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

2. 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 Executive Overview

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

4. 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)? • Lafarge’s 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

7. 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

8. 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

11. 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)

12. 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

13. 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

15. Our Team • Anne-Sophie COLIN Moulin d’Ainy 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