What does globalization mean for Lafarge
What does globalization mean for Lafarge and how can it globalize effectively? What role does the nature of industry play in the globalization process? Localization and globalization- those two aspects, according to Lafarge policy are the principals to growth In last decade Lafarge accelerated the pace of its growth into new countreis by acuaring companies and expending into new business and new products through its four divisons (cement, aggregates and concrete, roofing and gypsum). Through numerous acquisitions and joint ventures, Lafarge became a Global company and a leader in cement.
In General globalization for Lafarge means entering the new markets and growing by acquisitions. The company uses its acquisitions as a bridgehead to introduce the group’s product such as, gypsum, aggregates, etc. with the aim to create a building materials didvison in each country. On the other hand in the building materials business, markets are local (consumer tastes diversive, business strategies of companies results in fragmentation of different markets, different trands and competitors depending form the country).
There are also two aspects- high transportation costs and low inventories- which anables to build sustainable, worldwild competitive advantage by locating in one country. 2. Should Lafarge grow by expanding current operations or should it grow by acquiring foreign firms? Why is growth imperative in this industry? Lafarge should do both. On the one hand should grow by acquiring foreign companies (as building a greenfiels pland is much more expensive than buying an existing one).
By the acquisitions company can use its presence in the market as a bridgehead to introduce the group’s product other than cement and creat a leader in each country they enter. One of the main motive of th growth is to remain visible and attractive to investors, expanding cashflow. As a long term goal of the growth is achieve profitability for new operations 3. Is the overall business strategy of Lafarge in tandem with its principles of action and the “Lafarge way”?
Althought Lafarge achieved its goal to become the nuber one company in the construction business, managing of growth itself still needs improovenent. A lotof improovemenst has to be made in the field of working across different cultures, languageandminset. The culture difference should also inflects the decision making process, which is not perfect in my opinion. Decisions are taken by the Direction Generale, even at the regional and coutry level. Managers exist to implement thedecisions of the DG. Also having The DG taking most of the decisions might not be a great strategy since every territory seems to vary.