Transcript Lafarge in Malaysia - 2005

Company Lafarge in Malaysia
Best in Malaysia Case Study
May 2005
By: Ms. COLIN, Mr. CROUŸ, Mr. DURUPT, Mr.
JARRY, Mr. LAHRICHI and Mr. RABAIN
Executive Overview
• What's your business
• Company products
and clients
• Why did you come to
France
• Do company values fit
the French culture?
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Constraints in France
Adaptation to France
Key Constraint Costs
Key Benefit Numbers
Essential Advice
Some Guidelines
Dear "Best in France" Participants
This presentation is a sample for you to use as a guideline for your own case
studies. It outlines some of the key points of the "Four Seasons goes to
Paris" case study by Hallowell, Bowen, and Knoop.
While you will probably need to adapt some of these questions to your
specific company try to cover about the same topics.
There is no need to attach a separate report but please explain each slide
with enough depth to resolve any questions by using the "notes page" feature
of Powerpoint. Please follow normal bibliographic rules by citing your
references (books, company website pages, interview sources (name,
function, contact details), articles, company reports, etc.)
It imperative that you include the full contact details (title, address, phone,
and email) of each manager that you interview.
Best Wishes
Michael Segalla
The Lafarge Company
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When did it come to Malaysia?
– In 2001 with the acquisition of the Blue Circle Group
What's its business?
– Four Divisions
• Cement
• Readymix and Aggregates
• Gypsum
• Roofing
What are its key figures (world sales, Malaysian sales, profits,
market share etc. etc.)?
– World sales
15 BEuros
– Malaysian Sales
500 MEuros
– Operating profit worldwide
2 BEuros
– Market share worldwide
7%
Company products
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What products are produced in Malaysia?
– Cements
– Readymix
– Aggregates
– Gypsum wallboards
– Roofing tiles
Why are these products produced in Malaysia (and not
elsewhere for example)?
– Lafarge’s businesses are local and transportation costs
would make it economical not to produce locally
Are there expansion/reduction plans for these product lines?
– For Readymix and Aggregates only, apart from following the
natural growth of the Malaysian market
Company's clients
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Who are the company's clients?
– Other readymix companies
– Precasters
– Construction companies
– Distributors
What are their expectations?
– Competitive and consistent products, reliable services
How will a Malaysian presence help or hurt the company's
ability to satisfy client demands?
– The markets for our products are local and must be
produced locally, mostly at least
Why it came to Malaysia
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Company approach to international growth?
– Partly through internal growth
– Partly through acquisitions
Where else did it consider?
– ?
Why was Malaysia a key target location?
– Malaysia was part of the Blue Circle Group, not a target as
such
Company values
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What are the core values of the company that may or may not fit
with perceived Malaysian values?
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Some core values of Lafarge are dedication to customers,
employees, shareholders and communities and a participative
management style. Sustainable development and, particularly,
corporate social responsibility are part of them.
No particular problem between those values and the Malaysian
culture
How did company manage to instill its values in the Malaysian
unit?
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By communicating them in a participative and transparent way and
“translating” them (not only in the language but also in the way to
present them) into the values of the local Business Units
Constraints in Malaysia
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What are the principle constraints the company foresaw before
coming to Malaysia?
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Did they discover any others?
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The lack of high level engineers and managers
How do these constraints differ with their other locations?
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Top management, if from another country, must be very open to the local
culture and take it into account in the management style it adopts
Which are the worst constraints?
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Nothing specific, Lafarge has numerous experiences of operations in
foreign countries including in Asia
Every country is a different case, there are no clear cut rule
Did the local subsidiary lose projects to other countries because of
these constraints?
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N/A. Business is local
Adaptation to Malaysia
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What kind of adaptations did/is the company making to its
people management systems?
– Recruitment/Selection, Compensation, Management
Development, Workforce Planning, Performance Appraisal,
Motivation , Job Design, Job Assignment, Communication
Policies, International Transfers, Use of Expatriates,
Training, etc.
• No major adaptation is generally necessary. Most systems can
be copied with some sensitivity and diplomacy. Differences can
be limited to details. Good practices can be copied from other
countries
Key Constraint Costs
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What are the key costs to coming to Malaysia that are more or
less than operating in other locations?
– Any or all HR type costs (hiring, paying, training, dismissing,
etc.)
• Lower in Malaysia than in developed countries
– Other organisation structure costs (real estate, travel, taxes,
"cultural consultants", etc.)
• Lower as well
– Communication constraints (language, infrastructure
communication costs, etc.)
• The business language in Malaysia is English, no problem there
– Integration of Malaysian managers into global organisation
(does it cost more to use Malaysian managers than managers
from other cultures)
• Malaysian managers cost less (cf above)
Key Benefit Numbers
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What are the key benefits of being in Malaysia?
– Product quality (defect rate, product cost, productivity, design, customer
image, etc.)
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Revenue/profit (revenue/profit per Malaysian employee)
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Quality of life is good in Malaysia and cost of living low. Communications are
quite good also
Government assistance
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Headcount productivity is lower than in developed countries, more than
compensated by the bigger size of the plants and the cost of manpower
Location benefits (transport, time zone, quality of life, employee
satisfaction with Malaysia, etc.)
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Costs are lower in Malaysia than in developed countries. Industrial efficiency
was at first lower but should get to “normal” level soon
Malaysia is a country where there are laws which are respected and where the
efficiency of the Government is good
Market Potential (product penetration or growth potential, customer
demands for cultural adaptation of product(s), launch platform for other
Asian countries, etc.)
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Malaysia as a developing country has growth potential for building materials
Essential Advice
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What advice do you offer to other companies in this sector
concerning use of Malaysia as a location?
– Before coming to Malaysia
• Malaysia is a country which welcomes business but not for a
quick buck, any installation has to be for the long term and
competition is strong. There must be good strategic reasons to
come
– Adaptation while in Malaysia
• One must be open to multi cultural management. Malaysia is
itself multi racial with 60% of Malays, 25% of Chinese and 15%
of Indians
– Future investments in Asia
• Malaysia is a good base to enter Asia. Longer term, China is
unavoidable
We Thank
• Alain CROUŸ
Lafarge Malayan Cement
President and CEO
Our Team
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Anne-Sophie COLIN
Moulin d’Ainy
08400 CONTREUVE
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Antoine CROUŸ
1, rue Lambrechts
92400 COURBEVOIE
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Xavier DURUPT
8, “Les Hats de Dommartemont”
54130 DOMMARTEMONT
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Olivier JARRY
15, route de Montlignon
95600 EAUBONNE
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Othmane LAHRICHI
4, rue des Gallois Appt 403
31400 TOULOUSE
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Antoine RABAIN
7, rue de Lyon
75012 PARIS