Introduction
CIMERWA Cement Company was founded in July 1984 as a government parastatal in Muganza Sector, Rusizi District, in the Western Province of Rwanda. The company was initially called Ciments du Rwanda and was established under a cooperation trinity between the Government of Rwanda and the People’s China Republic. However, in 2007, the company was privatized, with RSSB (Rwanda Social Security Board owning 37%, the Government of Rwanda 30%, RIG (Rwanda Investment Group) having 21%, and the other investors holding the remaining 22%. This paper assesses CIMERWA PPC using strategic analysis frameworks, namely SWOT analysis, Balanced Scorecard, McKinsey 7-s Framework, PESTLE Model, and Porter’s 5 Forces and outlines the present situation of the company based on these analysis models. Besides, the article will give recommendations regarding changes in the company’s organizational structure which will give it a competitive edge in the cement industry.
Background Information
One of the largest integrated cement producers in Rwanda, CIMERWA, mines raw materials, creates clinker concentration, packs, and sells cement for civil and general construction. Some of its goods are shipped to nearby nations like the DRC and Burundi. Additionally, it forms the main provider of cement and related goods in Southern Africa, making it the company’s largest stakeholder (Elisephane and Ishigaki, 2020). Its manufacturing facility is situated in Bugarama, Rusizi district, close to Rwanda’s southwestern border.
SWOT Analysis
Strengths
CIMERWA PPC has several strengths within the cement industry. First, CIMERWA Company is the only integrated Cement Company in Rwanda, the only Rwandan Company to extract raw materials, manufacture clinker concentrate, and package and sell cement for civil and general construction (Elisephane and Ishigaki, 2020). The company also has a substantial edge of being well-established in the cement market for 38 years with an efficient channel to market, good financial base, large customer base, and robust supply chain (Elisephane and Ishigaki, 2020). Additionally, operating in the cement sector for the longest time, CIMERWA PPC has a strong management team with adequate experience and knowledge in finance, law, project management, leadership, strategy, and engineering, among others. CIMERWA PPC enjoys many shares within Rwanda’s cement market, which shows the company’s dominance in the sector.
The availability of raw materials for CIMERWA PPC is another crucial advantage of the company. Limestone is the main raw element for cement manufacture, and the company acquires it from the Western and Northern Rwanda provinces (Elisephane and Ishigaki, 2020). Ongoing mapping and exploration of minerals in Eastern DRC and Rwanda will increase limestone reserves (Kreutzer, 2019). Clay and gypsum are the prominent accompaniments in cement production that are available in Rwanda (Elisephane and Ishigaki, 2020). Generally, the availability of these two materials facilitates the prowess of CIMERWA in cement production.
Weaknesses
CIMERWA PPC is experiencing difficulties maintaining its brand image in Rwanda due to environmental pollution allegations by village communities of the Rusinzi District. The complaints and allegations comprised flooding due to water from the company, vibrations causing cracks in houses, and noise and dust pollution. Rwandan Parliament implemented the Environment Bill in February 2005, establishing the legal structure for environmental management within Rwanda (Elisephane and Ishigaki, 2020). Therefore, lawsuits and compensation are common within the company.
Furthermore, CIMERWA PPC has continuously failed to satisfy domestic cement demand despite intensified investment in the company. The company was unable to attain its production capability of 600,000 tones of cement (Elisephane and Ishigaki, 2020). In 2018, the company manufactured only 364,864 tones, less than 60% of the total yield or demand (Elisephane and Ishigaki, 2020). Consequently, Rwanda had to import approximately 318,800 tones to satisfy the need of 640,455 tones (Elisephane and Ishigaki, 2020). Moreover, the prices of CIMERWA Company have remained high compared to imported cement.
Opportunities
CIMERWA PPC has several opportunities that may add a competitive advantage to the company. Cement is the building block or element within the construction sector. Thus, with urbanization and population growth, the demand for cement is estimated to increase, which will make the company generate adequate revenues. Thus, the company has the opportunity to expand, improve its production capacity and generate more income. Since the company has a long-time reputation and good brand image, CIMERWA PPC can easily acquire credit facilities and aid from financial organizations, improving its sustainability (Elisephane and Ishigaki, 2020). Additionally, the company supports robust innovation and technological capabilities to enhance the production of cement and the company’s operations.
Threats
CIMERWA Cement Company experiences various threats in its daily operations. The main threat that CIMERWA PPC experience is competition. Due to its high cement prices and inability to satisfy cement demand in Rwanda, various companies have gained entry into the cement sector of Rwanda. Despite CIMRWA being the leader in cement production, other companies such as Prime Cement Limited in Musanze, Northern Rwanda, increases competition for the domestic cement market. Previously, CIMERWA PPC solely benefitted from the policy of Buy-Rwanda-Build-Rwanda (Behuria, 2019). Therefore, Prime Cement Limited and CIMERWA PPC will compete for quotas in the retail market share and public contracts in Rwanda. DRC is expected to implement the East African Community (EAC) Common Market Protocol (Esiara, 2021). Consequently, DRC will reduce taxes and eliminate trade barriers which will help Tanzania, Uganda, and Kenya compete for its cement market. Besides, environmental liabilities due to environmental pollution cause intensified potential liabilities and substantial costs.
Balanced Scorecard Model
The balanced scorecard (BSC) is a strategic performance evaluation metric or tool that a company utilizes to identify and enhance several internal business operations and their subsequent external outcomes. The BSC enables entities to evaluate and identify the success and effectiveness of their tactics to determine their performance. The framework focuses on four key areas: learning and growth, customers, financial perspective, and business process (Kreutzer, 2019). The following is a comprehensive BSC model analysis of CIMERWA PPC.
Learning and Growth
Learning and growth are critical aspects of improving organizational capacity, which is crucial in maximizing objectives and goals with favorable outcomes. This section analyzes how well employees absorb information and how they use it to improve the company’s competitive edge. CIMERWA PPC expects employees to perform highly in skill and knowledge application, leadership, and creativity and innovation. The stiff competition requires continuous improvement of processes and operations. Therefore, through regular workshops and training, employees at CIMERWA PPC can learn, improve and innovate new concepts and techniques to enhance its competitive advantage and value proposition. Moreover, competitors cannot imitate staff training and skills set, creating a non-substitutable and unique competency for CIMERWA PPC. For this reason, CIMEWRWA PPC is the leading cement producer in Rwanda, with competitive and sustainability capabilities (Nsabimana and Hirwa, 2018). Therefore, employees are acquiring information well and using it to improve the company’s growth as well as their professional and personal growth.
Customer Perspective
Customer perspectives are crucial in determining their satisfaction with product availability, price, and quality. The CIMERWA PPC aims to be the leading cement producer in Rwanda and East Africa while adding value to its customers. To acquire the demands and preferences of customers, CIMERWA PPC conducts customer survey and encourage customer feedback through its customer service unit. The quality of CIMERWA cement is appropriate. However, the availability is low since the company is under its production capacity (Kreutzer, 2019). The price is relatively high compared to competitors. Therefore, CIMERWA PPC aims to formulate strategies suitable for satisfying customers in terms of price and availability.
Financial Perspective
CIMERWA PPC aims to increase revenue, profits, shareholder value, and growth. The company aims to satisfy the demands of stakeholders such as suppliers, customers, and shareholders through establishing strategic partnerships and embracing technology. Principally, stakeholders are a significant part of the company since they invested in it. Therefore, they are more concerned with the financial success of the company (Kreutzer, 2019). Thus, CIMERWA PPC is improving its product and value proposition and reducing operational costs.
Business Processes
The business processes section explores how appropriate the company manufactures the products. Besides, this part assesses if the company’s product meets all the necessary standards. For the last 38 years, CIMERWA PPC has produced high-quality cement for civil and general construction (Gahigi, 2020). The company has been investing heavily in technology and ensuring that employees are up-to-date with the current technology and information systems. The technology has helped CIMERWA PPC run the business well and satisfy its stakeholders. However, the closure of the Rwanda-Uganda border and the existence of big construction projects in Rwanda led to a cement shortage in February 2019 (Gahigi, 2020). The company has a limited capability for drying limestone that contains high moisture content. The company aims to implement suitable technology and innovations to improve its production capacity.
McKinsey 7-s Framework
The McKinsey 7s framework is a strategic model that helps businesses and managers evaluate their performance (Kreutzer, 2019). The framework identifies seven fundamental factors for the company that must be aligned and focused on effective Change of management procedures and regular performance improvements (Shariah, 2018). The seven elements include strategy, structure, systems, shared values, style, staff, and skills. These components are discussed in detail in the following sections.
Strategy
The company’s strategy is crucial in establishing and maintaining a competitive edge over the competitors. CIMERWA PPC’s mission is to strengthen Rwanda to establish a strong foundation for the coming generations. The mission helps the company to guide actions, manage performance and formulate different approaches compatible with the company strategy. Besides, the mission indicates the company’s commitment, respect, and dedication to empowering the community and people in society (Nsabimana and Hirwa, 2018). The mission statement of strengthening Rwanda aims at reinforcing the relationship with the government, which is the leading strategic partner of the company. Therefore, the strategic plan of CIMERWA PPC is to position the company as the main cement brand present it home country, Rwanda. Additionally, the plan facilitates continuous ventures into new opportunities to capitalize company’s dedication to a bolder and stronger Rwanda established on appropriate foundations. Besides, improving their relevance among Rwandan customers is vital in enhancing brand loyalty and becoming the preferred choice brand for Rwandans (Shariah, 2018). Thus, fostering growth and appropriate partnerships is crucial to attaining the mission or objective.
Structure
CIMERWA PPC has a functional organizational structure reinforced by progressive and learning organizations. With few managerial levels and easy access to the executive leadership and management, staff at CIMERWA PPC feel confident and more secure, and the structure allows for quick decision-making. Moreover, there is a high collaboration between the distinct departments. The company possesses a systematic system for formulating and evaluating cooperation between the company’s sections, which ensures goal achievement and flawless workflow (Shariah, 2018). CIMERWA PPC promotes team-oriented tasks and teamwork. However, when jobs need individual scope and attention, the company delegates its respective duties and responsibilities.
In addition, CIMERWA PPC promotes both centralization and decentralization. The company reinforces a decentralized decision-making process. Roles and tasks are designed to be conducted responsibly, and staff formulates their objectives with mutual understanding and coordination with their supervisors. Nevertheless, CIMERWA PPC is centralized in ensuring supervisors approve and oversee various tactics and efforts that staff selected to ensure they are compatible with the organizational values and strategy. CIMERWA PPC has an intricate and effective system to ensure smooth communication between staff and distinct managerial levels. The communication systems improve the entire organizational structure (Nsabimana and Hirwa, 2018). Besides, organized, defined, and systematic communication enables easy information flow and eliminates compromising goals and tasks due to misunderstandings or lack of communication.
Systems
CIMERWA PPC has well-demarcated and defined systems to ensure that the companies lack disputes or conflicts and staff manage operations effectively. The systems are departmental in nature, and they include sales, marketing, operations, human resource management, and supply chain management, among others. Each system in the company has methods and tools that act as controls for goal attainment and evaluating performance. These measures and controls are specified in different units or departments depending on their responsibilities and tasks. Besides, every department formulates specific criteria for staff members for inter-departmental responsibilities and performance evaluation. Thus, CIMERWA PPC continually assesses its systems through formulated controls. The performance evaluation is ongoing and continual, and management conducts the process through internal discussions and observation (Nsabimana and Hirwa, 2018). The company operates formal performance assessment quarterly or semiannually, which depends on how urgent the assigned tasks are in the company.
Shared Values
The company defines and communicates its core values to stimulate a supportive and innovative company structure and culture that allows staff to conduct tasks well and improve their organizational commitment and motivation. The core values of CIMERWA PPC include heritage, quality, transparency, honesty, and creativity, among others. The company ensures that staff conduct operations and activities with the moral and ethical standards required. Besides, the company supports an inclusive culture or approach that improves diversity. The company also has internal policies and regulations that reduce discrimination incidences. The corporate culture supports creativity and innovation by encouraging independence for the development and growth of teams and individuals. Consequently, employees can refine their personalities and careers. CIMERWA PPC ensures that roles and tasks are compatible with the company’s core values (Shariah, 2018). All strategic approaches, tactics, and activities reflect and demonstrate core values to promote a reliable and consistent brand image and transparent organizational culture.
Style
CIMERWA PPC applies a participative leadership style in its operations. Through the leadership style, the company can involve and engage its staff in managerial decisions and decision-making processes (Shariah, 2018). Consequently, executive management can frequently interact with subordinates to get feedback concerning strategic operations and tactics and identify and resolve disputes. The participative leadership style improves employee motivation, organizational ownership, and commitment among staff and other stakeholders. Moreover, this style effectively attains the company’s vision and goal of strengthening Rwanda. Employees feel appreciated and valued for their input, feedback, and suggestions. The internal cooperation and collaboration across departments, teams, and systems is made possible by the company’s supportive culture (Shariah, 2018). Human resource management of the company fosters the formation of functional and practical groups and transparently and fairly supports all staff members in their growth.
Staff
Moreover, CIMERWA PPC has adequate employees with different positions and roles. The company hires employees internally or externally depending on the skill level needed and urgency (Nsabimana and Hirwa, 2018). Besides, the company offers in-house and external training to familiarize employees with the business and its core values and enhance their skill level. CIMERWA PPC hires employees from various countries depending on the requirements, qualifications, and business needs. Recruitment of employees within the company can either be contractual or permanent.
Skills
CIMERWA PPC has an excellent human resource with high capabilities and skills. The company recruits staff members based on their qualifications and merits. CIMERWA PPC also has defined job and task roles, and it trains employees for skill improvement and ensures job requirement satisfaction (Nsabimana and Hirwa, 2018). As a result, the company provides employees with adequate skills to conduct their respective tasks per culture, core values, and business goals. Regular workshops and training, internally or externally, are crucial for providing development and growth opportunities for staff members. Having skilled employees offer CIMERWA PPC a competitive edge over its competitors.
PESTLE Analysis
Political
Potential political instability and unrest threaten the companies’ operations in Rwanda and the East Africa region, including CIMERWA Cement Company, since it can adversely affect the economy and demand and supply for products. Rwanda has a stable and concrete political system. The prevalence of democratic procedure in Rwanda, which the international community supports, reduces the threat of potential political instability. Moreover, Rwanda has a good and stable relationship with the neighboring and regional countries such as Burundi, Tanzania, Uganda, Kenya, and the Democratic Republic of Congo (World Bank, 2022). These counties are either sources of raw materials for cement production or market for CIMERWA cement. Moreover, while Cimrewa PPC has procedures, controls, and systems formulated to reduce political risk, there is a lack of assurance that any detrimental political situation will not negatively influence the company’s operations.
Economic
The operational growth, income, and results of assets by a company may rely on the degree of stability of the country’s economy. Companies including CIMERWA PPC operating in Rwanda are prone to economic risks correlated with the nation. The growth of Rwanda slowed down in 2020 by 2% (World Bank, 2022). However, the economy recovered in 2021 with an increase of 6.3% in 2021, and it is anticipated to reach 8% by the end of 2022 (World Bank, 2022). Besides, inflation rates in Rwanda are suitable for business operations. The inflation rate was 7.73% in 2020 and 8% in 2021, and it is expected to reach 12% by the end of 2022 (World Bank, 2022). Therefore, the inflation rate of Rwanda is suitable for business operation and sustainability.
Additionally, rapid growth in Rwanda, with the focus on entities’ settings, improves private and international investment and the development of business operations. The economic boom has enhanced the living standards of citizens and the business environment. Rwanda’s GDP (Gross Domestic Product) was $10.33 billion in 2020 and $10.5 billion in 2021, and it may rise to $12.06 by the end of 2022 (World Bank, 2022). The GDP growth shows positive economic growth, establishing confidence among investors and companies. However, the management team of CIMERWA PPC has developed robust and effective business procedures, systems, and strategies to reduce the company’s exposure to adverse economic events.
Social
The culture of a community and manner of doing things influence the organization’s culture in a setting, especially the shared attitudes and beliefs of a population impact how marketers and salespersons conduct sales and marketing activities. Rwanda has high-income inequality and poverty rates, which slow economic growth (World Bank, 2022). These factors also affect the level of disposable income. The government of Rwanda is supporting the private sector for job creation which aims at reducing the poverty level. Moreover, Rwandans tend to buy products from environmentally responsible companies. Therefore, CIMERWA PPC must improve its environmental policies and formulate strategies to reduce pollution. Besides, Rwandans prefer purchasing branded cement (Nsabimana and Hirwa, 2018). Therefore, CIMERWA PPC will have a substantial brand value and an excellent image to survive in Rwanda’s cement sector.
Technological
The government of Rwanda is prioritizing its transformation into a service hub and knowledge-based economy by trailing the development of ICT technical investments and competencies to reinforce the network coverage expansion. The interventions are critical for job creation and the delivery of goods and services. Consequently, many people in Rwanda are competent in technological systems (World Bank, 2022). CIMERWA PPC depends heavily on the efficiency and functionality of IFS (information technology systems). Therefore, the technical systems must perform well at all times. Since maintenance routines or system upgrades delay the company’s operation, competent employees reduce the time taken for maintenance or upgrade. CIMERWA PPC has enough workforce to ensure optimal functionality of IT systems (Nsabimana and Hirwa, 2018). It takes time to innovate and be up-to-date with the latest technology to improve customer experience, efficiency, and reliability.
Legal
CIMERWA PPC conducts its business operations under the guidelines and regulations of relevant regulating bodies in Rwanda. Each regulation and policy subject the company to particular procedures, restrictions, and requirements to establish market transparency. Therefore, increased regulatory needs in Rwanda are a significant issue for the company. The Environment Bill of Rwanda expects the company to protect and promote a sustainable environment (Elisephane, 2020). However, communities around Rusinzi District have been complaining due to noise and dust pollution, causing substantial costs and legal liability that may affect the company’s overall financial reputation (Behuria, 2019). Besides, acquiring land for limestone mining and establishing integrated and grinding units needs an appropriate legal procedure.
Environmental
The Environment Bill mandates CIMERWA PPC to promote, conserve and protect environmental sustainability in Rwanda. The company is responsible for executing environmental management strategies in coordination with the Rwanda Environmental Management Authority. In Rwanda, the permissible dust emission from cement companies is 150 mg/Nm3 and for critically populated regions is 100 mg/Nm3 (Behuria, 2019). However, the limit for new cement companies is 50 mg/Nm3, similar to developed countries (Behuria, 2019). Thus, CIMERWA PPC has to meet the environmental standards of Rwanda.
Porter’s 5 Forces
Porter’s five forces is a company’s approach to comprehending a particular sector’s competitive forces or edge. The model is vital in evaluating the competitive advantage and sustainability of the company in a new market. Competition impacts every sector regardless of the company’s previous performance (Kreutzer, 2019). The forces include new entrants’ threat, buyers’ power, suppliers’ power, substitutes threats, and competitive rivalry. These forces will be described in the following parts in a detailed manner.
The Threat of New Entrants
The force of new companies entering a market affects the power of a company. The less money and time it costs a company to enter a market segment significantly the competitive position of the established company. Rwanda has a few restrictions policies and various policies that encourage foreign investment. Over time, Rwanda has acquired substantial liberalization – loosening or reducing government controls. Therefore, CIMERWA PPC will experience stiff competition from local and international cement companies such as Hima Cement, Simba Cement, Bamburi Cement, and Prime Cement (Esiara, 2021). As a result, differentiation is critical in such a market with various players providing stiff competition. Thus, the threat of new entrants is high in the cement market of Rwanda. However, CIMERWA PPC is a well-established and leading cement company in Rwanda with a good brand image and customer loyalty. The company will be able to sustain itself in the competitive industry.
The Power of Buyers
The power of buyers is the ability of customers to impact business operations. The power of each buyer to the company, the number of customers, and the cost of finding new markets or customers affect the power of buyers. Due to rapid growth and development in Rwanda, there is intensified demand for cement, which CIMERWA PPC cannot meet. Therefore, the power of buyers is low since there are many customers in the Rwandan cement industry. However, product differentiation is essential since customers buy new products and services (Esiara, 2021). The attraction of customers during entry time is crucial but less fundamental as maintaining customer attraction.
The Power of Suppliers
The power of suppliers can impact the entry of new entities, especially when most suppliers are natives. The suppliers can increase prices to discourage new companies or ensure the CIMERWA PPC is dependent on them to manipulate prices and supply for their benefit. Therefore, CIMERWA PPC must reduce the power of suppliers. CIMERWA PPC mines its raw materials, therefore reducing the power of suppliers. Additionally, significant additives such as gypsum and clay are readily available in Kenya and Tanzania. Moreover, there is a continuous survey in Eastern DRC for limestone land mines (Esiara, 2021). Therefore, CIMERWA PPC has diversified its sources of raw materials, lowering the power of suppliers to manipulate or affect their business operations. The power of suppliers is low in this case.
Threat of Substitutes
The threat of substitutes is a vital competitive force significant to CIMERWA PPC. Since CIMERWA PPC cannot meet the cement demand in Rwanda and its high places, there is an increased threat of substitutes in the cement market. The Government of Rwanda has been forced to import extra tones of cement over the years as CIMERWA PPC cannot meet the demand. Therefore, companies such as Prime Cement, Simba Cement, and Hima Cement, among others, have progressively acquired a cement market share in Rwanda (Gahigi, 2020). Moreover, these companies are offering higher volumes of cement at a lower price than CIMERWA PPC. Therefore, cement customers will likely prefer buying from other brands since they provide high-quality cement at a lower price.
Competitive rivalry is healthy and significant in the business setting. It is competing for a section of the market by utilizing tactics and strategies, focusing on customer service, quality competition, and price competition. Therefore, CIMERWA PPC will receive stiff competition from Bamburi Cement, Twiga Cement, Tororo Cement, Prime Cement, Simba Cement, and Hima Cement (Esiara, 2021). There are well-established companies from Rwanda and neighboring countries such as Kenya, Tanzania, and Uganda. Since DRC will implement the East African Community (EAC) Common Market Protocol, these companies will scramble for its cement market. Therefore, it will be crucial for CIMERWA PPC to focus on product differentiation, value proposition, and price leadership to continue competing effectively with such companies.
Conclusion and Recommendations
Inconclusively, CIMERWA PPC is one of the leading cement producers in Rwanda. Based on the company’s SWOT analysis, it hosts specific strengths such as longtime operation in the cement sector. Nevertheless, there are threats such as stiff competition from other cement producing companies both locally and regionally, increasing the need for CIMERWA to grasp creativity and innovativeness in its operation. The competitive advantage can be attained by adhering to the suggestions outlined in the following sections.
Organization structure is a framework that highlights how a company conducts particular activities to attain its goal. The activities include responsibilities, roles, and rules. Besides, organizational structures dictate how information flows within the organization. CIMERWA PPC has a functional structure that divides employees and works using a specialization. Staff members report and communicate directly to managers of their respective areas, who in turn report to the CEO (Esiara, 2021). The following shows the current organizational structure of CIMERWA PPC.
Reference List
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