Posted at 12.15.2018
The following task is a case study, in which we are going to assess the Knauf Company worldwide, but usually the operation of the business enterprise in the Europe. The objective of this project is, by studying the procedure of the business inside European countries to have the ability then to recognize, whether we visit a common strategy or if there are any distinctions onto it.
In the first part, there's a research about the organizational function and the activities of Knauf worldwide and mainly in the Western environment, starting from the past until the season 2009, where you can see the latest activities of the company. In the next part I am going to concentrate my research regarding how the standard strategy of the company is differentiated depending on the local requirements, regulations, civilizations, market potentials, etc. In the long run of the task we will make an research of the Greek market in order an in depth idea about the business operation.
Knauf Group is a multinational company of building materials and structure systems based in Germany, in Iphofen, where the brain quarters and the professional plan are located. In Iphofen is present also the historical museum of the business. Knauf is a family name. The Company began its functions in 1932, when the brothers Dr. Alfons N. Knauf and Karl Knauf proven the organization "Gebr. Knauf". It was a difficult starting and at this time, no one could have thought the future big development of the business. Knauf finally became a multinational maker of creating materials and structure systems, operating with an increase of than 150 production facilities worldwide. Today the company rates among one of the world's leading manufacturers of creating materials. Knauf has a labor force of 22, 000 employees in 40 countries and in 2009 2009 the business achieved sales of 5, 5 billion Euros.
The product portfolio varies from the original plasterboard to the development of conveying equipment for structure site logistics, including the segments of gypsum plasters for interior and outside use, insulation materials made of glass fibers or broadened polystyrene. The wide-ranging collection also includes some other very special products as gypsum fiber boards for wall surfaces and floors, and a variety of special ceiling systems. The final goal, which comes out out of this wide range of products, is that Knauf Group always centers its work in being the first choice producer in the engineering sector by gratifying any dependence on the architects, organizers, building programmers, etc.
A strong characteristic of Knauf is the constant courage for visions, development and ventures as well as easy decision-making processes and a wealth of ideas on the part of its personnel. Even though the company is so large the CEOs of the business Nicolaus and Baldwin Knauf demand that the business is a family business, since it continues to be supervised worldwide by the second and third era of the family Knauf. The business doesn't belong in virtually any currency markets and every investment is created by their own income without lending options from the lender or any other exterior fund.
Gypsum plasters (main selling material of the company)
The Group started to go international as soon as the beginning of the Seventies of the last century and the tendency has prolonged until today. Today the Group produces and markets its products in every European countries. In the developed countries such as E. E. countries, Turkey, Russia etc. , the business has production facilities. Based on the market demand in a few occasions there are two or even three plants, whereas in small countries as Cyprus for example, there is only a local branch and the market is supplied with materials from Knauf Greece. Furthermore, there are factories located in North and South America, in the CIS state governments, in Northern Africa, in China and in Indonesia.
Whereas in the earlier days the areas of dry development - and here we point out plasterboard as the principal product - and gypsum plasters were the traditional areas of activity of the Group, in the mean time the insulation materials section is rolling out into an additional mainstay of the Group.
The foundation natural stone because of this was laid in 1978 when a glass fibre developing company in Shelbyville, USA, was bought out. Today the business bears the name Knauf Insulation USA and works a total of four production sites in the United States.
The creation of insulating materials on the basis of wine glass wool and nutrient wool becomes more and more important. For about 30 years, the company has gained experience in the production of cup wool in North America. Within the last 5 years, Knauf has bought 10 wine glass wool and nutrient wool factories throughout Europe and additionally built new plants in Eastern Europe and Russia.
Emerging and acquisitions activities
Focusing before some years in the growing strategy into further segments of building, where Knauf didn't have experience, the Company needed the knowledge and the facilities of existed companies popular for his or her quality in their field. A few of them were bought from the group to be able to provide all the neighborhood Knauf companies with the special products that they are producing. A number of the companies that contain been bought and maintained now from the group are AMF, Danogips, Marmorit, Sacret, Richter Systems, Knauf Perlite, Knauf PFT, Knauf Alutop.
Most of these companies are selling their products only via local Knauf businesses. The interesting point is that the group doesn't hesitate to change its policy according to the target communities, different distribution programs and market needs. Being more specific, for example AMF Company is operating as an alternative business in the local markets, who offers products to the local Knauf businesses, but also to many wholesalers for example. PFT Company, which is occupied in equipment equipment (totally different market section), is also growing separately from the local Knauf businesses in the Western european markets in order to serve other distribution stations and target categories. Knauf insulation, which is a totally different company is as well acting independently in the market segments and sell its products right to wholesalers without local Knauf's help. In many situations in the European countries also, they are providing only via local Knauf businesses.
An interesting record is about a merging that the group has made out of its one of the primary competitors. The company USG is the marketplace leader in United States producing and selling the same range of materials. United States of America is too much mature market in creating with dry wall systems. Knauf group became aware a big distance before some years in their product variety. They didn't have a panel suitable for exterior constructions. Then the idea came from USG that were producing a concrete panel, which is the ideal product, if someone would like to construct outdoor surfaces - facades for example. Then Knauf group in order to get the technical knowledge and experience in concrete mother board market, has been cooperated with USG. They have got created collectively a joint ventured company under the name Knauf USG Systems, which can be an independent company found in Germany and its own aim is to produce and sell concrete boards in Europe, Midsection East, and Africa but only via the neighborhood Knauf businesses.
Knauf local businesses are maintained by CEOs that always are locals. The Local CEOs are supervised by the regional CEOs who are usually coming from the Knauf family. The neighborhood CEOs are completely responsible for the local organizational framework. Usually there is the plant director, a logistics manager, sales and marketing managers, IT managers, complex office and sales office. Depending how big the market is, sometimes as in Greece for example the technical division is merged with the sales division, which is finally consisted from sales technical engineers.
The Knauf vision is due to the model which the company is based: "From a family company to a family of companies". Knauf's quest is to stay a family that may always include its employees, customers and consumers. The business mainly stresses its school of thought on the following:
Sustainability, Ecology and economy. The company produces economic engineering systems based on raw materials which come straight from the earth and are completely friendly to the people and the surroundings.
Plan enhancements to meet tomorrow's requirements.
To be the market innovator in the building materials industry
Focusing in long-term growth and ongoing increase of company's value
To be as effective as the amount of its total employees. The business depends upon its employee's skills, efficiency and ingenuity. For the reason that sense production crops are made to be nice to work in, efficient and ensure a conscientious method of resources and the surroundings.
Quality management is a key factor for the group
5, 1 DISTRIBUTION
Knauf's standard strategy is to market their products only via wholesalers. These retailers can then sell products further to used sellers, contraction companies and technicians (Knauf system installers). This model can be evolved if an area market can be used to work with another way, as for example in Northern Africa countries. In Europe this strategy is generally followed.
5, 2 Focus on GROUPS
If we follow the complete chain of construction industry, we all know that Architects are planning the projects this means, that they are specifying materials (they create the demand). Which means that they are the main decision creators in the engineering chain.
Contractors are overtaking to complete the job, and the technicians as sub companies they are setting up Knauf systems.
As you can easily realize, Knauf focus on groups are all all these groups. Company's notion, is to check out the jobs from the first start of the planning before final procurement. And that means, that they support all the stages of the engineering by being present and service with tech support team all the organizations referred. In addition they focus a lot to the individuals (private traders). Folks are Knauf's long term objectives, given that they strongly believe they are in the end of the day the basic mean of continually adding value in the company and make their products even better known to the market. This sector is going to enable the already famous "Knauf" brand in the market, and of course the materials demand.
5, 3 COMMUNICATION - PR - ADVERTISEMENT
In this paragraph, I'm going to show you a tiny area of the general ideas about the company's marketing approach. Knauf in Europe proceeds in specific advertising actions to add its products variety in its all target groupings. This marketing approach operates because the start of the company and it is already very successful.
A very important things in business is to follow up your customers. Thus, Knauf via its CRM system helps you to save its connections and post them immediate mails. In addition they are also mailing e-direct mails, as is "the Knauf regular publication" or any other subject they wish to promote.
Moreover, they're taking part in exhibitions that are usually occurring in the building concept with target groups from structures, planning, beautification, etc. Another way of advertizing is by creating inputs in publications for architects, companies and technicians. Except of mags, they also make inputs in newspaper publishers and daily free presses, so they may be able to approach also the individuals. Tv set spots, radio places are as well important means of advertising their systems. Knauf invests an integral part of each turnover to provide free advertising presents to its customers. These gift items might be layouts, banners, indications, flags, examples, vehicles and memorial gift items, all having as design the Knauf logos and the Knauf partner' s logos as well. Local specialized documentation and sites are different ways to find information for the company's products. These documents are extremely well developed and they naturally offer an guaranteed tech support team to the clients.
The corporation invests a lot in education regarding its systems set up. Every local business has its own training centre where workshops are occurring in certain dates every year. Those people who have participated in the workshops are consuming the end a Knauf graduate clarification that creates "Mr has efficiently participated in the Knauf seminars the dates" And this small thing makes them believe that they belong in a particular group. Subsequently they spread this idea to other people.
5. 4 POSITIONING
Knauf continues to increase a premium brand and split its position against competition. That is why the corporation always invests in producing new products and increasing the old ones.
The gypsum industry belongs into the broader industry of creating materials. For the scope of our task we is only going to analyze the gypsum industry and especially the Western european Gypsum Industry as Knauf is principally active in to the Western market. The European Gypsum Industry is characterized as an evergrowing industry in comparison with the united states or Australian Gypsum Establishments which already are in the maturity face with their life cycles. With a turnover of over 10 billion, the Western european gypsum and anhydrite industry operates 160 quarries plus some 200 factories and generates employment directly to 28. 000 people and indirectly for 85. 000 people. It really is one of the few fully integrated establishments within the building products field.
Thirty years back, the Gypsum Industry was made up of many small manufacturing corporations mainly producing building plaster and stucco for local markets. The emergence and development of the plasterboard and the plasterboard alternatives market in the 1980s - needing high capital investments, equipment, R&D and acquiring usage of natural resources - resulted in a loan consolidation process within the European Gypsum industry. Presently on the market nowadays three main providers cover 80% of the gypsum product market. They are Knauf Band of Companies, BPB (United kingdom Pasterboards) and Lafarge. BPB, a UK centered manufacturer, purchased by Saint Gobain in 2005 and arranged within the Saint-Gobain's Construction Products Sector and Lafarge, the well known building material supplier, proven in 1833 in France in the beginning as a limestone mining company.
In studying the macro-environment with a PEST analysis, we can configure the environment which gypsum industry producers remain competitive and identify the factors that may in turn have an impact on lots of vital parameters that are likely to effect the organization's supply and demand levels and its costs.
The European building material industry is not that vulnerable to Political issues but in to the Greek Development Industry politics issues arise more frequently as the support from the European Union money have major role into Structure Industry progress rates. From 2001 till 2009 where increasingly more privately funded big real-estate tasks were executed the industry was growing extremely fast but the financial pressure that impacts, going back time, all companies and investors involved is slowing down the rates of the industry. In such critical times, most governments are discovering its plans with social and environmental attention policies. Into the construction environment there exists the need, more than other time, of energy conserving buildings and development techniques that exploit those advantages, and government authorities in assessing the socioeconomic impact of energy spending lowering already are subsidizing such constructions through administration or EU finance bringing up. Technology itself was always the main concern of producers and discover ways of minimizing their production cost as well as to invest in new R&D fields, such as antiseismic technology, for exploiting the initial advantages of gypsum.
European Gypsum Industry is an evergrowing one & most European countries only now capitalize advantages that gypsum offers as a building material. Gypsum is practically essential for the interiors of homes and offices and all types of building where people congregate, such as schools, shops, international airports, etc. Its superior performance in providing everyday comfort, in flames resistance and in insulation, heralds an ever greater role for it in buildings of the future. In fact, the safeness and protection of folks and property against open fire, and effective thermal and acoustic insulation of properties depends, generally, on the initial properties of gypsum. And several of the attractive top features of the modern interior would be impossible without the versatility of gypsum as a building material.
The gypsum wallboard industry is highly competitive. Because wallboard is expensive to move, does not travel well in large volumes and lacks of product differentiation, makers compete on a regional basis, generally predicated on price, product range, product quality, and customer service. The sector is highly competitive especially in Europe and THE UNITED STATES with production usually concentrated among few international players.
The drywall solutions are seen in growing countries as a substitute for traditional development solution like for example cement and brick and block constructions. The initial advantages that systems offered to the engineers made them an enormous threat of replacement for the original techniques. But, soon the industry will be into the maturity face and new impressive and development building materials like magnesium or perlite have previously started to threaten gypsum's raising empire. The industry has to commit into new materials, new solutions and diversify towards ground breaking building material and development system alternatives.
The capital investment that is required to be able to enter the gypsum industry is high. Equipment is expensive, know how is difficult to get, usage of natural resources is prohibited and investment in R&D is mandatory. That is why in very few years the Western european Gypsum Industry from their state of several locally situated small producers it changed into an exceptionally focused market where three companies cover roughly 80% of the marketplace. In global level the same concentrated situation is witnessed where 81% of the marketplace is included in 7 players (Georgia Pacific, Knauf, Lafarge, Country wide Gypsum, Saint-Gobain, USG and Yoshino)
The Gypsum Industry protects the complete life-cycle of the merchandise. Indeed, the companies which extract the nutrient "gypsum" also process it and make the value-added products and systems. The entire integration that characterizes the industry is a fact that gets rid of any danger of suppliers' bargaining vitality but at the same time it contributes to higher production costs for the producer. The possession of the gypsum reserves is a vitality game between the key competition of the industry as it reaches once a main idea of product differentiation and product quality resulting from the nutrient gypsum purity. Gypsum reserves are now rare around European countries and that switched the companies to invent new technology by producing synthetic gypsum mainly from take flight ash which really is a byproduct of energy development plants.
The industry is mainly selling through an intensive dealer's network in each country. Those retailers are commercial companies advertising a series of building materials either to companies or consumers. In Western Europe more mature market segments dealership is also concentrated into few very big companies (Praktiker, Leroy Marlene, OBI etc) which because of its size and concentration they have obtained a big bargaining power above the producers. In to the Greek market the traders' network is still predicated on small, unorganized depots with no special power above the industry but big merchants are already in to the market and soon the problem changes.
The subsequent factors have played out a major role in a gypsum company's success:
Cost advantages and economy of level:
The recent pattern of acquisitions and mergers exploit potential cost benefits to be found in R&D facilities providing global procedures. They create much larger and more varied market concentrated organizations. All of the top performing companies in the industry have faced, at least one time, a major merger before. In 2005, BPB, one of the top 3 companies of the industry in European countries, was bought by Saint Gobain which invested 5. 9 billion, for setting up itself a step forward from its major opponents in the building materials industry.
Access to natural resources:
As previously recognized, the Gypsum Industry includes the complete life-cycle of the merchandise and producers strive for securing reserves all around the globe. In that industry, due to the cost framework, privileged usage of the raw materials is vital for the company's growth. For that reason, companies started making an investment either in finding new ways of composing artificial gypsum from several resources (e. g. energy plant waste products) or by applying systems for recycling their the products at the end with their life pattern (demolition waste).
Differentiation through technical specifications and customer service quality:
The main focus on for all companies is to offer a complete solution using their systems of products for engineers to be able to substitute traditional ways of building. They were able to identify with standard norms the use of the plasterboard walls, ceilings, floor or any other use as well as their technical characteristics like fireproof, audio insulation, thermal insulation etc. Along with the blend of professional sales and tech support team as companies are employing only technicians for sales repetitions with intensive and professional training, to be able to serve customers and identify the systems in a market that is continually gaining market talk about from the original structure methods.
As we previously noticed, in to the Greek market addititionally there is one competition to Knauf, Rigips Hellas (BPB) with one production site located in Western world Greece. Both companies have their own reserves of the uncooked material close to their factories that happen to be both situated in to the same physical area bringing on equivalent quality degrees of raw material. A main difference is the development capacities as well as the plant life' sizes. Knauf operates a herb that was build from nothing in 1991 in Amfilochia, while on the other side Rigips attained some years after Knauf's establishment in Greece an old gypsum manufacturer from an area producer. That clarifies the estimated difference in local creation capacities for the two producers. Having the appropriate capacity levels, Knauf can control its development cost and overheads better than the competitors and therefore result to higher margin levels.
Knauf from 1991 invested a lot of money for differentiating through complex specifications and customer service quality. To be able to achieve that advanced technicians were recruited and were thoroughly trained into Germany's head office. The knowledge and professionalism and reliability of the mom company was soon moved into the Greek subsidiary and the company culture was quickly transformed according to the following:
"The near future is based on the hands of skilled and highly motivated employees. An important aspect is the "family culture" which prevails in the business: Study from one another, carry together, pass on knowledge, presume the role of mentor, take fast and direct paths and press for special successes. "
In very few years, almost 10 professional designers were covering all the Greek territory offering tech support team to contractors, considerable training to installers and professional customer support to retailers. Rigips that was established a couple of years later used same techniques for expanding into the Greek place but always by pursuing Knauf's steps. That was something that reduces its cost for training the marketplace into new building materials but cost them the trustworthiness of the leader in the market.
Knauf was but still is characterized as the leader industry in the gypsum market in Greece. Their competitive advantages in the market is the power of its people to open the market, train the customers and lead to a new age in structure industry. All of the above are mainly attained by the next:
A huge repository of active technical engineers is educated once every month by direct mail regarding new and innovative alternatives. Over 7. 000 installers are trained for successful installing drywall systems into Knauf's Training Centre in Amfilochia. Merchants are backed by professional sales engineer all over Greece. Finally, Knauf has commit a whole lot in marketing by considerable advertising into press, specialized periodicals, radio and TV, by providing indications to all its retailing network and by engaging into all main fairs in Greece.
Rigips haven't tried out to differentiate significantly from Knauf in to the market. They have not invest up to Knauf into penetrating and training the marketplace and their main position in the market is to let the leader open the way and then to follow. The main differentiation point for the two companies was the price. Knauf is the leader and then for that the client must pay a premium.
As we noticed in this project Knauf Company is developing in European countries with a certain way which is motivated by the beliefs, the culture, the ethics and the historical success model, that the family developed for their business. However, we also saw that several dissimilarities exist, with respect to the needs and the culture of the local markets. Such variations for example could be the style of the management, all of the products, the growing of the other commercial businesses and so forth. Knauf family thinks a whole lot in the various local adaptation of their business model which is visibly proven using their company willing and trust to choose residents as general professionals to run the business in the countries. They spend a lot of money and efforts and discover the correct person who is going to put into action Knauf successful business style based on the local needs.
Knauf group has proven its potential to penetrate, train and lead new marketplaces. As a group it has a appealing future as it is good major key successful factors for the industry. Its competitive benefit is quite strong and it is executed into most countries on earth as it is in to the Greek market. The industry is highly competitive which is getting more plus more concentrated. In order for Knauf to keep growing into such a competitive environment it needs to diversify its building materials portfolio into more growing and profitable market segments. Such a market is the insulation material industry in which the group recently spent by acquiring a whole lot of local makers in Europe and becoming the world's fastest-growing insulation company with full ownership of its activities since 2002.
Finally, Knauf should spend into countries that are structurally unexploited like for example in Asian or growing African countries primarily by securing raw materials reserves into tactical places.