SWOT Analysis PHINMA: Cost and Cement Plants Essay Example

companies

Weaknesses:

1. High energy costs
2. Capital costs of conversion are high
3. Cement plant requires a large financial investment currently ranging from $150-$200 million.
4. P100 million worth of mistakes
5. Government abetted
6. Less efficient then Korean investors

Opportunities:

1. Expansion plant to reduce cost
2. When a cement plant is efficiently constructed, the savings in plant construction cost translate into lower depreciation costs.
3. Growth in domestic cement demand
4. Non-engineers plant managers but with managerial skill
5. Inviting foreign technical consultants
6. Monopolize the industry
7. Gain better control of their technology by fabricating some of the heavier pieces of equipment and castings currently being imported
8. Compete with Vietnam and South China

Threats:

1. Thai cement producers
2. Koreans investing in cement in the Philippines
3. Government regulations
4. Overcapacity exceeding local demand
5. Oil crisis
6. Cement shortage due to rising demand

Alternative Courses of Action

Design and build its own cement plants

• Advantages: a. They will be able to save up to 20% b. They can choose the kind of equipment they like c.
  

Less expensive d. 50% local content

Continue having turnkey agreement with foreign suppliers

• Advantage: a. More automated processes b. Better equipment sourcing c. Capacity to manufacture some of the major pieces of the cement equipment.
• Disadvantage: a. More expensive b. Adds around 20 percent to the cost c. Only 25% value would be local

Strategy Formulation

I conclude that the best solution to the problem is alternative no. which is to design and build its own cement plants because it will give pride to our country plus the company can save a lot compared to having an agreement with foreign suppliers.

Plan of Action

1. Continue organizing conferences for their engineers to learn more
2. Expansion plants to reduce cost
3. Hire non-engineers but with managerial skills
4. Develop their R&D unit

Potential Problems

1. What if Korean investors will pursue their plan to invest here in the Philippines?
2. What if there are no more qualified engineers to be hired?
3. What if there will be oversupply of their product?

Contingency Plans

1. As they have said, they are still ahead even if they are less efficient because Koreans will be having higher costs than them. They should be precautious but then be confident enough and be proud of their locally-own made product.
2. Train people with the capability of being a part of their company. Allot budget for those to study abroad and learn a lot.
3. They should cope with the demand of the consumers. They should be aware how much is the demand so as for them to know how many they should produce.