Merger Lafarge Holcim

Problematize the case

With a well-balanced presence in 90 countries, 115,000 employees around the world and a focus on Cement, Aggregates and Concrete, LafargeHolcim is the world leader in the building materials industry. It was formed by the merger on 10 July 2015 of cement companies Holcim and Lafarge which had combined net sales of CHF 33 billion (EUR 27 billion) in 2014.

LafargeHolcim is the industry benchmark in R&D and serves from the individual homebuilder to the largest and most complex project with the widest range of value-adding products, innovative services and comprehensive building solutions. With a commitment to drive sustainable solutions for better building and infrastructure and to contribute to a higher quality of life, the group is best positioned to meet the challenges of increasing urbanization.

Select frame(s) of analysis among current views

• Porter's 5+1 Forces
• Business Model
• Bottom of the Pyramid

Explain why you chose this (these) analysis framework(s)

I decided to analyze this Case Study through the Porter's 5+1 Forces model because it gives the possibility to understand the challenges that the new company is facing from both an external and internal point of view. In addition to that, it gives us the possibility to analyze the legal constraints imposed by the governments of developing countries. I'm perfectly conscious thugh that the Porterian Model is a static and limited model.

The Business Model is fundamental because it allows us to undestand the Strategic Capabilities and then the competitive advantage of the new company.

Finally, in order to understand the policy of LafargeHolcim better, it's interesting telling something about the BoP Strategy that the company has adopted in some developing countries.

Make the analysis of the case according to this (these) framework(s) of

analysis

PORTERIAN 5+5 FORCES MODEL

• RIVALRY BETWEEN COMPETITORS: Even if LafargeHolcim is the market leader for building material, the competition is really strong in this business.
• SUPPLIERS: Since LafargeHolcim extracts directly the raw materials that they use to produce their goods, the only suppliers are the ones producing engines they are using; for this reason it seems that the power of suppliers is not so important.
• CUSTOMERS: LafargeHolcim has a worldwide presence and then has a large number of customers.
• NEW ENTRANTS: Emerging countries like Asian countries could represent an important threat; their own market is growing and that allows the companies to develop themselves, become stronger and get a comparative advantage.
• SUBSTITUTES: Wood, steel, iron or glass depending on the case. Some of these products are more eco-friendly and others cheaper than cement.
• LEGAL CONSTRAINTS: So that developing countries have to respect the Kyoto Protocol concerning the CO2 emissions, LafargeHolcim has to respect the laws of different countries where it's working. Laws on constructions can often prevent the construction of a building.

BUSINESS MODEL

LafargeHolcim constantly works to optimize its use of natural resources by managing its environmental footprint effectively and creating value where possible by using recycled materials.