client care has been at the center of its prosperity. Shah Cement
is the favored brand of the most individual house developers just as super development ventures of the
country. The World's Largest Vertical Roller Mill has been included Shah Cement Manufacturing.
Guinness World Record has perceived the one-of-a-kind accomplishment of Shah Cement and has
recorded it as the World's single Largest Cement Vertical Roller Mill facility. Shah Cement Industries
Ltd. is the biggest Cement creating plant in Bangladesh, with a limit of 10 million metric tons for each
annum. Shah Cement Plant is furnished with both inbound and outbound strategic involving own
maritime vessels, gigantic number of cover armadas, barges and mass transporters to supply in the
commercial center simply in time. Shah Cement's obligation to reasonable turn of events, its high moral
guidelines in transactions and on-going endeavors in local area government assistance programs have
won it recognition as a dependable corporate resident. To give client the best quality cement, Shah
Cement has its own blending plant, which is furnished with present day PLC-based PC controlled
program. Shah Cement's endeavors in presenting Ready Mixed Concrete combined with the advancement
of mass concrete taking care of offices have been liable for rethinking the speed and nature of
development movement in metropolitan urban areas and in uber framework projects.
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All the different exercises that a company performs creates a value chain. The value chain consists of two
main categories of activity, Primary Activities and Support Activities.

Shah Cement Value Chain Analysis

Supply Chain Management:

Any cement industry including Shah Cement in Bangladesh is facing huge costs in terms of raw materials
as most of it needs to be imported and it affects the profitability. As cement is a low margin item, any
increment in raw materials cost truly influences the benefit of cement manufacturers. Cost of all major
cement fixings - Clinker, slag and gypsum went up within the international market in 2018 (Rahman et al,
2019). To tackle this situation Shah Cement is using the Vertical Roller Mill (VRM) and Shah Cement
has the world’s largest VRM.

Operations:

Operation Management activities incur many costs which need to be maintained properly for a better
profit and competitive advantage over competitors. Guaranteeing continuous control supply around the
clock, Shah Cement has a control plant of 17-megawatt capacity (About Shah Cement, n.d). Its claim
bagging plant is one of the biggest in this locale capable of producing 3 lac packs per day fueled by Hi-
tech Star Wait apparatus from Austria (About Shah Cement, n.d). All these features of Shah Cement
helped them to set a cheap rate of cement and gained competitive advantage in the Bangladesh Cement
Industry.
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Distribution:

Shah Cement Delivery Support includes-

● Most noteworthy number of own secured vans

● Own ocean-going vessels for clinker/ raw materials handling

● Satisfactory bulk carriers & convenient silos

● Satisfactory number of own fleet of barges

● Select delivery system all through the nation

All these made it possible for the company to stand on its guarantee of “24-hour delivery” (Delivery
Service Excellence, n.d).

Sales and Marketing:

Shah Cement has a very strong marketing and sales department. They have successfully positioned the
brand as one of the most technically advanced, a sustainable brand and a brand that sells quality cement at
a cheaper rate. Many advertising and marketing campaigns also kept the company in trend. Marketing
campaign during Covid called Shah Cement Housefull Offer Campaign 2020 and ads covering their
Guinness World record for having the largest VRM in the world.

Service:

Shah Cement’s commitment to sustainable advancement, its high moral benchmarks in commerce
dealings and on-going endeavors in community welfare programs have won it approval as a mindful
corporate citizen (About Shah Cement, n.d). Shah Cement’s endeavors in presenting Readymade Mixed
Concrete coupled with the promotion of bulk cement dealing with offices have been capable of redefining
the pace and quality of development action in metropolitan cities and in mega framework ventures (About
Shah Cement, n.d).

All these have contributed to the profitability of Shah Cement and successfully operated in Bangladesh
for over 15 years (About Shah Cement, n.d). They got to be the market pioneer amid the primary year of
presentation and solidified its authority each year. Prevalent innovation coupled with a center on quality
and client benefit has been at the center of its victory.
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Cement Industry and Shah Cement Analysis

Before a business thinks of entering a business environment, it is important for the business owner and all
it’s possible stakeholders to carry out an industry analysis. Industry analysis will help the business
become aware of the pros and cons the industry has in store for them. It will help them prepare for the
threats and also find ways to seize opportunities that will benefit their business and overall financial
turnover in the long run. Moreover, through industry analysis, a business can plan beforehand of the
business strategies they might need to opt to, to gain competitive advantage in the market. Furthermore,
having done a company analysis, Shah cement might be able to figure out if they have any shortcomings.
Once they are aware of the situation, they can prepare beforehand. 

For this report, we tried to carry out the industry analysis of the cement industry and the company
analysis of Shah Cement in Bangladesh using Porter’s five forces analysis. 

Porter’s five forces analysis:

1. Competition in the industry and the competitions Shah cement might face:

According to writers Hervé Dumez and Alain Jeunemaître, the cement industry has always been a very
competitive industry. In their research paper, the cement industry as a model case (Hervé, D.,
Jeunemaître, A. 2000), the cement industry has always been competitive since there have always been
competitors in the market offering very close pricing. The two writers have mentioned competition in
countries like the USA, however, the case is very similar here in Bangladesh. According to Wikipedia,
Shah cement is the current cement market leader owning almost 14% of the market. Nevertheless, this
does not mean it does not have any competitor. According to a study carried out by Datis Export Group,
right behind Shah Cement is Bashundhara Cement. The other companies are Aman Cement, Fresh
Cement, followed by Seven Rings cement and so on. Even in terms of pricing, these companies are close
behind each other, i.e., Shah Cement retails at 400 taka/bag, Bashundhara Cement at 390 taka/bag, Aman
Cement at 380 taka, Fresh Cement at striking 460 taka/bag, and Seven rings cement at 390 taka/bag.
Therefore, this shows that the cement industry and Shah cement itself has quite a handful of existing
competitors in the industry. 
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2. Potential of new entrants into the industry and to Shah cement:  

As we already know, the cement industry is a very competitive industry. Within the industry there are
many existing rival companies- Bashundhara Cement, Aman Cement, Fresh Cement, Seven Rings
Cement- with very competitive prices and which are enlisted in the market. However, due to the recent
pandemic, import of raw materials has been hindered severely. Currently, according to Light castle
partners, the market is very sensitive to these changes. Therefore, we can assume that in recent times,
there can be no entrance of new competitors in the industry. This also means that Shah cement has little to
no threat coming from new entrants. However, the previous leading competitors still exist.  

3. Power of suppliers:

i. In context to the industry:

The cement industry has a handful of cement suppliers. The list consists of top brands like Shah Cement,
Bashundhara Cement, Aman cement, Fresh cement, Seven rings cement etc. Besides these top brands,
there are other well-known cement brands such as Meghna Cement, Premier Cement, and olympic
cement. Most of these cement suppliers have very similar components and most of them sell both OPC
and PCC cements. Therefore, we can conclude that the industry itself has a significant number of
suppliers. 

ii. In context to Shah Cement:

According to Shah Cements website, they are a very Environmentally sustainable company. Their
strategy includes- preservation of natural resources, awareness and responsibility, legal compliance,
protective measures for the environment, reduction in wastes, cement production plants. They get their
raw materials from the by-products of their other business unit’s chemical wastes. They recycle these by-
products and produce their cement so that they leave as little carbon footprint as possible and so that they
cause as little harm to the environment as possible. 
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4. Power of customers:

No industry can survive with its buyers/customers. An industry survives only because of its buyers. For
both the industry and Shah cement, having a stable inflow of customers is crucial. Good thing about the
cement industry is that Bangladesh is a developing country. In the past few decades, there has been much
infrastructural development. To develop these buildings, bridges and other infrastructural monuments, the
demand for cement kept growing overtime. As for Shah cement as a company, it has been the best in the
industry for fair reasons. According to an article published by Dhaka Tribune, Shah cement is the only
cement manufacturer and distributor who can customize their cement components as per request.
Moreover, they were the ones who supplied cement for the building of the famous Padma bridge.
Therefore, it is very easy for customers to have faith in a company who contributed in the building of
significant symbols of Bangladesh and also who made it to the Guinness world. 

5. Threat of substitute product for both the industry and Shah Cement:

In every business, there is always a threat of substitutes. For example, in the last decade, Blockbuster was
replaced by Netflix, taking pictures using kodak cameras became obsolete when smartphones became
more available in the market. Similarly, even for the cement industry threats of substitutes exist as well. 

One substitute of cement can be Pulverized Fuel Ash (PVA) also commonly known as fly ash. Fly ash is
much more easily accessible since it’s the by-product from the coal industry and Bangladesh has a
booming coal industry. Moreover, according to Hunker.com, Fly ash concrete absorbs more moisture
which makes it stronger than Portland cement. Since it absorbs more moisture, it also means that it needs
less water. Fly ash concrete is also cheaper than Portland cement or PCC and OPC. However, the only
setback is storage since not storing it properly can cause environmental pollution. If stored properly, it is a
very efficient substitute to cement which can affect the cement industry, and Shah Cement,
significantly.   
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Diversification Strategy

Shah cement is one of the few cement groups that is involved in many important Bangladesh Government
projects. Not only this, Shah cement always tries to keep their promise of delivering their products on
time. According to the report of TBS news (2020), Shah cement installs the largest vertical roller mill just
to ensure the product delivery on time. Mizan and Hossain (2014) points out that the cement industry of
Bangladesh is very progressing because of some important companies and among them Shah cement is
one of them. But according to the report of The Daily Star (2020), cement industry is struggling due to
covid and other unavoidable reasons. One of the main unavoidable reasons is not so much diversification.
Most of the cement companies only focus on delivering best quality cement during constructions. As we
all know no construction project took place during the covid lockdown period, cement companies faced
economic crisis. To come out from this economic crisis, cement industry needs to focus on
diversification. In terms of diversification, Shah cement should go for acquisition of different business
related to cement industry. Cement is used in construction where different components like bricks, rods
etc. are also used. To make a building, developers need items like bricks, rods, cement, sand etc. But
there’s no company which provides all these items altogether. For this reason, Shah cement can diversify
their business in these sectors as well. Previously bricks were made of sands. But now adays cement made
bricks are getting popularity because of its quality. Recently few small groups have started to produce
cement made bricks but due to covid they are facing economic problems to run their business properly.
Even some companies want to sell their companies because of this economic crisis. Shah cement should
acquire these companies. It will be beneficial for Shah cement because there will be no extra cost except
buying machineries to make bricks. So, in terms of strategic fits it will be a perfect match for Shah
cement since cement is used in both areas so the resources are same. On the other hand, if Shah cement
acquires some other companies which make construction equipment like rod, send etc. then it will be
beneficial for them to create more value to the customers. Customers prefer to buy everything from the
same company. When they get everything from Shah cement, it will create a positive vibe about Shah
cement to everyone. In value chain case Shah cement needs to focus on one thing specially which is
delivering the product on time. In terms of diversification, Shah cement should focus on acquisition.
Through acquisition they can easily start their production in other sectors soon. If the go through internal
development, then it will take many days for them to run those business. By this time, they might lose
people’s interest. On the other hand, joint venture with other companies will bring problems in terms of
ownership. Their production can be hampered due to managerial issues. To avoid all these issues, Shah
cement should go for acquisition.
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References

 A., A., & A. (2018, March 2). Cement Price BD - Per Bag Cement price 2017 & top

cement company list. All Furniture BD. http://allfurniturebd.com/cement-price-bd/

 About Shah Cement – Shah Cement Industries Ltd. (2021).

Https://Shahcement.Com/about-Shah-Cement/#at-a-Glance.

https://shahcement.com/about-shah-cement/#at-a-glance

 Bangladesh Cement Manufacturers Association. (2021). Cement Industry News from

Global Cement.
https://www.globalcement.com/news/itemlist/tag/Bangladesh+Cement+Manufacturers+A
ssociation

 City Enterprise. (2021, March 28). Shah Cement Special at cheap price in

Dhaka,Bangladesh. https://cityenterprisedhk.com/product/shah-cement-special/

 Concrete: Cement Substitutes - GGBS, PFA and more. (2021). Srcnet.

https://www.greenspec.co.uk/building-design/concrete-cement-substitutes/

 Datis Export Group. (2020, August 27). How many Cement plants are producing in

Bangladesh 2020? https://datis-inc.com/blog/how-many-cement-plants-are-producing-in-

bangladesh-2020/#Top_10_producers_meet_approximately_81_of_total_demand

 Dumez, H., & Jeunemaître, A. (2000). The cement industry as a model

Case. Understanding and Regulating the Market at a Time of Globalization, 5–22.

https://doi.org/10.1057/9780230288751_1

 Environmental Sustainability – Shah Cement Industries Ltd. (2021). Shah Cement.

https://shahcement.com/environmental-sustainability/
 file:///C:/Users/imtia/AppData/Local/Temp/AJTP_1.2.pdf
 Hansen, T. C. (1990). Recycled concrete aggregate and fly ash produce concrete without
portland cement. Cement and Concrete Research, 20(3), 355–356.
https://doi.org/10.1016/0008-8846(90)90024-r
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 On time in-site Delivery – Shah Cement Industries Ltd. (2021). Shahcement.Com/on-

Time-in-Site-Delivery/. https://shahcement.com/on-time-in-site-delivery/

 Report, T. (2020, January 8). Shah Cement sets Guinness World Record. The Business
Standard. https://www.tbsnews.net/companies/cement/shah-cement-sets-guinness-world-
record

 Shah Cement is at Guinness World Records || গিনেজ ওয়ার্ল্ড রেকর্ড স-এ শাহ্ সিমেন্ট. (2019,

December 1). YouTube. https://www.youtube.com/watch?v=QeVLCul3HvA

 Shah Cement, advancing the infrastructure sector in Bangladesh. (2021, July 26). Dhaka
Tribune. https://www.dhakatribune.com/business/2021/07/26/shah-cement-building-a-
strong-foundation-for-bangladesh

 Wikipedia contributors. (2021, June 27). Shah Cement. Wikipedia.

https://en.wikipedia.org/wiki/Shah_Cement#:%7E:text=Shah%20Cement%20Industries

%20Limited%20is,in%20terms%20of%20production%20capacity

 Wing, L. A. (2019, July 7). Cement in Bangladesh: Building a Concrete Future.

LightCastle Partners. https://www.lightcastlebd.com/insights/2019/03/cement-in-
bangladesh-building-a-concrete-future

 শাহ্ সিমেন্ট হাউজফু ল অফার ২০২০ এর মেগা পুরষ্কার প্রদান।. (2021, August 31). YouTube.

https://www.youtube.com/watch?v=Tp8oALKMC-A