mp report on lucky cement

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RE S.no. TOPICS Pg.no. 1 Introduction 2 2 Vision 3 3 Mission 4 4 SWOT Matrix 5 5 EFE Matrix 9 6 Competitive Profile Matrix 10 7 IFE Matrix 11 8 SPACE Matrix 12 9 BCG Matrix 15 10 IE Matrix 18 11 Grand Matrix 21 12 QSPM Matrix 23 13 Conclusion 25 14 Recommendation 26 15 reference 27 SUBMITTED BY ARSALAN SOHAIL TO SIR ZAFAR MANAN Page 1

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S.no. TOPICS Pg.no.

1 Introduction 2

2 Vision 3

3 Mission 4

4 SWOT Matrix 5

5 EFE Matrix 9

6 Competitive Profile Matrix 10

7 IFE Matrix 11

8 SPACE Matrix 12

9 BCG Matrix 15

10 IE Matrix 18

11 Grand Matrix 21

12 QSPM Matrix 23

13 Conclusion 25

14 Recommendation 26

15 reference 27

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1. INTRODUCTION :

Lucky Cement Limited is the largest[1] cement producer in Pakistan. Its shares are traded on the Karachi Stock Exchange, and are part of the KSE 100 Index. Its symbol in the Karachi Stock Exchange (KSE) is 'LUCK'. The company's highest share price was PKR 147.00, on 18 April 2008[2]

History Lucky Cement Limited was founded in 1994 by Tabba . The company initially started with factories in the Pezu district of the North West Frontier Province (N.W.F.P). It now, also, owns a factory in Karachi. Lucky Cement Limited has been sponsored by one of the largest business groups in Pakistan, the Yunus Brothers Group (YB Group), based in Karachi and has grown remarkably over the last 50 years. The YB Group is engaged in diversified manufacturing activities including textiles, spinning, weaving, processing, finishing, stitching and power generation. The Group consists of a number of industrial establishments other than Lucky Cement Limited, including Lucky Textile Mills, Fazal Textile Mills Limited, Gadoon Textile Mills Limited, Lucky Energy (Private) Limited, Yunus Textile Mills and Lucky Textile Mills - established in 1983.

Brands The company currently [when?] produces five brands [4][5] of cement;

o Lucky Cemento Lucky Staro Lucky Goldo Chairmano Lucky sulphate resistant cement (SRC)

2. VISION:

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“We envision being the leader of the cement industry in Pakistan,

identifying and capitalizing on new opportunities in the global

market, contributing towards industrial progress and sustainable

future, while being responsible corporate citizen to become a

market leader and avail the new opportunity with sustainability”.

3. MISSION:

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“Lucky cement mission is to be a premium cement manufacturing by

building a professional organization having state-of-interest-of-art

technology, identifying new prospects to reach globally and maintain

n services and quality standards to cater to the international

construction needs with an environment-friendly approach. “

4. SWOT MATRIX:

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The concept of determining strengths, weaknesses, threats, and opportunities is the fundamental idea behind the SWOT model. To present the model in a more understandable way, scholars came up with so-called SWOT matrix. SWOT matrix is only a graphical representation of the SWOT framework.

The above is a schema of how SWOT works. You start at the top level and go down to details. When this is filled with content, it gets the shape of a matrix, such as the example below:

Strengths.

1. Economies of scale production increasing efficiency and reducing cost.

2. Cost efficient energy sources

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3. Infrastructure is near to port.

4. Large dealer network.

5. Using state-of-art-technology.

6. Inventory turnover up 2.84 to 3.58.

7. Unique product in quality which meets all international standards.

8. Location of your business is near to sea port.

9. Patents, know-how, trade secrets.

10. Worker's unique skill set and knowledge.

11. Corporate culture, company image.

12. Operational efficiency with reducing cost.

13. Marketing - reach, distribution to worldwide network.

Weaknesses:

1. Cause pollution

2. Capital incentive industry

3. High transportation cost

4. Waste of material

5. Impact of weather

6. Road and transportation problem

7. CSR programmed cost

8. Law and order situation of Karachi.

Opportunities:

1. Market developments and penetration.

2. Competitors' are want to exits who can’t meet lowest completion.

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3. Tactics - surprise, major contracts, and worldwide increase the demand of cement.

4. Business and product development.

5. Information and research to make cement stronger and long lastic.

6. Relationship with agencies and distributors.

7. New markets, vertical and horizontal integration.

8. Export in other country.

9. Increase production to reduce cost and achieve economies of scale.

Threats :

1. Political instability

2. Legislative effects by robbers.

3. Obstacles faced?

4. Environmental effects and climate impact.

5. Competitor intention to expand their business.

6. Fluctuation in Market demand.

7. New technologies, services, ideas of competitors

8. Sustaining internal capabilities of surviving.

9. Seasonality, weather effects on stocks.

SO Strategies:

By increasing efficiency, increase the productivity and penetration the market. (S4,O3)

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Infrastructure near port can help increase the export.(S3,O5) By meeting the standards supply all over the world.(S1,O2) Reduce the cost by touching the economy of scale.(S2,O3)

WO Strategies:

Use technology reduces the pollution. (W1,O3) Bulk supply will reduce the transportation cost.(W3,O2) High productivity will increase the IRR.(W2,O1) Build a structure and anew plant where demand is high and will increase in future

with full potential.(W3,O4)

ST Strategies:

Using trackers and safety guard can reduce the security risk. (S2,T3) Keeping less stock reduce cost of spoil goods. (S3,T4) Meeting with new technology and research can retain the high market share.

(S1,T2)

WT Strategies:

Take a insurance plan logistic. (W3.T2) Evaluation of demand with current market trend.(W2,T3) Use technological advancement to reduce cost of production.(W4,T5)

5. EFE MATRIX FOR LUCKY CEMENT:

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KEY EXTERNAL FACTOR

WEIGHT

RATING

WEIGHTED

SCOREOPPORTUNITIES

1. Market developments and penetration. 0.05 4 0.22. Competitors' are want to exits who cost are not lowest . 0.06 3 0.18

3. Tactics - surprise, major contracts, 0.09 2 0.184. Business and product development. 0.03 1 0.035. Information and research to make cement stronger and long lastic. 0.08 3 0.246. Relationship with agencies and distributors. 0.06 4 0.247. New markets, vertical and horizontal integration. 0.03 3 0.098. Export in other country. 0.04 3 0.129. Increase production to reduce cost and achieve economies of scale. 0.05 2 0.1

THREATS :

10. Political Instability 0.02 3 0.0611. Legislative effects by robbers. 0.01 4 0.0412. Obstacles faced? 0.04 3 0.1213. Environmental effects and climate impact. 0.04 2 0.0814. Competitor intention to expand their business. 0.08 2 0.1615. Fluctuation in Market demand. 0.08 1 0.0816. New technologies, services, ideas of competitors 0.05 4 0.217. Sustaining internal capabilities of surviving. 0.06 3 0.1818. Seasonality, weather effects on stocks. 0.07 4 0.28

TOTAL 1.00 2.64

6. COMPETITIVE PROFILE MATRIX:

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  LUCKY CEMENT FALCON CEMENT XYZ CEMENTCRITICAL SUCCESS FACTOR WEIGHT

RATING SCORE WEIGHT RATING SCORE WEIGHT

RATING SCORE

                   

advertising 0.10 3 0.3 0.20 4 0.8 0.20 4 0.8

product quality 0.20 3 0.6 0.10 3 0.3 0.10 3 0.3

price competitiveness 0.15 4 0.6 0.10 2 0.2 0.10 2 0.2

management 0.15 4 0.6 0.20 1 0.2 0.10 1 0.1

financial position 0.10 4 0.4 0.10 3 0.3 0.15 4 0.6

customer loyalty 0.10 3 0.3 0.05 2 0.1 0.10 2 0.2

global expansion  0.10 2 0.2 0.20 1 0.2 0.10 1 0.1

market share 0.10 3 0.3 0.05 2 0.1 0.15 2 0.3

                   

TOTAL 1 3.3 1 2.2 1 2.6

7. IFE MATRIX: Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business.

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IFE matrix also provides a basis for identifying and evaluating relationships among those areas. The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation.

The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company. The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects

Column1 Column2 Column3 Column4

internal strengths weight rating weighted score

1.       Cost efficient energy sources 0.1 4 0.4

2.       Infrastructure is near to port. 0.09 4 0.36

3.       Large dealer network. 0.08 4 0.32

4.       Using state-of-art-technology. 0.04 3 0.12

5.        Inventory turnover up 2.84 to 3.58. 0.05 4 0.2

7.       Location of your business is near to sea port. 0.04 3 0.12

8.       Patents, know-how, trade secrets. 0.05 3 0.15

10.   Corporate culture, company image. 0.07 4 0.28

inertnal weaknesses

1.       Cause pollution  0.1 2 0.2

2.       Capital incentive industry  0.09 1 0.09

3.       High transportation cost 0.07 1 0.07

4.       Waste of material  0.07 2 0.14

5.       Impact of weather 0.05 1 0.05

6.       Road and transportation problem 0.04 1 0.04

7.       CSR programmed cost 0.06 2 0.12

1 2.66

8. SPACE MATRIX:

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The STRATEGIC POSITION ACTION EVALUATION ( SPACE ) matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake.

SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization.

The SPACE matrix can be used as a basis for other analyses, such as the SWOT analysis, BCG matrix model, industry analysis, or assessing strategic alternatives (IE matrix).

To explain how the SPACE matrix works, it is best to reverse-engineer it. First, let's take a look at what the outcome of a SPACE matrix analysis can be, take a look at the picture below. The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy:

* Aggressive

* Conservative

* Defensive

* Competitive

INTERNAL STRATEGIC DIMENSIONS:

Financial strength (FS)

Competitive advantage (CA)

EXTERNAL STRATEGIC DIMENSIONS:

Environmental stability (ES)

Industry strength (IS)

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There are many SPACE matrix factors under the internal strategic dimension. These factors analyze a business internal strategic position. The financial strength factors often come from company accounting. These SPACE matrix factors can include for example return on investment, leverage, turnover, liquidity, working capital, cash flow, and others. Competitive advantage factors include for example the speed of innovation by the company, market niche position, customer loyalty, product quality, market share, product life cycle, and others.

Every business is also affected by the environment in which it operates. SPACE matrix factors related to business external strategic dimension are for example overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive pressures, industry growth potential, and others. These factors can be well analyzed using the Michael Porter's Five Forces model.

The SPACE matrix calculates the importance of each of these dimensions and places them on a Cartesian graph with X and Y coordinates.

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The following are a few model technical assumptions:

- By definition, the CA and IS values in the SPACE matrix are plotted on the X axis.

- CA values can range from -1 to -6.

- IS values can take +1 to +6.

- The FS and ES dimensions of the model are plotted on the Y axis.

- ES values can be between -1 and -6.

- FS values range from +1 to +6.

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9. BCG matrix

BCG Matrix (Boston consulting Group):The Boston consulting group a leading management consulting firm develops and popularized the growth share matrix as shown in figure.

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogs , or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.

Question marks (also known as problem children) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share.

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RELATIVE MARKET SHARE:

This indicates likely cash generation, because the higher the share the more cash will be generated. As a result of 'economies of scale' (a basic assumption of the BCG Matrix), it is assumed that these earnings will grow faster the higher the share. The exact measure is the brand's share relative to its largest competitor.

MARKET GROWTH RATE:

Rapidly growing in rapidly growing markets, are what organizations strive for; but, as we have seen, the penalty is that they are usually net cash users - they require investment. The reason for this is often because the growth is being 'bought' by the high investment, in the reasonable expectation that a high market share will eventually turn into a sound investment in future profits. Where it can be applied, however, the market growth rate says more about the brand position than just its cash flow. It is a good indicator of that market's strength, of its future potential (of its 'maturity' in terms of the market life-cycle), and also of its attractiveness to future competitors.

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As a particular industry matures and its growth slows, all business units become either cash cows or dogs. The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a dog.

The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks. As the BCG stated in 1970:

Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. The balanced portfolio has:

stars whose high share and high growth assure the future; cash cows that supply funds for that future growth; and question marks to be converted into stars with the added funds.

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10.IE MATRIX:

The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model.

The IE matrix is a continuation of the EFE matrix and IFE matrix models.

The IE matrix belongs to the group of strategic portfolio management tools. In a similar manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix.

The IE matrix is based on the following two criteria:

1. Score from the EFE matrix -- this score is plotted on the y-axis

2. Score from the IFE matrix -- plotted on the x-axis

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The IE matrix works in a way that you plot the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane. Then you take the score calculated in the IFE matrix, plot it on the x axis, and draw a vertical line across the plane. The point where your horizontal line meets your vertical line is the determinant of your strategy. This point shows the strategy that your company should follow.

On the x axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position. A score of 2.0 to 2.99 is considered average. A score of 3.0 to 4.0 is strong.

On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to 4.0 is high.

IE matrix example...

Let us take a look at an example. We calculated IFE matrix for an lucky cement company on the IFE matrix page. The total weighted score calculated on this page is 2.79 which points at a company with an above-average internal strength.

We also calculated the EFE matrix for the same company on the EFE matrix page. The total weighted score calculated for the EFE matrix is 2.46 which suggests a slightly less than average ability to respond to external factors.

Now we plot these values on axes in the IE matrix.

IE matrix example

This IE matrix tells us that our company should hold and maintain its position. The company should pursue strategies focused on increasing market penetration and product development (more about this below).

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11.GRAND MATRIX:

This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular tool for formulating alternative strategies. In this matrix all organization divides into four quadrants. Any organization should be placed in any one of four quadrants. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. It is based two major dimensions.

1. Market growth 2. Competitive position

All quadrant contain all possible strategies

Qurdant-1 contains that company’s strong having competitive situation and rapid market growth.Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position. These firms must focus on current market and appropriate to follow market penetration, market development and products development are appropriate strategies.

Qurdant-2 contains that company’s having weak competitive situation and rapid market growth. Firms positioned in Quadrant II need to evaluate their present approach to the marketplace seriously. Although their industry is growing, they are unable to compete effectively, and they need to determine why the firm's current approach is ineffectual and how the company can best change to improve its competitiveness. Because Quadrant II firms are in a rapid-market-growth industry, an intensive strategy (as opposed to integrative or diversification) is usually the first option that should be considered).

Qurdant-3 contains that company’s weak competitive situation and slow market growth. The firms fall in this quadrant compete in slow-growth industries and have weak competitive positions. These firms must make some drastic changes quickly to avoid further demise and possible liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first. An alternative strategy is to shift resources away from the current business into different areas. If all else fails, the final options for Quadrant III businesses are divestiture or liquidation.

Qurdant-4 contains that company’s strong competitive situation and slow market growth. Finally, Quadrant IV businesses have a strong competitive position but are in a slow-growth industry. These firms have the strength to launch diversified programs into more promising

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growth areas. Quadrant IV firms have characteristically high cash flow levels and limited internal growth needs and often can pursue concentric, horizontal, or conglomerate diversification successfully. Quadrant IV firms also may pursue joint ventures As above figure there are four quadrants in grand matrix that further contain various set strategies.

STRONG COMPETITIVE POSITION WEAK COMPETITIVE POSITION SLOW MARKET GROWTH RAPID MARKET GROWTH

Quardrant-1 Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification

Quardrant-2 Market development Market penetration Product development Horizontal integration Divestiture Liquidation

Quardrant-3 Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation

Quardrant-4 Concentric diversification Horizontal diversification Conglomerate diversification Joint ventures

12.QSPM MATRIX:

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The Quantitative Strategic Planning Matrix (QSPM)

The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most appropriate or which alternative strategy should be select. This stage contains QSPM that is only tool for objective evaluation of alternative strategies. A quantitative method used to collect data and prepare a matrix for strategic planning. It is based on identified internal and external crucial success factors.

That is only technique designed to determine the relative attractiveness of feasible alternative action. This technique objectively indicates which alternative strategies are best.

The QSPM uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies. That is, the EFE Matrix, IFE Matrix, and Competitive Profile

PREPARATION OF MATRIX

Now the question is that how to prepare QSPM matrix. First it contains key internal and external factors. An internal factor contains (strength and weakness) and external factor include (opportunities and threats). It relates to previously IFE and EFE in which weight to all factors. Weight means importance to internal and external factor. The sum of weight must be equal to one. After assigning the weights examine stage-2 matrices and identify alternatives strategies that the organization should consider implementing. The top row of a QSPM consists of alternative strategies derived from the TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives. However, not every strategy suggested by the matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive judgment in selecting strategies to include in a QSPM. After assigning the weight to strategy, determine the attractiveness score of each and afterwards total attractiveness score. The highest total attractiveness score strategy is most feasible.

STEPS IN PREPARATION OF QSPM

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1. List of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor 3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing 4. Determine the Attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score

Limitations

1. Requires intuitive judgments and educated assumptions 2. Only as good as the prerequisite inputs 3. Only strategies within a given set are evaluated relative to each other

Advantages

1. Sets of strategies considered simultaneously or sequentially 2. Integration of pertinent external and internal factors in the decision making process

KEY INTERNAL FACTORS :

Research and Development Computer Information Finance/Accounting Production/Operations Management Marketing Systems

KEY EXTERNAL FACTORS :

Economy conditions Social/Cultural/Demographic /Environmental Political/Legal/Governmental Competitive Technological Consumer attitude

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13.CONCLUSION:

Lucky Cement Company is committed to diversity in a working environment

where there is mutual trust and respect and where everyone feels responsible for

the performance and reputation of our company. They are committed to safe and

healthy working conditions for all employees. They will not use any form of

forced, compulsory or child labor. and committed to working with employees to

develop and enhance each individual's skills and capabilities.

14.RECOMMENDATION

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Strategic Recommendation

Appropriate strategy for LUCKY CEMENT is Market Development. LUCKY CEMENT should remain in the present business and should introduce present products in new geographical area.

Following are necessary factors that must be present while choosing market development strategy:

LUCKY CEMENT has its own strong distribution channel.

LUCKY CEMENT is very successful at what it does.

Untapped rural market and market of developing countries exist for LUCKY CEMENT to cover.

LUCKY CEMENT is a strong MNE in Pakistan. It has abundant resources both financial and human, so it can easily expand geographically. Here we are not concerned about expansion of operating activities to new geographical area. We are particularly concerned about capturing untapped market. It is up to LUCKY CEMENT whether it is decided to start operating in new areas too or just introduce products by using its strong channel of distribution.

LUCKY CEMENT is operating locally. It means that company is such an industry which can be grown globally.

15.REFERENCE:

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https://www.google.com.pk/search?q=ie+matrix+sample

http://www.maxi-pedia.com/internal+external+IE+matrix

http://www.zainbooks.com/books/management/strategic-management_30_grand-strategy-matrix-2.html

http://www.grandmatrix.com/forums/index.php

http://www.google.com.pk/search?hl=en-PK&source=hp&biw=&bih=&q=grand+matrix&meta=&oq=grand+mat&gs_

http://grand-nce.ca/research/matrix

http://classof1.com/homework_answers/corporate_strategy/grand_strategy_selection_matrix/

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