Company Lafarge in Malaysia

1
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
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Executive Overview

• What's your business
• Company products and clients
• Why did you come to France
• Do company values fit the French culture?

• Constraints in France
• Adaptation to France
• Key Constraint Costs
• Key Benefit Numbers
• Essential Advice

3
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

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The Lafarge Company

• 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

5
Company products

• 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)?
• Lafarges 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

6
Company's clients

• 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

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Why it came to Malaysia

• 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

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Company values

• What are the core values of the company that may
  or may not fit with perceived Malaysian values?
• 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?
• 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

9
Constraints in Malaysia

• What are the principle constraints the company
  foresaw before coming to Malaysia?
• Nothing specific, Lafarge has numerous
  experiences of operations in foreign countries
  including in Asia
• Did they discover any others?
• 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?
• The lack of high level engineers and managers
• How do these constraints differ with their other
  locations?
• 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?
• N/A. Business is local

10
Adaptation to Malaysia

• 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

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Key Constraint Costs

• 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)

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Key Benefit Numbers

• What are the key benefits of being in Malaysia?
• Product quality (defect rate, product cost,
  productivity, design, customer image, etc.)
• Costs are lower in Malaysia than in developed
  countries. Industrial efficiency was at first
  lower but should get to normal level soon
• Revenue/profit (revenue/profit per Malaysian
  employee)
• 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.)
• Quality of life is good in Malaysia and cost of
  living low. Communications are quite good also
• Government assistance
• 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.)
• Malaysia as a developing country has growth
  potential for building materials

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Essential Advice

• 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

14
We Thank

• Alain CROUŸ
• Lafarge Malayan Cement
• President and CEO

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Our Team

• Anne-Sophie COLIN
• Moulin dAiny
• 08400 CONTREUVE
• Antoine CROUŸ
• 1, rue Lambrechts
• 92400 COURBEVOIE
• Xavier DURUPT
• 8, Les Hats de Dommartemont
• 54130 DOMMARTEMONT
• Olivier JARRY
• 15, route de Montlignon
• 95600 EAUBONNE
• Othmane LAHRICHI
• 4, rue des Gallois Appt 403
• 31400 TOULOUSE
• Antoine RABAIN
• 7, rue de Lyon
• 75012 PARIS