Free Essay

Assignment

In: Business and Management

Submitted By varuncoolsidhu
Words 15273
Pages 62
Marble Cluster Strategy February 2006

CCCA
OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Afg Marble DGE 01-06

1

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis Step 2: Setting Goals Step 3: Understanding Marble Buyers’ & Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

2

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

1

Who is The OTF Group?
The OTF Group (OTF = On The Frontier) is a private sector consulting firm that provides cutting-edge solutions to help firms and industries in emerging markets confront the challenge of developing successful business strategies.
Confidential

Uganda Trade Statistics Analysis Fixed Investment as a Percentage of GDP
Uganda’s Fixed Investment as a Percentage of GDP vs. Selected Nations, 1981-1995
Japan Korea, Rep. Tanzania United States Kenya Sudan Uganda Zair e

50%

Tension

Moral Purpose

OTF Client List (Partial)
World Bank Group

40%

Percent of Nation’s GDP

30%

20%

Leadership

10%

0% 1 981

1983

1985

1987

1989

1991

1993

1995

'89

'91

'93

Receptivity
Note: Statistics for years not represented on the chart were not reported Source: World Bank, World Development Indicators, 1997
XCG-ACM-Uga nda- 4-2 0-98 -JR 4 Copyr ight © 1 998 M onito r Comp any, In c. — Confid ential — CAM

Insight

Analysis Analysis

Change Process Change Process Facilitation Facilitation

Multilateral Multilateral Engagement Engagement

New Economy New Economy Solutions Solutions

Describing the causes of underdevelopment Discovering that simply providing the right insight is insufficient to create change

Fitting the preconditions for change together, through collaborative processes, to build working industry clusters

Attempting to help donor institutions reshape their aid programs to build competitiveness at the microeconomic level

Creating solutions to help firms discover new export markets and become globally competitive The OTF Group develops industry strategies based on concepts of “clusters”

US Council on Competitiveness US States Colombia Ireland Bermuda Peru El Salvador Jamaica Dominican Republic Serbia Tartarstan Macedonia Rwanda Gabon South Africa Vietnam Thailand

Afg Marble DGE 04-09-05

3

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Overview of the Afghanistan Competitiveness Project
What is the Afghanistan Competitiveness Project?

The Afghanistan Competitiveness Project (ACP) is a two-year OTF Group project that will work with 3 priority clusters and 2 enabling clusters. The ACP is funded by USAID. The project is designed to achieve the following objectives: 1. Improve dialogue between the public and private sectors. 2. Help local industries develop great products and services using cluster development. 3. Create a sustainable platform that enables continuous improvement of Afghan products and services in the global marketplace.

Afg Marble DGE 04-09-05

4

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

2

Overview of the Afghanistan Competitiveness Project
Institutional Framework of the CCCP
Commercial Competitiveness Commission of Afghanistan

CCCA

Cluster Leadership Council

Cluster Leadership Council

Cluster Leadership Council

Cluster Leadership Council

Other Organiza -tions E.g. AISA AICC ACCI AWBC Other NGOs

3 initial clusters supported by

There is an institutional framework being established to ensure that the ACP creates a sustainable forum for public-private sector dialogue.
Afg Marble DGE 04-09-05 5 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Overview of the ACP Why Focus is Important – Afghanistan’s Historical GDP per capita
600

500

400

2003 per capita GDP is estimated at $207 without poppies, but $310 with poppies.

2015 Objective of US $500 per capita implies CAGR = 7.6% 2002-2003 Growth Rate = 9.5% GDP per capita from poppy trade

GDP per capita (constant US $)

300

1960 – 1979 CAGR = 2.6%

200

100

No data available, but implied CAGR 19832001 = -.05%

0

Beginnings of agriculture led growth Soviet Invasion Modern agricultural techniques and Occupation Dominance in certain markets (dried fruits Attempts to develop & nuts, and carpets) centralized economy Construction of large SOEs

Source: World Bank Development Indicators Online, World Bank Afghanistan Country Report, Ministry of Commerce Reports
Afg Marble DGE 04-09-05 6 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

19 60 19 62 19 64 19 66 19 68 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12 20 14

Mujaheddin Period & Taliban Regime Minimal long-term investment Opportunistic trade

•Growth based on innovation & competitiveness •Focus on priority sectors •Customer based development •Shift economy to licit activities

3

Overview of the ACP Afghanistan’s Development Objectives
Based on GDP per capita objectives and historical population growth rates, Afghanistan’s economy will need to grow nearly 300% between 2003 and 2015.

GDP Objectives 2003- 2015
50 45

GDP Growth GDP Growth Afghanistan’s economy will need grow nearly 4-fold to achieve the objective of $500 per capita by 2015.

Afghan Population, millions

40 35 30 25 20 15 10 5 0 $0 $100 $200 $300

2015 GDP could be $22.7 billion 2003 GDP is $5.96 billion

Population Growth Population Growth
$500 p ita er cap
$400 $500 $600
7

Average population growth for the past ten years was 3.86%. At this growth rate, Afghanistan’s population will increase by 57% between 2003 and 2015. Despite possibilities to influence family planning, economic objectives should assume higher-end demographic projections

GDP per capita in $

Source: WDI Online, Afghanistan Ministry of Commerce Reports
Afg Marble DGE 04-09-05 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Overview of the ACP Why focus on Marble?
Afghanistan has the natural resources to profit from marble & granite, but is not doing enough to capture local and foreign markets. Investment into better processing is key to improve industry competitiveness
Base/Size Size is unknown, but majority of exports seem to be to Pakistan.
Potential Opportunities 6.0

5.0 Essential Oils

Cashmere

Carpets Dried Fruits & Nuts

Growth

Accessing foreign markets should lead to more export opportunities than relying on Pakistan, but exports are difficult to quantify Little processing for export markets is done in Afghanistan, most of the value is captured abroad: exports raw marble, imports marble blocks Few countries have been able to successfully brand marble Recent investments into cutting equipment have been made; Processors seem eager to capture more value and cooperate with the project
8

4.0

Marble

Lamb skins 3.0 Cotton 2.0

Value-add

1.0

0.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

Branding

Current Level of Development

Receptivity

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

4

The OTF Five Step Change Process
The way forward for Marble

Step 1 Situation Analysis Situation Analysis
$2.5 B industry with 8-9% growth over past 10 years and 8% growth for next 25 Dominated by few players Success determined by quality Afganistan needs investment in all 7 forms of capital Blasting at quarries and exporting unprocessed destroys value: $40/ton vs. +$300/ton

Step 2 Set Marble Goals Set Marble Goals
Marble industry targets – $450M revenues in 10 years – Price per ton: $150/blocks, $300/slabs – 222 quarries and 56 processing plants in operation – 15,000 direct jobs (quarries and plants) – Avg salary: $150/month Determine business plan requirements for growing industry Build a senses of shared vision within cluster group Identify core members of groups as well as subject matter experts

Step 3 Understand Marble Understand Marble Importers’ needs Importers’ needs
Surveyed US and Middle East Buyers purchase mainly slabs and finished goods Suppliers must be reliable; buyer want to form long-term relationships with them Quality and color are the most important traits for marble Marble is a relationship business; selling requires direct contact with buyers Form a research plan based on initial hypotheses Leverage OTF Insight to conduct market research Push information to key players
9

Step 4 Articulate Afghan Articulate Afghan Marble Positioning Marble Positioning
Analyzed several competitors: Italy, Turkey, India, Pakistan and Iran Afghanistan needs to focus on exports of slabs and finished goods – lower transpo. costs, higher margins, more value Requirements: identify quality deposits, invest in knowledge and equipment, market products overseas Use findings to stimulate discussion around priority areas within cluster group Involve all subject matter experts in clarifying potential issues

Step 5 Develop Action Develop Action Guidelines Guidelines
Focus on investment at quarries – processing won’t be profitable without good raw material $62 M in investment needed over next five years to get return of $78 M p.a. in revenues Start $10 M marble fund to loan up to 100% of project cots and provide TA for 4 quarries and 2 plants

Public-Private Industry Partnerships

Intellectual Agenda

Form and engage a joint private-public sector representative cluster group Agree on a working schedule with cluster group Prioritize issues

Write strategy paper on marble fund with input from NIA and MST and disseminate to MMI and donor organizations Look for organization to institutionalize Leadership Committee

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis • International Marble Market • Afghanistan’s Marble Industry Step 2: Setting Goals Step 3: Understanding Marble Buyers’ & Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

10

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

5

The OTF Five Step Change Process
The way forward for Marble

Step 1 Situation Analysis Situation Analysis
$2.5 B industry with 8-9% growth over past 10 years and 8% growth for next 25 Dominated by few players Success determined by quality Afganistan needs investment in all 7 forms of capital Blasting at quarries and exporting unprocessed destroys value: $40/ton vs. +$300/ton

Step 2 Set Marble Goals Set Marble Goals
Marble industry targets – $450M revenues in 10 years – Price per ton: $150/blocks, $300/slabs – 222 quarries and 56 processing plants in operation – 15,000 direct jobs (quarries and plants) – Avg salary: $150/month Determine business plan requirements for growing industry Build a senses of shared vision within cluster group Identify core members of groups as well as subject matter experts

Step 3 Understand Marble Understand Marble Importers’ needs Importers’ needs
Surveyed US and Middle East Buyers purchase mainly slabs and finished goods Suppliers must be reliable; buyer want to form long-term relationships with them Quality and color are the most important traits for marble Marble is a relationship business; selling requires direct contact with buyers Form a research plan based on initial hypotheses Leverage OTF Insight to conduct market research Push information to key players
11

Step 4 Articulate Afghan Articulate Afghan Marble Positioning Marble Positioning
Analyzed several competitors: Italy, Turkey, India, Pakistan and Iran Afghanistan needs to focus on exports of slabs and finished goods – lower transpo. costs, higher margins, more value Requirements: identify quality deposits, invest in knowledge and equipment, market products overseas Use findings to stimulate discussion around priority areas within cluster group Involve all subject matter experts in clarifying potential issues

Step 5 Develop Action Develop Action Guidelines Guidelines
Focus on investment at quarries – processing won’t be profitable without good raw material $62 M in investment needed over next five years to get return of $78 M p.a. in revenues Start $10 M marble fund to loan up to 100% of project cots and provide TA for 4 quarries and 2 plants

Public-Private Industry Partnerships

Intellectual Agenda

Form and engage a joint private-public sector representative cluster group Agree on a working schedule with cluster group Prioritize issues

Write strategy paper on marble fund with input from NIA and MST and disseminate to MMI and donor organizations Look for organization to institutionalize Leadership Committee

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis International Marble Market – Market Breakdown
The marble industry has expanded rapidly since the 1990s and is expected to grow at more than 8% per year in the future. International trade is an increasing component of the marble market, however, high shipping costs will ensure that domestic consumption remains important.
World Marble Consumption
5000

Millions of meters squared

4500 4000 3500 3000 2500 2000 1500 1000 500 0 2003

4.4 B m2

International trade

60%

820 M m2

54% 46%

Domestic consumption

40%

2025

Marble is a large and growing market, with most global producers focused on international trade. Countries with large deposits and small internal markets should be able to export much of their production. *Source: World Stone Industry Data 2004
Afg Marble DGE 04-09-05 12 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

6

Situation Analysis International Marble Market – Market Breakdown

World Marble Imports
US$ 2.5 Billion

Blocks (Cut Marble) $354 M

Uncut marble (Stones) $417 M

Polished marble products $1,247 M

Unpolished slabs $535 M

Although greater volumes of block and uncut marble are imported, slabs and polished marble are much higher value.
*Source: USAID Trade Map 2003
Afg Marble DGE 04-09-05 13 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis International Marble Market – Leading Exporters & Importers
Exports for Afghanistan’s products are dominated by a few countries.
Top 5 Exporters & Importers of Marble by Value, 2003 Exporter Countries
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Importer Countries $1.1 B
ROW China Mexico Spain

$290 M
ROW

$454 M
ROW Greece Turkey Egypt

$726 M
ROW

$417 M
ROW Taiwan Greece Syria Italy

$354 M
ROW

$535 M
ROW

$1.2 B
ROW

Egypt Greece Italy

Turkey China Greece

Turkey Italy Spain

UAE UK Italy Spain China

Japan S. Arabia US UAE Hong Kong

UK Germany Saudi

Spain Italy Italy

US

Turkey

Spain

China Korea

Stone

Block

Slab

Polished marble

Stone

Block

Slab

Polished marble

Top 5 %

75%

80%

72%

72%

77%

51%

47%

65%

India is a large producer but does little export or import

Successful exporting countries offer a full range of products while Afghanistan exports over 80% of all marble as stone.
Source: OTF Interviews; USAID Trade Map, export vs import discrepancies due to ????
Afg Marble DGE 04-09-05 14 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

7

Situation Analysis International Marble Market – Trends in Imports
Market growth is led by the US and China in finished goods and raw materials respectively.
Stone Imports: 1999 v. 2003
500 450 400 350 US$ Millions 300 250 200 150 100 50 0 1999 2003
450

Block Imports: 1999 v. 2003
400

US$417 M ROW US$208 M Taiwan Greece Italy Syria
US$ Millions

US$354 M US$302 M ROW UAE UK Spain China
1999 2003

350 300 250 200 150

China

100 50 0

Italy

Slab Imports: 1999 v. 2003
600 500 US$ Millions 400 300 200 100 US$ Millions

Polished Marble Imports: 1999 v. 2003
1400 1200 1000 800 600 400 200 0 1999 2003

US$535 M

US$535 M

US$1,247 M US$916 M ROW UK Germany Saudi Arabia US Japan

ROW Saudi Arabia US UAE Hong Kong

Korea
0 1999 2003

Although imports of stone have shown the greatest growth by value, this is only half the story…
Source: USAID Trade Data
Afg Marble DGE 04-09-05 15 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis International Marble Market – Trends in Imports
Product types can be categorized as commoditized, stable or growing.
Import Volume and Price Growth: 1999-2003
100% 80% 60% 40% 20% 0% -20% -40% Stone Block Volume Growth Slab Price Growth Polished Marble

Commoditized: Increasing volumes have led to price competition Stable market

Growing: Increase in volume and steady price

…though imports of non-value added products are growing, prices are dropping due to a glut of supply. In which categories can Afghanistan compete?
Source: USAID Trade Data – data for polished marble is estimated
Afg Marble DGE 04-09-05 16 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

8

Situation Analysis International Marble Market – Types of Suppliers

Raw Materials __________________ Access to quarries Located in region with lack of infrastructure (power, roads) and poor regulatory environment Little investment in value added, and regard for quality Resources are exploited for easy profit __________________ India: Despite being one of the largest producers of stone, 90% of exports are non-value added

Semi-Processed __________________ May or may not have access to quarries Invested in processing equipment Focus on exports – may lack close links to end buyers in different countries Sell mostly to finished goods suppliers __________________ Gramil Ltda, Brazil: Control 13 quarries, 43 different types of stone. Export 70% of production – mainly slabs & blocks

Finished Goods __________________ Source raw and semi-processed materials from a variety of sources and finish processing Offer variety of colors and materials Have strong links to end buyers (ie. local construction markets) __________________ Al Habtoor Marble, Dubai: Buys blocks & slabs from Brazil, Italy, Turkey, Spain, Greece, Portugal, India, etc. Offers over 30 types of marble & granite. State-ofthe-art processing facilities to customer specifications.

Providing finished goods requires close links to end users, but blocks and slabs are standard products and easily exported.
Afg Marble DGE 04-09-05

Sources: OTF Research

17

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis International Marble Market – Key Factors of Successful Clusters

Processing

Cluster success will depend on how much value is added to the raw material

Sales & Marketing

Quarrying

Country brands come as a result of high quality production from individual firms (Italy); successful clusters have high quality standards upheld by cluster members

Access to raw material is a critical foundation of the cluster

Equipment manufacture

As the cluster develops, supporting industries grow to fill the needs of the local producers
Afg Marble DGE 04-09-05

Sources: OTF Research

18

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

9

Situation Analysis International Marble Market – Cluster Case Studies
Quarrying
Best raw materials in the world; best quality quarrying; 3000 year Standard Setter history Italy: India: Mid-market Player Turkey: Gateway to the World Palestine: The Little Industry That Could China: Value-added Monster of Tomorrow
Afg Marble DGE 04-09-05

Processing

Sales & Marketing
Best brand, top 5 exporter in every product, top exporter of slabs and finished marble products Compete on price – 90% of sales are non-branded and non-value added (stones & blocks)

Equipment Manufacture
High-tech, high-quality, high-value: Italian equipment is the best and most expensive Inexpensive equipment, good enough for blocks and slabs, but finished goods? Close links to Italian manufacturers has decreased the need of manufacturing equipment locally Developed manufacturing base of basic cutting & polishing equipment Low-cost, good quality equipment that can make low-cost, good quality finished products

High-tech, high-quality, high-value: products get a premium over world prices Some problems with quality and efficiency have hindered industry but leverage low cost and availability of raw materials High-tech, high-quality, reasonable cost; top Turkish companies can compete anywhere in the world Processing to international standards; focused on exports Imported raw materials processed cheaply and well – mostly for local market
19

Many quarries; poor quarrying techniques due to poor government regulations and infrastructure Many quarries; export quality quarrying; good government support & infrastructure Many quarries, export quality quarrying, strong self-imposed industry standards Many quarries but few relative to production the only case where this is so

Access to Europe and Asia; top 5 exporter in every product category

Cohesive marketing and branding efforts led by Union of Stone & Marble Known for low-cost and good quality, beginning to increase exports (are taking Japanese market from India)

Sources: OTF Research

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis International Marble Market – Cluster Case Studies Palestine & India
Palestine and India offer opposite approaches to competing globally. Palestine focuses on marketing and value add, while India, which contains some of the largest marble reserves in the world, competes on price. Palestine
__________________

India
__________________

Workers: Production Volume: Production Value: Price per ton: Tons per employee: Exports (% of production): Export mix: Employee Annual salary:

15,000 720,000 tons $430 M $300-600 48 8% Mostly slabs & tiles $6,000

500,000+ 4.28 M tons $770 M (approx.) $180 9 2.5% Mostly blocks Less than $2000

Smaller players have to learn to compete on more than price, “it’ll always be cheaper in China” and increasingly, India as well. India’s choice on how to compete, keeps Indians poor. Note: Data is from 2000
Afg Marble DGE 04-09-05

Sources: OTF Research; Palestine Union of Stone and Marble; Indian Industry reports

20

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

10

Situation Analysis Summary – International Markets

• The most successful marble industries offer full ranges of colors and product lines. Industries that simply rely on natural resources tend to struggle. • Industry growth has been highly dependent on China’s consumption of raw materials and US consumption of finished goods. • Stones and blocks have commoditized with a surge in volume and plunge in prices; slabs have been stable and finished marble product exports have shown strong growth while maintaining their value. • Prosperous industries (industries that provide profits to investors and good wages to employees) focus on value added goods. • Prosperous industries have clusters made up of firms that can cooperate and support each other, and engage in positive competition. • Poor industries rely on natural factors of advantage, suffer from mistrust and compete against each other mainly on price.

Afg Marble DGE 04-09-05

21

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis • International Marble Market • Afghanistan’s Marble Industry Step 2: Setting Goals Step 3: Understanding Marble Buyers’ & Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

22

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

11

Situation Analysis Domestic Industry – The Marble Cluster
Supporting initiatives

Quarries/raw material Quarries/raw material supplies (1,3,5) supplies (1,3,5) Quarrying equipment Quarrying equipment manufacturing (1,2,4) manufacturing (1,2,4) Shipping & distribution Shipping & distribution (5) (5)

Government Agencies: Regulatory, Government Agencies: Regulatory, Investment Support (3) Investment Support (3)

Raw material from Raw material from quarries (1,2,3,4,5) quarries (1,2,3,4,5) Cutting & polishing Cutting & polishing equipment equipment manufacturing (2,4) manufacturing (2,4) Shipping & Shipping & distribution (5) distribution (5)

Quarrying Quarrying

Processing Processing

Sales & marketing (2) Sales & marketing (2)

Sales & marketing (2) Sales & marketing (2)

Energy (3,4,5) Energy (3,4,5) Financial institutions Financial institutions (2,4,5) (2,4,5) Initiatives:

Energy (3,4,5) Energy (3,4,5) Financial institutions Financial institutions (2,4,5) (2,4,5) Current Status: Competitive Needs improvement Undeveloped
: Priority Initiatives
Afg Marble DGE 04-09-05

NGOs: Educational, Research, and NGOs: Educational, Research, and Trade Organizations (2) Trade Organizations (2)

1. Capitalization of quarries 2. Capacity building of NGOs 3. Capacity building of Govt. Agencies 4. Development of ancillary industries 5. Improvement of infrastructure & security environment
OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Sources: OTF Research

23

Situation Analysis Domestic Industry – The Marble Cluster

Sector
Quarries/Raw material supplies

Issue
Lack of proper equipment and knowledge leads to extraction methods that ruin the value of the marble

Initiative
1. Capitalization of quarries: investment into knowledge and equipment. 3. Capacity building of govt. agencies: secure, transparent, long-term leasing is needed to encourage investment. 5. Improvement of infrastructure and security environment: quarries are in remote and dangerous regions. 1. Capitalization of quarries: investments into proper equipment will create the need for local manufacture and repairs of quarrying equipment. 2. Capacity building of NGOs: an equipment manufacturing industry will require engineering expertise, in turn requiring good engineering schools and other training institutions. 4. Development of ancillary industries: a new manufacturing industry will need finance and power – both industries need to be developed. 5. Improvement of infrastructure and security environment: better roads will mean cheaper transportation costs for the industry.

Equipment manufacturing

No capacity for equipment manufacturing and intensive equipment repairs exists in Afghanistan.

Shipping & distribution

Poor roads make shipping marble expensive relative to other countries

Afg Marble DGE 04-09-05

24

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

12

Situation Analysis Domestic Industry – The Marble Cluster
Sector
Sales & marketing

Issue
Little knowledge exists of world markets and marketing techniques

Initiative
2. Capacity building of NGOs: marketing professionals are needed for the future success of the industry, this will require training for students and for business professionals. 3. Capacity building of govt. agencies: rebuilding and expanding power grids has to be coordinated by the government at a national level. 4. Development of ancillary industries: any focus on developing ancillary industries should include the energy industry as critical to the success of other industries. 5. Improvement of infrastructure and security environment: security & infrastructure improvements will benefit investment in energy production and distribution. 2. Capacity building of NGOs: finance professionals needed both at banks and enterprises, this will require training for students and for business professionals and writing first business plan to showcase opportunities. 4. Development of ancillary industries: along with energy, the financial industry needs special focus since improvements here help many other industries. 5. Improvement of infrastructure and security environment: risk of investments and loans will decrease as the security situation improves.
25 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Energy

Power is sporadic and most factories and quarries are forced to rely on expensive generators

Financial institutions

Little capacity exists in the business community for business plan writing, credit is difficult to access and expensive

Afg Marble DGE 04-09-05

Situation Analysis Domestic Industry – The Marble Cluster

Sector

Issue
The Ministry of Mines and Industry has limited capacity to survey, enforce quarry leases, or inspect quarrying operations A successful stone industry will require knowledge of geology, engineering, marketing, etc. This knowledge is limited in Afghanistan.

Initiative
3. Capacity building of govt. agencies: capacity building must continue to include passage and enforcement of new mining law, and investment in surveying equipment and knowledge.

Government agencies

NGOs: Educational, Research and Trade Organizations

2. Capacity building of NGOs: establish a marble association to identify and communicate the issues of the industry, work with educational and research organizations to invest in industry knowledge, etc.

Afg Marble DGE 04-09-05

26

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

13

Situation Analysis Domestic Industry – 7 Forms of Capital for Afghan Marble
Addressing the constraints faced by the cluster requires addressing short-comings or a lack of investment in both physical and social capital. Understanding the cluster’s current position across seven key forms of capital can help to guide the choice of near-term initiatives to begin undertaking.
Category


Current State Lack of trust and cooperation between Afghans outside of clans. • High levels of entrepreneurship. • Appreciation for the importance of knowledge.


Desired State

Initiatives

• •

Cultural

Industry competes and collaborates.

Build cluster with representation from different regions and ethnic groups. (2)

Human

Lack of health care, and social infrastructure.



Access to clinics & education for workers in cities and remote quarrying locations.



Provide safety standards for marble industry. (2,3)

Knowledge

Virtually no knowledge of markets, equipment, latest processing techniques, etc. • Limited links to Pakistan & Iran only.


Defined ideas about market segments, distribution channels, and how to access them. • Links to buyers and equipment manufacturers around the world. • Strong knowledge base of latest techniques and products.




Research on world markets, selection of target markets, pricing study of Afghan marble, best equipment mix and equipment sources for producing to target market specifications. (2)

Initiatives: 1. Capitalization of quarries 2. Capacity building of NGOs 3. Capacity building of Govt. Agencies 4. Development of ancillary industries
: Priority Initiatives
Afg Marble DGE 04-09-05 27

5. Improvement of infrastructure & security environment
OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – 7 Forms of Capital for Afghan Marble
Category


Current State Ministry of Mines & Industry is slowly building capacity to support the industry. • Lack of security an issue in remote quarries – some are inaccessible, others require payments to warlords. • No cohesive association to focus on the industry’s needs. Lack of capital is stifling investment in processing equipment. Lack of working capital prevents many processors from operating, leaving quarries to sell stone cheaply to Pakistan. • Few donor programs look at the marble industry.
• • • •

Desired State Ministry that can carry out surveys, provide transparent bidding process for quarries, etc. • Associations that bring together actors throughout the value chain to share information and increase collaboration, particularly supporting producer-market linkage.


Initiatives Develop a association to represent Afghan marble in the example of Palestine’s USM. (2) • Establish leadership council to begin forming association. (2) • Support capacity building initiatives at ministry. (3)

Institutional



Financial

Variety of lending instruments available to suit needs of different size investments. • Bank credit available for working capital.




Engage financial institutions with specific business opportunities. (1) Assist donors and the commercial banking sector to design appropriate financing mechanisms.(4)

Manmade



Poor roads and no power make quarrying and processing difficult. Lack of investment in up-to-date quarrying & processing technologies. High quality raw material in demand from foreign buyers. Little knowledge of available resources exists.

Adequate roads for transporting goods. Factories and quarries connected to power grid. • Cessation of all blasting at quarries, replaced by equipment to make blocks.
• •

• •

Develop investment plan and source financing for equipment.(1) Through CCCA prioritize infrastructure investments into roads and power.(5)



Natural Endowments

• •



Accurate surveys of all marble sites.

Support initiative to undertake extensive surveying of Afghan mineral resources.(2,3)

: Priority Initiatives
Afg Marble DGE 04-09-05 28 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

14

Situation Analysis Domestic Industry – Afghan Marble Competitive Diamond
- Large domestic demand absorbs small production base (approx 1,000 tons/month) + 100% of processed - Short-term mentality from quarries leads to exporting marble sold for local unprocessed stone (80% of quarried stone) construction. “As much Afghan marble is good quality and in - Natural resources may be undervalued, leading to as I make, I can sell” – demand inefficiencies in the industry ($10 levy per ton) processor in Kandahar Some Iranian returnees have experience Low + Continuous shipments in marble of unprocessed marble Poor processing limits exports and Strategy Strategy to Pakistan and many creates inefficiencies throughout value European and other chain (80%+ wastage, only smaller sized foreign buyers asking slabs can be manufactured) Factors Demand Factors Demand for Afghan marble Lack of infrastructure makes operating indicates strong export expensive and limits investment in potential. sector Cluster Cluster Long distance to nearest ports in Iran HIGH and Pakistan make shipping expensive Poor security profile in most quarrying - Financial sector constrains development with limited investment and areas working capital, although new financial products are coming online Medium - Little knowledge sharing between cluster members - Poor institutional support from ministries – no surveying capabilities, murky procedures for quarrying rights, land titling issues, etc. Low

+ + -

-

Lack of investment due to a variety of factors has retarded industry development and competitiveness.
Source: Framework, Michael Porter “Competitive Advantage of Nations”, OTF Group Analysis
Afg Marble DGE 04-09-05 29 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Estimates of Marble Processing
Roughly 80% of marble quarried is exported as stone; most processed marble is sourced and sold locally in the major cities. All processing capacity is located in the major cities.

Mazar: ??? tons/mo ???? Herat marble seems to be as good as Italian Carrara marble Herat: 300 tons/mo White – very good quality Kabul: 300 tons/mo Afghan White, white, black, green

Jalalabad: 150 tons/mo White – medium quality, black Khogiani marble seems to be as good as Italian Carrara marble Kandahar: 150 tons/mo White – low quality (spotted), grey, yellow, brown, red
300 tons/ month processed

Lashkar Gah: ~10 tons/mo White, Onyx

Afghan marble production is for local markets, will the industry be able to shift focus to exploit international markets?
Source: OTF interviews; note – these are only estimates, some data from interviews is contradictory
Afg Marble DGE 04-09-05 30 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

15

Situation Analysis Domestic Industry – Value chain for marble exports to Pakistan1
Afghanistan exports only uncut marble and imports cut tiles for final cutting and polish for use in local construction.
Marble: Sales per metric ton (US $)
250

200

Many small factories exists that do final cut & polish for the local construction industry

150

US $ per ton

Cutting at the quarry will save shipping All quarrying is done by blasting

100

There is no equipment in the country that can efficiently cut slabs and blocks to international standards

50

0 Quarry Tax Shipping (to Peshawar) Cutting (slabs) Final Cut & Polish

Afghanistan

Pakistan

Investments in cutting equipment are necessary to capture more value. Cutting and polishing firms receive the most money for selling marble.
1. Information from Pakistan is estimated Source: OTF interviews, USAID Trade Data, Price lists – www.findstone.com, OTF estimate
Afg Marble DGE 04-09-05 31 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Value chain for marble export to Italy
Two containers of marble blocks were shipped to Italy in the last year representing 100% of Afghanistan’s value added marble exports.
Marble: Sales per metric ton (US $)
1200

1000

800

600

400

200

0 Quarry Tax Shipping (to Plant) Cutting (blocks) Shipping (to Italy) Final cut & polish (estimate)

Afghanistan

Italy

$200/ton of value was kept in Afghanistan by exporting blocks vs. $40/ton from stone. Improving quality & efficiency & moving down the value chain should allow Afghanistan to Assumes 100% efficiency, data for Italy estimated from similar products. capture even more value.
Source: OTF interviews, USAID Trade Data, Price lists – www.findstone.com
Afg Marble DGE 04-09-05 32 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

16

Situation Analysis Domestic Industry – Obstacles: Over-reliance on Natural Factors
“Brazil has become a world standard for quality and beauty” - Brazil Marble Industry report

“Afghanistan marble is the best in the world” - Afghan businessman

35 types of marble in the country

One firm alone processes 43 types of marble

40 different colors currently processed

“Nature has gifted Pakistan…with some of the best quality marble” - Syed Aslam, Pakistani Economist

Relying on the richness of Afghanistan’s sub-soil assets is not enough to compete.
Source: OTF interviews, Stoneworld.com; Pakistanieconomist.com
Afg Marble DGE 04-09-05 33 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Obstacles: Lack of forward integration
Afghanistan uses explosives to quarry, and exports the stone unprocessed Simply cutting large sized blocks drastically increases the value of the marble

Blocks:

China

Stones:
Afghanistan

/to 68 $2
Pakistan

n

$40/ton

$566/ton
$2 41 /to n

US

Slabs/Tiles: $240/ton

Italy

Value is lost in going through middlemen. Afghanistan gifts money to Pakistan (and Iran) by selling raw materials and buying value-added goods. Afghanistan must forward integrate by investing in trade links and processing capacity.
Source: OTF interviews, USAID Trade Data, Price lists – www.findstone.com;
Afg Marble DGE 04-09-05 34 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

17

Situation Analysis Domestic Industry – Obstacles: High cost of transportation
$90/ton
$1800 to Marminsk (route may not be feasible due to multiple border crossings)

• •
Herat

Kabul

$80 0
$740

$800-$1000

• Jbad



Peshawar

Persian Gulf Transportation is the single biggest cost for Afghan marble exports overseas.



Bandar-e-Abbas Arabian Sea

$115/ton $65/ton



Karachi

Afg Marble DGE 04-09-05

Prices for 20’ containers weighing max of 20 tons, unless noted as dollar cost per ton Source: Interview with Kargar, head of Freight Forwarders Association

35

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Obstacles: Over-reliance on natural factors
Wastage is the main efficiency indicator in the industry - blasting in Afghanistan can lead to wastage of over 80% (over 50% at the quarry and again well over 50% of the remainder at the plant), while using wire saws can reduce wastage to around 44% (7% at the quarry and 40% of the remainder at the plant). Blasting: $100/ton1
80%+ waste

Wire saws:
44% waste

$280/ton

Eliminating blasting will eliminate the greatest source of value destruction of marble resources.
1. Figure is for example purposes only meant to indicate the hypothetical value of a ton of marble in the quarry. Source: OTF research: Pakistaneconomist.com, OTF Interviews
Afg Marble DGE 04-09-05 36 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

$50 0


$600

Quetta

- $1 300

$2 30 0

18

Situation Analysis Domestic Industry – Obstacles: Over-reliance on natural factors
Capital investments can be high and equipment should be carefully chosen to ensure maximum return. An investment is required to realize the value of the natural resource.
Equipment List Quarrying (10,000 m3 p.a.)
Diamond wire saws x2 Drills Electronic Chainsaw Other 76,000 51,900 127,350 11,918 98,800 67,470 165,555 15,493

Euros

Dollars

Tilting and splitting
Hydraulic jacking Hydraulic splitting Spare parts & other 7,650 20,300 106,793 9,945 26,390 138,831

“Blasting can “kill” the quarry by causing micro-fractures throughout the entire quarry; that’s why we prefer to work at virgin quarries” - Charles Rudd, marble & granite quarrier and processor in Uzbekistan

Block squaring
Wire sawing machine & trolley Crane 40 tons 67,614 119,975 87,898 155,968

Air compression & power
Compressor & generator 98,506 128,058

Total

689,606

896,488

The high cost of equipment means that the marble must be of good quality in order to justify the investment.
Afg Marble DGE 04-09-05 37 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Obstacles: Lack of inter-firm cooperation
Trust among Afghans is a scarce commodity.
“We are the only factory working” “I don’t want anyone knowing what I’m doing.” - Herat processor - Kabul factory owner #1 “Why do you want to work with other factories? I can supply everyone.”

• •
Herat: 5 factories

Kabul: 13 factories • Jalalabad: 3 factories

- Kabul factory owner #2

• Lashkar Gah: 1 factory • Kandahar: 1 factory

Afghan businessmen must learn to compete and collaborate in order to achieve the full potential of their industries.
Source: OTF interviews
Afg Marble DGE 04-09-05 38 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

19

Situation Analysis Domestic Industry – Obstacles: Paternalism
Although there is a process for obtaining leases…
Submit application to quarry at specific location to Quarrying Dept at MoMI Quarrying Dept contacts Regional Department Regional Dept visits quarry, determines exact location Regional Dept gives information to Regional Gov.

Winner selected

Competitors submit bids

MoMI drafts contract & places ads asking for bids

Governor approves quarrying

…the real process is behind the scenes:
“I got the lease because no one else could provide security – the competitors in the area don’t have the money or connections, and the competitors with money and connections wouldn’t dare go there.” “Even if the ministry gave someone else the contract, they could never implement it.” “I know the guy in charge of that quarry, I’m the only one who can get access.”

Source: OTF interviews
Afg Marble DGE 04-09-05

Winning a contract has more to do with politics than who can do the best job. Is investment allocated properly? Will people invest in quarrying equipment in an uncertain environment?
39 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry – Pricing according to color
Price is determined mainly by color and supply and is susceptible to fashion. Origin Italy Iran Egypt India Egypt Afghanistan Afghanistan Type Statuarietto Yazd Leopard Goldi Forest Green Rose Bamyan Green Afghan White Price (per m2) polished tile $41 $40 $30 $25.5 $20 $27? ????

Afghanistan has not developed an efficient export market, how much is Afghan marble worth?
Source: Stonecontact.com
Afg Marble DGE 04-09-05 40 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

20

Situation Analysis Domestic Industry – Pricing according to size
The ability to make large tiles and slabs starts at the quarry with the production of large blocks free of cracks.

Type Emperador Bursa Beige Statuarietto Venatino

Price per m2 slabs $33 $31 $48 $32

Price per m2 tiles 60x30 $27 $25 $51 $32

Price per m2 tiles 30x30 $26 $24 $41 $27

Bigger is better, and larger sized pieces command a price premium due to the versatility of their use.
Source: Stonecontact.com
Afg Marble DGE 04-09-05 41 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis SWOT – Marble Industry

Strengths
Good variety of raw material and colors seem to be in demand High local demand for products at strong prices will allow processors to transition to exports

Weaknesses
Shipping is expensive relative to many countries Insecurity and corruption make it difficult to gain and maintain access to quarries Lack of knowledge of latest quarrying and processing techniques & equipment

Opportunities
Basic quarrying and cutting will vastly increase export revenues while substituting imports Stopping blasting and smuggling of stone will prevent destruction of valuable Afghan resources Foreign partnering will facilitate learning and developing resources

Threats
Sudden change in security profile could mean losses of investments at rural quarries The China Factor – currently China imports a lot of raw material and exports a little processed material, a slowdown in Chinese construction will force the legion of Chinese processors to look for markets abroad

Source: OTF Group Analysis
Afg Marble DGE 04-09-05 42 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

21

Situation Analysis Summary – Afghanistan’s Marble Sector

• Investments are required across most forms of capital: man-made (roads and power), financing, institutions, knowledge, human and cultural capital – however Afghanistan is endowed with good deposits from which to build an industry. • 80% of marble quarried in Afghanistan is smuggled out for a fraction of its value. • There is no adequate quarrying equipment in the country. Blasting destroys the value of the stone quarried as well as the deposit and makes it difficult to invest profitably in further processing of future quarrying. • As a landlocked country, transportation costs make exports of stone and block unprofitable (or barely profitable). • A great deal of mistrust and poor cooperation exists between firms. • Bidding for quarries is an uncertain process that requires good connections and careful navigation through different powerful factions in the government. • No Afghan marble is traded in world markets making pricing an unknown. • There is strong demand for marble locally, but markets are regional and have little knowledge of how to export. • Some of Afghanistan’s potential stone quarries could be highly lucrative after making the proper investments.
Afg Marble DGE 04-09-05 43 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry - Priorities Quarrying:

VS

8 – 10 ton irregular shaped stones from the Khogiani quarry in Nangahar, the result of quarrying with explosives. In addition to the small size, the stones will be filled with microfractures that lead to further wastage downstream.

Quarry in Rajasthan preparing to lever 250 ton block from quarry face onto a bed of sand. The block will then be cut into 15-20 ton blocks as per customer specs. Wire cutting leaves the blocks “dressed” and export ready

Blasting produces small pieces, well over 50% of which is wasted in further processing. Using wire saws can reduce wastage to around 40% at the factory, while producing blocks to customer specifications and allowing for greater efficiency and economies of scale.
Source: OTF research, OTF Interviews
Afg Marble DGE 04-09-05 44 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

22

Situation Analysis Domestic Industry - Priorities Processing:

VS

A plant in Jalalabad cuts narrow strips singly using a gangsaw. These strips are limited in their usefulness for tiles and cladding.

Large multiblade block cutter in Udaipur, India can cut an entire block into 50+ slabs at once, each as wide and long as the block and between 2-3 cm thick. These slabs can be made into tiles, cladding, countertops, tables, etc.

Not only does multiblade saw have higher output, it also makes larger slabs which can command a price premium of 15% over the smaller strips.
Afg Marble DGE 04-09-05 45 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Situation Analysis Domestic Industry - Priorities Opportunities: Production cost in Herat is $12-13 m2 vs $3.5-$4.5 m2 in India for slabs – Quarries in Herat and in India both run on generator power – Marble in both is transported roughly 120 km from quarry to plant – Quarries from both operate only 9-10 months of the year – Plants in Herat have cheaper power $0.07 kWh vs. $0.09 kWh – India has higher throughput and less waste; Herat plants are shutdown for long periods due to lack of stone Price of unprocessed stone exports is $40-$50/ton vs $400/ton for Herat marble processed into slabs (based on quote from potential buyer) Needs: Investment at quarries and processing plants to purchase wire saws and multi-blade saws (large multi-blade saws are not needed if the quarries use blasting, but will be very profitable with adequate raw material inputs) Transparent, secure and long-term quarry licensing in order to attact investors at the quarries Financing support is required to facilitate investment
Afg Marble DGE 04-09-05 46 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

23

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis Step 2: Setting Goals • Cluster Goals • Project Goals Step 3: Understanding Marble Buyers’ & Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

47

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

The OTF Five Step Change Process
The way forward for Marble

Step 1 Situation Analysis Situation Analysis
$2.5 B industry with 8-9% growth over past 10 years and 8% growth for next 25 Dominated by few players Success determined by quality Afganistan needs investment in all 7 forms of capital Blasting at quarries and exporting unprocessed destroys value: $40/ton vs. +$300/ton

Step 2 Set Marble Goals Set Marble Goals
Marble industry targets – $450M revenues in 10 years – Price per ton: $150/blocks, $300/slabs – 222 quarries and 56 processing plants in operation – 15,000 direct jobs (quarries and plants) – Avg salary: $150/month Determine business plan requirements for growing industry Build a senses of shared vision within cluster group Identify core members of groups as well as subject matter experts

Step 3 Understand Marble Understand Marble Importers’ needs Importers’ needs
Surveyed US and Middle East Buyers purchase mainly slabs and finished goods Suppliers must be reliable; buyer want to form long-term relationships with them Quality and color are the most important traits for marble Marble is a relationship business; selling requires direct contact with buyers Form a research plan based on initial hypotheses Leverage OTF Insight to conduct market research Push information to key players
48

Step 4 Articulate Afghan Articulate Afghan Marble Positioning Marble Positioning
Analyzed several competitors: Italy, Turkey, India, Pakistan and Iran Afghanistan needs to focus on exports of slabs and finished goods – lower transpo. costs, higher margins, more value Requirements: identify quality deposits, invest in knowledge and equipment, market products overseas Use findings to stimulate discussion around priority areas within cluster group Involve all subject matter experts in clarifying potential issues

Step 5 Develop Action Develop Action Guidelines Guidelines
Focus on investment at quarries – processing won’t be profitable without good raw material $62 M in investment needed over next five years to get return of $78 M p.a. in revenues Start $10 M marble fund to loan up to 100% of project cots and provide TA for 4 quarries and 2 plants

Public-Private Industry Partnerships

Intellectual Agenda

Form and engage a joint private-public sector representative cluster group Agree on a working schedule with cluster group Prioritize issues

Write strategy paper on marble fund with input from NIA and MST and disseminate to MMI and donor organizations Look for organization to institutionalize Leadership Committee

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

24

Goals for Afghanistan Marble Why Set Goals?
Why set goals? – Goals maintain focus and direction for the whole cluster. – Goals establish growth and other targets towards which the cluster can aspire. – Goal setting identifies areas that require particular focus, of both effort and resources. It also highlights areas that may not be receiving sufficient attention. – Goal setting initiates at an early stage the process of tracking strategy progress and the need for establishing data gathering and monitoring and evaluation processes. There are two levels of goals: 1. Cluster-wide Afghanistan Marble goals
– –



These are goals that the whole cluster, working together, will achieve. They are achieved through the implementation of a comprehensive strategy and investment plan, that guides effort and resource allocation throughout the value chain. Time horizons for their achievement are typically from 5-10 years. These are goals that guide the implementation of a limited number of quick win initiatives. The initiatives begin some of the work required to achieve the larger cluster-wide objectives. They have shorter time horizons of one to two years.

2. Short-term ACP -- Project goals






Afg Marble DGE 04-09-05

49

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for Afghanistan Marble Benchmarking Potential Industry Size
Although world consumption of marble has been growing by 8% since the late 1990s, not all countries have been able to capitalize on export markets
Palestine __________________ $450M market in 2000 with approx $380M in exports Volume of 1.5M tons (est.) 1/100th the size of Afghanistan Focused on exports of value added products Excellent coordination of the industry through Union of Stone and Marble Egypt __________________ $100M in exports in 2003 80% of exports are lower margin blocks and rough slabs A lot of blasting at quarries, selling marble cheap, little investment in processing plants Chinese buy cheap Egyptian marble, process and resell cheaper than the Egyptians can sell it No coordination in industry, a great deal of undercutting occurs Pakistan __________________ $20-30M in exports in 2004 Little growth in exports despite growing world markets Blasting at quarries results in 61-73% wastage Lack of power at plants, poor roads prevent large shipments Lack of training and poor technology Lack of cooperation within industry and with government India __________________ $1.7B market in 2001 but only $39M in exports Largest known marble reserves in the world Both good and bad quarrying techniques Both good and bad quality processing Lack of cooperation within industry Rampant underselling has decreased value of exports

Palestine in 1/100th the size of Afghanistan; although aggressive, Afghanistan’s projected growth to $450M by 2015 is not unreasonable as it would put Afghanistan 15 years behind Palestine in a rapidly growing market. Afghanistan will have to invest in proper quarrying and processing as well as infrastructure in order to achieve Sources: OTF Research this and avoid the pitfalls of50Egypt, Pakistan, and India. Confidential Information — Copyright © 2004 by OTF Group, Inc Afg Marble DGE 04-09-05 OTF

25

Goals for Afghanistan Marble Benchmarking Quarrying Capacity
Regions Companies

Palestine _______________ Quarries: 230 Avg. production: 2400 m3

Carrara, Italy _______________ Quarries: 200 Avg. production: 2500 m3

India _______________ Quarries: 3600 Avg. production: 440 m3

Tekmar, Turkey _______________ Quarries: 3 Avg. production: 30,000 m3

Gramil, Brazil _______________ Quarries: 13 Avg. production: 390 m3

Afghanistan Quarries: • Afghanistan has an estimated 60 deposits of marble, some of which can support multiple quarrying operations • There may be undiscovered deposits Avg. production: • Chesht quarry – projected production: 22,000 m3 • Khogiani quarry – projected production: 10,000 m3 • Other quarries - ??? Will this be achieved?

Production varies greatly between regions and companies, a conservative goal for Afghanistan will an average production of 2500 m3 per quarry.
Source: OTF Research
Afg Marble DGE 04-09-05 51 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for Afghanistan Marble Exports vs. Domestic Sales

World Market Exports Israel In-country sales

Palestine Other exports Exports

India In-country sales

In-country sales

Slab and tile production in Afghanistan is roughly estimated at 900 tons/month, with 100% sold in the local market. Local demand may be as high as 1800 tons/month, all other production will have to be exported.

Local demand will not be able to support strong industry growth, the Afghan industry will have to focus on exports.
Source: OTF Research
Afg Marble DGE 04-09-05 52 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

26

Goals for Afghanistan Marble Product Mix
Most of the value is in blocks and slabs. Tiles are easy to cut and polish from slabs and hence only command a premium in the larger sizes.

Prices for Emperador Light & Dark marble from Turkey

Price per ton* Blocks Slabs $210 $366

Price per m2* $7 $33

Equipment required Wire saws Wire saws, multiblade block cutter, slab polishing line Wire saws, Tile cutting and polishing line

Tiles (45cmx45cm)

$350-$395

$30-$35

Afghanistan should focus on slabs for exports and produce tiles for the local market.
* Assumes 30 m2 per m3 Source: OTF Research, Stonecontact.com
Afg Marble DGE 04-09-05 53 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for Afghanistan Marble Industry Value
Current Afghan marble exports are probably under $1M. Private sector investment into quarries and plants of $107 M could help the industry grow to $450 M by 2015. Government investment into roads and power will be needed to help the industry achieve its goals.
Total revenues 2015 Proposed Industry Revenue Growth
500 450 400

$450 M $107M

Total required investment

Estimated employment (quarry & plant) 15,000 Estimated quarries/plants opened Blocks Slabs Tiles Assumes: World growth continues at 8% p.a. for the foreseeable future. Adding 250,000 tons total capacity per year from through 2010 and 250,000 tons per year from 2011 to 2015. Total capacity in 2015 will be 1.5 M tons per year, about 0.6% of estimated world production. Price per quarried ton of around $300 for slabs and tiles and $150 for blocks – no core drilling has been done at key quarries and many deposits are of unknown size and quality, will that price be possible? In-country sales of no more than 20,000 tons per year 222/56

US $ Millions

350 300 250 200 150 100 50 0

20 10

20 05

20 06

20 07

20 08

20 09

20 11

20 12

20 13

20 14
54

Afg Marble DGE 04-09-05

20 15

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

27

Goals for Afghanistan Marble Job Creation
Based on its growth targets the industry should be able to create up to 15,000 jobs in the next 10 years.
Afghanistan Jobs Created
16000 14000 12000

No. jobs

Palestine Marble Industry Benchmark ________________________ Workers: 15,000 Total production: 1.5M tons Production per worker: 100 tons Avg. salary: $6,000

10000 8000 6000 4000 2000 0
20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15

With most quarries located in remote areas, marble represents a good source of rural development by providing thousands of good-paying jobs (avg. salary $150/mo).
Source: OTF Research
Afg Marble DGE 04-09-05 55 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for Afghanistan Marble Enterprise Creation
$107 M in private sector investment will go towards 222 quarries and 56 processing plants in order to boost production of value added marble goods.
New Enterprises Created
300 250 200 150 100 50 0
07 06 08 09 05 10 11 12 13 20 20 20 14 20 20 20 20 20 20 20 20 15

Quarries Processing Plants

Assumes: Avg. production per quarry of 2,500 m3 per year – based on benchmarking Avg. production per plant of 10,000 m3 per year – based on initial business plans developed by OTF Group.

No. enterprises

Quarries and plants will be supported by GoA infrastructure projects such as roads and power and increased security throughout the country.
Afg Marble DGE 04-09-05 56 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

28

Goals for Afghanistan Marble Summary

Afghanistan can follow the example of Palestine and become a provider of high-quality, value added marble products to the world market. To achieve this the private sector must invest in knowledge and equipment to conduct proper quarrying and processing, while the government must invest in roads, power and security. Under the current plan, exports of marble could grow from less than $1M today to $450M by 2015. $107M in private sector investment will be required over the 10 year period in order to achieve these results. Investment will be in block, slab and tile cutting systems, cranes and earth moving equipment, compressors, generators, etc. 222 quarries at an average capacity of 2,500 m3 per year will have to be opened, as well as 56 factories with a capacity of 10,000 m3 per year. Over 90% of production will be targeted for the export market, requiring coordinated marketing efforts including – acquiring market knowledge – attending international trade shows; and – establishing foreign showrooms and distribution centers.

Afg Marble DGE 04-09-05

57

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for Afghanistan Marble Summary Targets

Goals General

Targets Increase export value from less than $1 M to $450 M in 10 years

Increase capacity: Open new quarries Capture more value: Upgrade processing

222 quarries to be opened with an average annual capacity of 2,500 m3 All quarries will manufacture blocks, 56 processing plants will process slabs and tiles Form JVs with experienced foreign companies Total investment of $107 M Export to Middle East and USA – largest markets for value added goods Avoid selling blocks and raw stone

Capture more value: Focus on exports of value added goods

Afg Marble DGE 04-09-05

58

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

29

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis Step 2: Setting Goals • Cluster Goals • Project Goals Step 3: Understanding Marble Buyers’ and Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

59

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for ACP Cluster Strategy Development
Establishing goals for the cluster is one of 5 core deliverables of the OTF project that culminate in the development of a strategy and investment plan for the marble cluster.
Strategy development process Strategy development for the cluster is driven by OTF’s 5-step process. Each of the main deliverables are listed below with expected completion dates: Step 1 Step 2 Step 3 Step 4 Step 5 Conduct Situation Analysis Establish Marble Cluster Goals Understand Marble Buyer Needs Articulate Afghan Marble Market Positioning Develop Action Guidelines Q2 2005 Q2 2005 Q4 2005 Q4 2005 Q1 2006

‘Quick-win’/short-term initiatives Three initiatives will be undertaken to address immediate business barriers faced by the marble and dimension stone cluster and to partially begin the implementation of some elements of the cluster strategy. Ensuring active cluster involvement in these initiatives is central to how they are developed and implemented.

Afg Marble DGE 04-09-05

60

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

30

Goals for ACP Cluster Strategy Development – Initiatives
Current Project Initiatives Develop marble ventures Survey quarries, send samples to overseas buyers, develop business plans, examine financing options, find customers, partner with AISA on trade missions and market activity Relevance to Cluster Goals Serve as example for future ventures to invest $107 M into 222 quarries and 56 processing plants Begin to establish distribution networks and accumulate market knowledge Capture up to 10x more value for marble and expand exports to $450 M Ensure success of initial ventures so further investment takes place Jump-start industry knowledge necessary for the success of the industry

Invest in knowledge of sales and operations Develop SOW for quarrying and processing experts to train employees and supervise start up ventures Find experienced foreign partners for joint ventures Formation of marble association Create organization that will represent the industry at home and internationally and make cluster activities sustainable

Improve cooperation among industry players to help establish purchasing and sales consortia, and avoid destructive business practices Disseminate knowledge and provide support to new ventures

Afg Marble DGE 04-09-05

61

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Goals for ACP Institution Development and Outreach
The long-term sustainability of the OTF project and the implementation of the marble cluster strategy is dependent on a strong and active marble cluster, and an institution that serves as a leadership body for the cluster.
Institution Development OTF will work with existing institutions – or create new ones should no suitable ones exist – to help them play a key leadership role for the marble cluster. To this end, the Marble Cluster Leadership Council has been established, with members from all the regions of Afghanistan. The Leadership Council will spearhead initiatives that bring both near-term and longer-term benefit to the cluster. The Council will work closely with Commercial Competition Commission of Afghanistan (CCCA), established by OTF. OTF also has initiated regular marble cluster meetings, facilitating the cluster to participate in the strategy development process and to address business barriers faced by the cluster. Work teams of cluster members have been established for each of the three initiatives that OTF is spearheading. Others will be developed to address other issues, led by members of the cluster. Outreach OTF is conducting a number of outreach initiatives to encourage debate and understanding among the Afghan business community and the general public about competitiveness. This includes media briefings and placements, and seminars throughout the country.

Afg Marble DGE 04-09-05

62

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

31

Establishing Goals Summary

Project Objectives
STRATEGY

Date Q1 2006 Q3 2005 Q3 2005 Q3 2005 Q1 2006 Q3-4 2005 Q1 2006

Comprehensive strategy and investment plan for marble cluster complete Implementation of 3 initiatives underway, led by OTF Marble Cluster Leadership Council established

INSTITUTION BUILDING OUTREACH

Work groups established for all initiatives Marble association formed Cluster summit in Kabul at Ministry of Mines and Industry, 2 outreach seminars in Jalalabad and one in Kandahar 2 articles on the marble industry published in Afghan media

Afg Marble DGE 04-09-05

63

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis Step 2: Setting Goals Step 3: Understanding Marble Buyers’ and Importers’ Needs Step 4: Articulate Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

64

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

32

The OTF Five Step Change Process
The way forward for Marble

Step 1 Situation Analysis Situation Analysis
$2.5 B industry with 8-9% growth over past 10 years and 8% growth for next 25 Dominated by few players Success determined by quality Afganistan needs investment in all 7 forms of capital Blasting at quarries and exporting unprocessed destroys value: $40/ton vs. +$300/ton

Step 2 Set Marble Goals Set Marble Goals
Marble industry targets – $450M revenues in 10 years – Price per ton: $150/blocks, $300/slabs – 222 quarries and 56 processing plants in operation – 15,000 direct jobs (quarries and plants) – Avg salary: $150/month Determine business plan requirements for growing industry Build a senses of shared vision within cluster group Identify core members of groups as well as subject matter experts

Step 3 Understand Marble Understand Marble Importers’ needs Importers’ needs
Surveyed US and Middle East Buyers purchase mainly slabs and finished goods Suppliers must be reliable; buyer want to form long-term relationships with them Quality and color are the most important traits for marble Marble is a relationship business; selling requires direct contact with buyers Form a research plan based on initial hypotheses Leverage OTF Insight to conduct market research Push information to key players
65

Step 4 Articulate Afghan Articulate Afghan Marble Positioning Marble Positioning
Analyzed several competitors: Italy, Turkey, India, Pakistan and Iran Afghanistan needs to focus on exports of slabs and finished goods – lower transpo. costs, higher margins, more value Requirements: identify quality deposits, invest in knowledge and equipment, market products overseas Use findings to stimulate discussion around priority areas within cluster group Involve all subject matter experts in clarifying potential issues

Step 5 Develop Action Develop Action Guidelines Guidelines
Focus on investment at quarries – processing won’t be profitable without good raw material $62 M in investment needed over next five years to get return of $78 M p.a. in revenues Start $10 M marble fund to loan up to 100% of project cots and provide TA for 4 quarries and 2 plants

Public-Private Industry Partnerships

Intellectual Agenda

Form and engage a joint private-public sector representative cluster group Agree on a working schedule with cluster group Prioritize issues

Write strategy paper on marble fund with input from NIA and MST and disseminate to MMI and donor organizations Look for organization to institutionalize Leadership Committee

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Overview
The Customer Survey allows the Marble Industry to understand the requirements for entering foreign markets.
World marble imports

Markets surveyed: US and Middle East (UAE, Bahrain and Saudi Arabia) US: 54 respondents Middle East: 295 respondents Enterprises ranged in size from less than $500,000 to over $25 M in sales Target markets chosen due to propensity for purchasing value added marble products

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

$535 M
ROW

$1.2 B
ROW

Japan

UK Germany Saudi

S. Arabia US UAE Hong Kong Korea

US

Slab

Polished marble

Afg Marble DGE 04-09-05

66

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

33

Marble Survey Results: US and Middle East Demographics
Customers in both regions buy a great deal of both finished goods and raw materials.

What operations does your firm engage in?
US Respondents
80 70

Middle East Respondents
80 70

% of respondents

60 50 40 30 20 10 0 Purchasing finished goods Purchasing raw materials Finished goods production Slab production Quarrying

% of respondents

60 50 40 30 20 10 0 Purchasing finished goods Purchasing raw materials Finished goods production Slab production Quarrying

This is a good customer base for Afghan producers who will have a variety of products to offer and verifies the trade data.

Afg Marble DGE 04-09-05

67

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Demographics
US firms tend to operate globally, but little in the Middle East. Middle Eastern firms tend to have a strong regional focus and work little elsewhere.
In which region(s) of the world do you currently operate?
US Respondents
100 90 100 90

Middle East Respondents

% of respondents

80 70 60 50 40 30 20 10 0 North America Europe East Asia South and Middle East Central Asia Africa

% of respondents

80 70 60 50 40 30 20 10 0 North America Europe East Asia South and Middle East Central Asia Africa

• Is there something unique about the Middle East market that makes it difficult for outsiders to operate there? • To penetrate both markets will require a two-pronged approach based on the regional strategies of a more enclosed environment (Middle East) and an open environment (U.S.).

Afg Marble DGE 04-09-05

68

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

34

Marble Survey Results: US and Middle East Purchase Behavior
US firms tend to buy from many more suppliers than Middle Eastern firms.
How many firms do you purchase from?
US Respondents 40+ firms 40+ firms 18.4% 1-5 firms 20.4% 21-40 firms 7.7% 21-40 firms 14.3% 6-10 firms 11-20 firms 20.4% 26.5% 6-10 firms 26% 11-20 firms 16% 7.3% Middle East Respondents

1-5 firms 43%

• With fewer suppliers, the Middle East market may be tougher to break into; possibly the Middle Eastern markets rely more on relationships than US markets. • Size of firm is a poor predictor of number of suppliers, Both markets still have a large proportion of firms who buy from numerous suppliers, so opportunities to supply these markets exist.
Afg Marble DGE 04-09-05 69 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Purchase Behavior
Payment terms are generally flexible with many respondents choosing several options. Terms in the US tend to favor the buyer, with payment on arrival being the most popular and many buyers preferring 30-90 days credit terms while the Middle East tends towards LoC.
What purchase terms do you prefer?
US Respondents
80 70 80 70

Middle East Respondents

% of respondents

60 50 40 30 20 10 0 Payment on arrival LoC Pre-payment Credit 30-90 days B/L 2 or more

% of respondents

60 50 40 30 20 10 0 Payment on arrival LoC Pre-payment Post dated chque 2 or more

• In a follow up question, 48% of US respondents chose either credit or payment on arrival as their preferred terms. • LoC terms in the Middle East seem better for suppliers, however it is unclear who bears the expense. • Working capital will be a factor for processors in Afghanistan given the difficulty in obtaining financing, but sellers may require more capital when selling in the US than in the Middle East. • Due diligence of buyers is important - some American companies claim that buyers may fail to pay, and it winds up being more expensive for the seller to try to recoup the money in court than to let it go.
Afg Marble DGE 04-09-05 70 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

35

Marble Survey Results: US and Middle East Purchase Behavior
Most buyers purchase slabs and tiles, although in the Middle East they purchase significant amounts of blocks and raw stone as well.
What products did you buy in the past year?
US Respondents
100 90 100 90

Middle East Respondents

% of respondents

70 60 50 40 30 20 10 0 Slabs Tiles & FG Blocks Raw stone

% of respondents

80

80 70 60 50 40 30 20 10 0 Slabs Tiles & FG Blocks Raw stone

• In a follow up question 93% of respondents in the US and 74% in the Middle East selected either slabs or tiles as their largest purchase in terms of volume. • Both markets are good for Afghan producers seeking to sell value added products.

Afg Marble DGE 04-09-05

71

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Purchase Behavior
Firms tend to purchase a wide variety of colors, although the Middle East buys much fewer colors than the US.
How many different colors did you buy in the past year?
US Respondents 1-5 colors 2% 6-10 colors 8% 11-20 colors 16% 21-40 colors 10.5% Middle East Respondents 40+ colors 15.5% 1-5 colors 33.7%

21-40 colors 40+ colors 54% 20%

11-20 colors 17% 6-10 colors 23.3%

Afg Marble DGE 04-09-05

• Why does the Middle East buy fewer colors? Is there a difference in the buying pattern of the end customer? • Follow on question found beiges and whites are the most popular colors, but with fewer colors purchased, the concentration of buyers who prefer beige and white is higher in the Middle East. • Afghanistan’s deposits of white marble should be popular in both markets, but will be especially popular in the Middle East. 72
OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

36

Marble Survey Results: US and Middle East Supplier Selection
Most firms find new suppliers through trade shows, word of mouth and direct sales with the US preferring trade shows and the Middle East direct sales. Few buyers use B2B sites or advertising.
Which methods do you use to find suppliers?
US Respondents
80 70 80 70

Middle East Respondents

% of respondents

60 50 40 30 20 10 0 Trade show Word of mouth Traditional Direct sale Advertising supplier B2B

% of respondents

60 50 40 30 20 10 0 Trade show Word of mouth Traditional Direct sale Advertising supplier B2B

• This is a relationship business where face to face meetings are key - a follow on question revealed that, in the US only one respondent felt advertising was the most important method of finding suppliers, while none felt B2B was important1. In the Middle East only 7% of respondents felt either method was the most important for finding suppliers, although 27% of respondents did use B2B sites to find suppliers. • Keeping a customer happy is critical for future business in the US the word of mouth effect makes building a good reputation even more critical.
1) Interviews in the US revealed that some construction companies do useB2B sites for smaller orders, however construction companies were not directly surveyed in the US.
Afg Marble DGE 04-09-05 73 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Supplier Selection
Both markets tended to rate suppliers’ traits similarly. Reliability and consistency, speed and relationship were the most important factors in selecting a supplier.
How important are the following in selecting a supplier? (1 = Not at all important ; 5 = Very important) US Respondents
6 5 4 3 2 1 0
1 0 in s
4.8 4.4 4 3.8 3.2 2.9 2.9 2.8

Middle East Respondents
5
4.4 4.2 4.2 3.7 3.7 3.3 3.1 2.6

4 3

2

ar ry

sh ip

ta ct

ar ry

in

s

t

t

er y

hi p

liv er y

ct

nt ac

st en

te n

lo r

lo r

or ig

or ig

m pa

co

ns

de

tio

de

co n

qu

tio

si

of

of

e/ co n

el a

of

of

li

e/ co

to

el a

of

to

cia

try

try

ss

rie t

rie t

e

e

ss

R

ee d

ou n

ee d

ou n

So

el ia bl

el ia bl

Ac

Sp

• Good suppliers are reliable and consistent, and buyers tend to form long term relationships with them. Many respondents said honesty and integrity and reliability were key factors they look for in suppliers. • US buyers prefer suppliers who have access to a quarry in order to guarantee supply, however, it is not as important for Middle Eastern firms. • Country of origin is only moderately important, buyers deal with firms not countries.
Afg Marble DGE 04-09-05 74 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

R

R

Sp

Ac ce

M od

M od

ce

Va

Va

C

C

So

R

cia

of

of

of

y

y

li

m pa

ns

liv

co

qu

co

is

ct

t

37

Marble Survey Results: US and Middle East Product Selection
Quality is king, with color, price and size are also important. 66% and 90% of US and Middle East buyers respectively require specs from the supplier.
Do you require test results by the supplier? How important are the following in selecting a product? (US and ME) 100% (1 = Not at all important ; 5 = Very important)
5

US Respondents

80%
4.6 4.4 4.3 4.1

60% 40%
3.2

4

37% 1st Purchase

20%
2.6

3

29% Yes Yes/1st purchase

33%

0% No

2

Middle East Respondents
100%
1

80%
0 Quality Price Color Size Brand of origin Social impact

60% 40% 20% 0%

47% 1st Purchase

43% Yes 10% Yes/1st purchase No

• Suppliers who can deliver on quality, color and size can get price premiums, while those who can’t will have their products discounted. • Suppliers have to prove their quality with samples and specs – a testing lab will be required. Information — Copyright © 2004 by OTF Group, Inc 75 Afg Marble DGE 04-09-05 OTF Confidential

Marble Survey Results: US and Middle East Perception of Supplier Country Quality
There is a strong correlation between how well known and how well regarded a country is. Almost all respondents knew Italy and had a very favorable perception, very few respondents had a perception of Afghanistan, and that perception is bad.
Perception of supplier country quality (1 = Very poor ; 5 = Outstanding; or no perception) US Respondents
5
4.6 4

Middle East Respondents
100%
5
4.6

100%

Have perception of the country

Average response

4

3.8

3.7 3.1 3.1 3 2.8

75%

4

3.7

3.6 3.1 3.1 3 2.6 2.1

75%

3

3

50% 2
1.8

50%
1.8

2

25% 1
1

25%

0

0%

0

0%

rk ey

ly

In di a

n

• Where does causality in the correlation between how well regarded and how well known a country is? • Palestine is rated poorly, perhaps because the bulk of its exports go to Israel and they are relatively unknown, or perhaps they have low quality products and that has led to them being unknown. With Palestine’s market size at $450 M and a focus on value added goods, the former is more likely. • In Afghanistan it is poor quality that prevents exports, hence both the poor perception and lack of perception of Afghanistan are probably indicators of how current quality in Afghanistan is regarded. • Perception of a country’s quality should be tempered by the knowledge that most buyers do consider it an important criteria for customer selection. In the aggregate however, it may indicate the general level of quality of the OTF Confidentialan industry. © 2004 by OTF Group, Inc firms in Information — Copyright 76 Afg Marble DGE 04-09-05

Pa le st in e Af gh an ist an

Pa kis ta n

Tu rk ey

le st in e

Br az il

Eg yp t

In di a

hi na

ly

hi na

yp t Eg

Tu

Af gh an

C

Pa

Pa

kis ta n

C

Br az il

ist a

Ita

Ita

38

Marble Survey Results: US and Middle East Perception of Afghanistan - US
91% of respondents are willing to buy Afghan marble if the conditions are right. Having good samples is the most important condition, but getting to know suppliers and credit terms are also important.
Would you buy directly from an Afghan processor?
100%

What products would you buy?
90 80

% of respondents

80% 60% 40% 20% 0% Yes/It depends 33% Yes
58% Depends

% of respondents

Respondents who had a bad perception of Afghanistan are all willing to buy

70 60 50 40 30 20 10 0

9% No

On what does it depend?
90 80

Slabs

Tiles & FG

Blocks

Raw stone

% of respondents

70 60 50 40 30 20 10 0 Need samples Get to know suppliers Credit terms
77 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

• As long as quality and color are good, Afghan marble will sell – the price will cover any inefficiencies in production. • US buyers in general source from many places and seem willing to try new suppliers.

Afg Marble DGE 04-09-05

Marble Survey Results: US and Middle East Perception of Afghanistan – Middle East
64% of respondents are willing to buy Afghan marble if the conditions are right. Again having good samples is the most important condition, but getting to know suppliers and credit terms are also important. Quality is an issue for Middle Eastern buyers as well.
Would you buy directly from an Afghan processor?
100%

What products would you buy?
80 70

% of respondents

% of respondents

80% 60% 40% 20% 0% Yes/It depends
54% Depends

Most who said “No” simply didn’t know enough about Afghan marble

60 50 40 30 20 10 0

10% Yes

36%

No

On what does it depend?
90 80

Tiles & FG

Slabs

Raw stone

Blocks

% of respondents

70 60 50 40 30 20 10 0 Need samples

• Compared to the US, fewer buyers in the Middle East are willing to purchase Afghan marble. • Middle East buyers are more familiar with Afghan marble and its low quality than their US counterparts, so quality improvement is an issue for them. • Middle East buyers tend to deal with fewer companies, many may not want to deal with new suppliers.
Get to know suppliers Quality must improve Credit terms
78 OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Afg Marble DGE 04-09-05

39

Marble Survey Results: US and Middle East Perception of Afghanistan
Only 6% of US respondents and 22% of Middle East respondents were willing to invest in Afghanistan citing the probable return on investment and market proximity, cost of production and access to a specific type of stone.
What is important for you when deciding where to manufacture? “Cost of raw material and labor” “Infrastructure, know how, and availability of raw material” “Ability to resolve disputes quickly and fairly” “The degree of difficulty of the project and client” “Security and stability” “Quality and price of raw materials” “Proximity to mines, labor cost, tariffs and financing by local banks”

Afg Marble DGE 04-09-05

• Getting investment into Afghanistan will be difficult due to the lack of trained workforce and infrastructure, but high quality quarries will still draw more intrepid entrepreneurs. 79

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: Key Findings
In a highly competitive but growing industry, Afghan marble producers can win buy developing relations based on reliability and speed and providing a high quality and reasonably priced product.

All firms import slabs and tiles – the products Afghanistan wants to sell. Business is done on the strength of relationships. Face-to-face meetings are important. The most important criteria for a supplier is reliability and consistency, while the most important criteria for marble is quality then color and price – if you have good quality marble of the right color, you can set your price. Over 50% of respondents in both markets, would consider purchasing Afghan marble, with some degree of conditionality – so understanding an individual customer’s needs is important. Testing lab will be needed in Afghanistan for necessary quality reassurances. While country of origin is not an important criteria for selecting suppliers, how a country’s quality is perceived should indicate to an industry how its firms operate.

Afg Marble DGE 04-09-05

80

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

40

Marble Survey Results: US and Middle East Summary - US American firms import mainly slabs and tiles – the products Afghanistan wants to sell. Over 30% of US buyers state that they will consider buying Afghan marble, and another 58% would conditionally. Business is done on the strength of relationships, with most suppliers found at trade shows. Word of mouth also counts for a great deal. Buyers source many colors from many suppliers – US customers are used to choices – and operate all over the world. US firms buy on credit, but will also use Letters of Credit – with long transit times from Afghanistan working capital will be an issue for processors. Few buyers know Afghanistan, the few who do, do not have a good perception – however, most buyers are willing to try Afghan marble. How to sell in the US: Go to a trade show, take high quality samples, meet and greet different buyers.

Afg Marble DGE 04-09-05

81

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Marble Survey Results: US and Middle East Summary – Middle East Middle East firms buy mainly slabs and tiles, but much more blocks and raw stone than the US buyers. Approximately 10% of Middle East buyers state they would buy Afghan marble, with an additional 54% would conditionally Business is done on the strength of relationships, with most suppliers found by the supplier’s sales efforts. Suppliers have to make extra effort to enter the market. Strong regional focus with most firms working mainly in Middle East. Buy relatively few colors and like to deal with relatively few suppliers. Overwhelmingly prefer LoC, much better for Afghanistan than selling on credit, but it is unclear on who pays the fees. Much more squeamish than Americans about trying new suppliers, persistence will be key in the selling process, Afghans who want to sell in the Middle East may have to make repeated trips to the region to develop realtions. How to sell in the Middle East: Make appointments to see different buyers, take good quality samples, and follow up. They buy from few people, can you be one of them?

Afg Marble DGE 04-09-05

82

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

41

Agenda

Introduction to the OTF Group & the Afghanistan Competitiveness Project

Step 1: Situation Analysis Step 2: Setting Goals Step 3: Understanding Marble Buyers’ and Importers’ Needs Step 4: Articulate Afghan Marble Positioning • Competitor Analysis • Afghan Marble Positioning Step 5: Develop Action Guidelines

Afg Marble DGE 04-09-05

83

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

The OTF Five Step Change Process
The way forward for Marble

Step 1 Situation Analysis Situation Analysis
$2.5 B industry with 8-9% growth over past 10 years and 8% growth for next 25 Dominated by few players Success determined by quality Afganistan needs investment in all 7 forms of capital Blasting at quarries and exporting unprocessed destroys value: $40/ton vs. +$300/ton

Step 2 Set Marble Goals Set Marble Goals
Marble industry targets – $450M revenues in 10 years – Price per ton: $150/blocks, $300/slabs – 222 quarries and 56 processing plants in operation – 15,000 direct jobs (quarries and plants) – Avg salary: $150/month Determine business plan requirements for growing industry Build a senses of shared vision within cluster group Identify core members of groups as well as subject matter experts

Step 3 Understand Marble Understand Marble Importers’ needs Importers’ needs
Surveyed US and Middle East Buyers purchase mainly slabs and finished goods Suppliers must be reliable; buyer want to form long-term relationships with them Quality and color are the most important traits for marble Marble is a relationship business; selling requires direct contact with buyers Form a research plan based on initial hypotheses Leverage OTF Insight to conduct market research Push information to key players
84

Step 4 Articulate Afghan Articulate Afghan Marble Positioning Marble Positioning
Analyzed several competitors: Italy, Turkey, India, Pakistan and Iran Afghanistan needs to focus on exports of slabs and finished goods – lower transpo. costs, higher margins, more value Requirements: identify quality deposits, invest in knowledge and equipment, market products overseas Use findings to stimulate discussion around priority areas within cluster group Involve all subject matter experts in clarifying potential issues

Step 5 Develop Action Develop Action Guidelines Guidelines
Focus on investment at quarries – processing won’t be profitable without good raw material $62 M in investment needed over next five years to get return of $78 M p.a. in revenues Start $10 M marble fund to loan up to 100% of project cots and provide TA for 4 quarries and 2 plants

Public-Private Industry Partnerships

Intellectual Agenda

Form and engage a joint private-public sector representative cluster group Agree on a working schedule with cluster group Prioritize issues

Write strategy paper on marble fund with input from NIA and MST and disseminate to MMI and donor organizations Look for organization to institutionalize Leadership Committee

Afg Marble DGE 04-09-05

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

42

Competitor Analysis Profile - Italy
Italy is the world leader in marble. Gifted with some of the best quality deposits in the world, Italy has invested in knowledge and equipment and parlayed its comparative advantage to a massive competitive advantage. The recent decline of the Italian marble industry (3-5% p.a. over the past few years) is due to increased exports of Italian equipment to other marble producing countries.
Italian exports and imports of key marble products
$450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Stone Blocks Slabs Tiles, FG

US millions

Imports Exports

Italy especially dominates the value added categories where their equipment and experience give them a strong competitive advantage. Italy imports mainly raw materials for further processing in Italy.

Italian cutting line (by Simec). This kind of operation has allowed Italy to reign at the top of the industry for decades. Italian marble is the proxy for quality.

Afg Marble DGE 04-09-05

Italy will be tough to beat in terms of quality, but Italian processors and equipment vendors are aggressively looking for opportunities overseas. Afghanistan can “join them” instead of trying to Source: 2003 Trademap data “beat them”.
85

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

Competitor Analysis Profile - Turkey
Turkey has the largest marble deposits in the world and is now the largest producer in the world while proximity to both Europe and Asia gives it access to large markets. However, it is Turkey’s use of European technology that has allowed it to leverage its natural resources to become one of the dominant exporters of the industry.
Turkish exports and imports of key marble products
$300 $250

US millions

Imports Exports

$200 $150 $100 $50 $0 Stone

Blocks

Slabs

Tiles, FG

Turkey is second only to Italy in exports of finished marble goods. Its vast resources mean that imports of marble are negligible.

A perfect example of Turkey’s recent rise, the Tekmar marble company has two plants with a combined capacity of 2.5 M m2 per year. 99% of production is exported as finished goods. Almost all equipment is imported from Italy. It has only been in operation since 1991.

Afg Marble DGE 04-09-05

If anyone takes the number one spot from Italy, it will be Turkey - and they will do it with Italian equipment. Turkey is testament to the strategy of sourcing the best equipment and expertise in Source: 2003 Trademap data the world to unlock the value of natural resources.
86

OTF Confidential Information — Copyright © 2004 by OTF Group, Inc

43

Competitor Analysis Profile – India I
The strongest regional competitor, the Indian industry is plagued by lack of investment. High tariffs limit imports, while large local markets focus mainly on price; a protected local industry may be hindered from capturing international markets due to lack of quality.
Indian exports and imports of key marble products
$35 $30

US millions

$25 $20 $15 $10 $5 $0 Stone

Imports Exports

Note: In 2004 Indian exports of finished goods jumped from…...

Similar Documents

Premium Essay

Assignment

...MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE TASHKENT INTERNATIONAL TRADE FINANCE – INDIVIDUAL ASSIGNMENT Course Module Lecturer Due Date Weightage : Bsc (Hons) in Banking and Finance : International Trade Finance : Ms Ratna Devi : 5 November 2012 : 30% Assignment —Individual This assignment for the module International Trade Finance carries 30% of the overall assessment grade. Case under Observation: This is a case study of a U.S. company called Cossco, Inc, depicted in different scenarios 1 through 4, carrying a maximum of 70 marks. Each scenario is presented in a way that encapsulates the topics in your syllabus for International Trade Finance. Students are advised to closely read each scenario and understand the issues faced by the CFO and financial analyst. Recommendations are to be given in a logical and concise manner. __________________________________________________________ Scenario 1 20 Marks Cossco, Inc is a U.S based company that has been incorporated in the United States for three years. It’s a small company with total assets worth $300 million. The company produces a single type of product, golf clubs. Cossco during the boom time, has been quite successful. However, the demand for “IRONS”, the company’s primary product in the United States, has been slowly decreasing since last year. Cossco’s shareholders have been pressuring the company to improve its performance. Cossco produces high-quality golf clubs and employs a unique production......

Words: 1782 - Pages: 8

Free Essay

Assignment

...ASSIGNMENT ON MANAGEMENT OF TECHNOLOGY RAJESWARI.G ID NO. 2010HZ58075 ASSIGNMENT ON In your opinion, what are some important criteria which the firms should take to increase the quality and productivity of their products and service? Assignment on Productivity Improvement Page 2 Important criteria which the firms should take to increase the quality and productivity of their products and services There are few things to be considered for a Firm to increase the market value/productivity by improving the quality of the product, This is generally can be achieved, By improving the existing product, By introducing new products, Product launching / Advertising the same By improving the services for the newly or existing products, Immediate response for the complaints , querries Cost effective , easy accessible products etc., Let we discuss the points in detail, 4 Quick Steps to Improve an Existing Product You may have a niche marketing website that just isn’t producing sales for you at the rate at which you had hoped it would…..or maybe it isn’t producing any income for you at all or it could be that you haven’t actually figured out that what you are selling is, in fact, a niche market product. You might need to do a little ‘tweaking’ and modify your strategies somewhat to get the site performing better. There really are some things that you can do to improve your existing product. Step #1: Bill Cosby, the famous entertainer, once said, “I don’t know......

Words: 5382 - Pages: 22

Premium Essay

Assignment

...© Deakin University MPE781/981 ASSIGNMENT, TRIMESTER 3, 2012 ECONOMICS FOR MANAGERS T3.2012 Assignment Due date: Nature: Assignment Overview: Monday, January 28, 2013. Individual assignment. This assignment is partly based on an article published in The Australian on April 26, 2012 entitled “Poor bear brunt of ‘nanny taxes’” by Adam Creighton. The article can be downloaded via the library database Newsbank: http://library.deakin.edu.au/record=e1000139~S1. For your convenience, the article is also attached to this assignment. Please read the article carefully before attempting the questions. You will be required to demonstrate your understanding of concepts taught in the unit and relate them to the case in the article. This assignment is designed to encourage you to think about the application of concepts learned in this unit to real world scenarios. Although you can work in groups, this is not a group assignment and you must submit answers individually. You will be graded on your use of appropriate economic theory and concepts, clarity of exposition and overall quality of your answers. Your answers should follow “Guide to assignment writing and referencing”, available at this link: http://www.deakin.edu.au/currentstudents/assets/resources/study-support/study-skills/assignref.pdf. Answer all questions. Limit the total word count of your assignment to less than 3,000 words. Depth is encouraged over breadth: that is, it is more important that you demonstrate you......

Words: 2372 - Pages: 10

Premium Essay

Assignment

...FST-01 ASSIGNMENT BOOKLET Foundation Course in Science and Technology Bachelor’s Degree Programme (BDP) (Valid from 1st July, 2013 to 31st March, 2014) It is compulsory to submit the assignment before filling in the exam form School of Sciences Indira Gandhi National Open University New Delhi (2013-14) Dear Student, We hope, you are familiar with the system of evaluation to be followed for the Bachelor's Degree Programme. At this stage you may probably like to re-read the section on assignments in the Programme Guide that was sent to you after your enrolment. A weightage of 30 percent, as you are aware, has been earmarked for continuous evaluation, which would consist of one tutor-marked assignment for this course. This assignment is based on all Blocks of this course i.e. Block 1-8. Instructions for Formatting Your Assignments Before attempting the assignments, please read the following instructions carefully: 1. On top of the first page of your answer sheet, please write the details exactly in the following format: ENROLMENT NO.: …………………... NAME: …………………........................ ADDRESS: …………………................. ……………………………………… COURSE CODE COURSE TITLE : ………………………………. : ……………………………….. ASSIGNMENT NO. : ………………………………... STUDY CENTRE : ……………………………..… (NAME AND CODE) PLEASE FOLLOW THE ABOVE FORMAT STRICTLY TO FACILITATE EVALUATION AND TO AVOID DELAY. 2. 3. 4. 5. 6. Use only foolscap size writing paper (but not of very thin variety) for writing your......

Words: 760 - Pages: 4

Premium Essay

Assignment

...ASSIGNMENT MARKETING MANAGEMENT |CASE |INDIVIDUAL ASSIGNMENT |GROUP ASSIGNMENT | | |(Please select 1 question for your individual |(Please select 2 questions for your group assignment | | |assignment regardless how many questions are given in |regardless how many questions are given in each case) | | |each case) | | | |Submission deadline: JANUARY 4TH, 2014 | | |Submission to: ANHDANGLUCKY@GMAIL.COM | |ZENITH |What would you do to improve the reliability of the |What managerial and research problems that face Zenith?| | |market research, if you were the top management of the | | | |company? |Where could Zenith get the relevant information? | | |What would the best way be to discover the market |What would you do if you were Pearlman? | | |demand of the new product of Zenith? | ...

Words: 693 - Pages: 3

Free Essay

Assignment

...FACULTY OF EDUCATION AND LANGUAGES OUMH1303: ENGLISH FOR ORAL COMMUNICATION SEMESTER : JANUARY 2010 COURSE ASSIGNMENT (35%) INSTRUCTIONS 1. The assignment would be evaluated on the basis of the accuracy of the answers given and the credibility of the supporting arguments, data and references. 2. Type your assignment using “Times New Roman”, font size 12 with 1.5 line spacing on A4 size paper. Your assignment must be submitted to your tutor before or by the 4th tutorial. 3. 4. Your assignment should be limited to 10 – 12 pages. 5. This assignment is worth 35 % of your final course grade. 6. Plagiarism in any form is prohibited. Plagiarised materials would not be accepted and zero (0) marks would be awarded for the work. 1 ASSIGNMENT QUESTION You are the president of the Parent-Teacher Association (PTA) at an urban school. At the last association meeting, many parents expressed their concern about the poor performance of their children, particularly in Mathematics, Science and the English Language. They felt that the school should work harder towards improving the teaching and learning of these subjects. The PTA could assist but the association does not have enough funds (money) to carry out its projects for the school. You wish to speak about this problem and suggest some solutions at the forthcoming meeting. (a) Which of the following speech types will best describe your speech: informative, persuasive, negotiation, or argumentative......

Words: 626 - Pages: 3

Premium Essay

Assignment

...FINAL ASSIGNMENT |Programme Title |Edexcel BTEC Level 5 HND Diploma in Business (QCF) | |Unit Title |Marketing Principles | |Unit Code |F/601/0556 | |Assignment No |01 | |Level |Level-5 HND | |Credit value |15 credits | |Assessor | | |Deliverer | | |Handout Date | | |Hand in Date |31/07/2014 | Assignment Title: Making Marketing Decisions You have been......

Words: 1867 - Pages: 8

Premium Essay

Assignment

...ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD (Department of Business Administration) Course: Human Resource Management (5532) Level: MBA Semester: Autumn, 2010 CHECKLIST This packet comprises the following material: 1) 2) 3) 4) 5) Note: Text book Assignments # 1 & 2 Course outlines Assignment 6 forms (2 sets) Assignment submission schedule In this packet, if you find anything missing out of the above-mentioned material, please contact at the address given below: The Mailing Officer Mailing Section, Block # 28 Allama Iqbal Open University, Sector H/8, Islamabad. Tel: (051) 9057611, 9057612 Mohammad Majid Mahmood Bagram Course Coordinator ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD (Department of Business Administration) WARNING 1. 2. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”. Course: Human Resource Management (5532) Level: MBA Semester: Autumn, 2010 Total Marks: 100 Pass Marks: 40 ASSIGNMENT No. 1 (Units: 1–4) Q. 1 Why HR is called the most important asset and competitive advantage of any organization in the world? (20) Your Solutions 2 Helping Material HR and Competitive Advantage In order to have an effective competitive strategy, the company must have one or more competitive advantage, factors that allow......

Words: 5443 - Pages: 22

Free Essay

Assignment

...and uniform specifications. 1046.2 WEARING AND CONDITION OF UNIFORM AND EQUIPMENT Police employees wear the uniform to be identified as the law enforcement authority in society. The uniform also serves an equally important purpose to identify the wearer as a source of assistance in an emergency, crisis or other time of need. (a) Uniform and equipment shall be maintained in a serviceable condition and shall be ready at all times for immediate use. Uniforms shall be neat, clean, and appear professionally pressed. All peace officers of this department shall possess and maintain at all times, a serviceable uniform and the necessary equipment to perform uniformed field duty. Personnel shall wear only the uniform specified for their rank and assignment. The uniform is to be worn in compliance with the specifications set forth in the department's uniform specifications that are maintained separately from this policy. All supervisors will perform periodic inspections of their personnel to ensure conformance to these regulations. Civilian attire shall not be worn in combination with any distinguishable part of the uniform. Uniforms are only to be worn while on duty, while in transit to or from work, for court, or at other official department functions or events. If the uniform is worn while in transit, an outer garment shall be worn over the uniform shirt so as not to bring attention to the employee while he/she is off duty. Employees are not to purchase or drink alcoholic beverages......

Words: 2063 - Pages: 9

Premium Essay

Assignment

...SUNWAY COLLEGE JOHOR BAHRU DIPLOMA IN BUSINESS ADMINISTRATION COURSEWORK / ASSIGNMENT (GROUP) Module Code Module Title Semester Issue Date Due Date Lecturer : BMGT 0304 : HUMAN RESOURCE MANAGEMENT : MARCH-JUNE 2015 : WEEK 2 : WEEK 6 (30th April 2015) : ANTHONY WONG INSTRUCTIONS 1. 2. 3. 4. 5. 6. There are SEVEN (7) pages in this assignment including the cover page. The assignment must be completed in groups as per instruction. The submitted assignment must include the Assignment Cover Page. References must be acknowledged accordingly. Plagiarism/cheating will result in the assignment being marked FAIL. The assignment must be submitted in hardcopy (printed) format and presented. IMPORTANT Assignments must be submitted on their due dates. If an assignment is submitted after its due date, the following penalisation will be imposed: ● ● ● One to two days late Three to five days late More than five days late 20% deducted from the total assignment marks 40% deducted from the total assignment marks Assignment will not be marked. 1 INTRODUCTION This assignment is a partial fulfillment of requirements leading to Diploma in Hotel Management/Business Admin for students taking a subject in Human Resource Management. The assignment will be done by students in suitable group size which approved by the lecturer. PURPOSES The purposes of this assignment are to assess a student’s ability to: 1. Understand the basic concepts or theories learned in the subject matter.......

Words: 1354 - Pages: 6

Premium Essay

Assignment

...new water feature. Please ensure that you address all the criteria contained within the ‘Assessment Task 1 Marking Sheet’. This assignment will be marked generally in accordance with the Marking Sheet where marks are deducted for non-conformities. Please be aware that simply mentioning the marking criteria/addressing it in a half-sentence or similar does not guarantee full marks; the thoroughness and completeness of how the marking criteria are addressed will determine how many marks for each separate criterion will be awarded; this can be either the full mark, or parts thereof. Furthermore, it is vital that you familiarise yourself with precisely what a Risk Assessment and Risk Treatment incorporate for ISO 31,000 – due to the word count limit, it is advisable to not deviate from the task given, while meeting the marking criteria. Word count limit: The body of this assignment will be in the range of 3000 to 5000 words, excluding any Appendices. You may need to simplify and define the boundaries carefully in order to achieve the word limit. A single hard copy will be submitted in class. The assignment must also be uploaded to the 49006 Turnitin folder within UTSOnline before the due date. Please make sure to submit the complete assignment including Cover Page, Table of Contents, Reference list and Appendices. Emailed assignments will not be accepted. Be aware that several students have fallen foul, in previous semesters, of the sophisticated systems in......

Words: 831 - Pages: 4

Free Essay

Assignment

...Assignment front sheet Qualification Unit number and title Pearson BTEC Level 5 HND Diploma Business Unit 1: Business Environment Learner name Assessor name Nour Hawarneh Date issued Completion date Submitted on Nov 08, 2015 Jan 18, 2016 Assignment title Your company’s environment LO2 LO3 Assessment Criteria In this assessment you will have the opportunity to present evidence that shows you are able to: 1.1 organisational purposes of businesses Identify the purposes of different types of organisation 1 1.2 Describe the extent to which an organisation meets the objectives of different stakeholders 1 1.3 LO1 Learning outcome Understand the Learning Outcom e Explain the responsibilities of an organisation and strategies employed to meet them 2.1 Explain how economic systems attempt to allocate resources effectively 2 2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation 2 Understand the nature of the national environment in which businesses operate Understand the behaviour for oganisations in their market environment 2.3 3.1 LO4 2 Illustrate the way in which market forces shape organisational responses using a range of examples Judge how the business and cultural environments shape the behaviour of a selected organisation 3.3 Be able to assess the significance of the......

Words: 1690 - Pages: 7

Premium Essay

Assignment

...|Assignment brief – QCF BTEC (L3 ONLY) | |Assignment front sheet | |Qualification |Unit number and title | |BTEC L3 Diploma/Ext. Dipl. – Business |UNIT 1 – BUSINESS ENVIRONMENT | |Learner name | Assessor name | | |MARY EC ZAFRA | |Date issued | Hand in deadline |Submitted on | |14 OCTOBER 2015 | 15 November 2015 |18NOV2015 | | | | |Assignment No. & title |Assignment 1/2 - The Businesses We See | |In this assessment you will have opportunities to provide......

Words: 952 - Pages: 4

Premium Essay

Assignment

...Application Exercise (Assignment to be submitted) (90 min.) (Not exceeding five pages) |Apply the five forces analysis to your company/division and assess the attractiveness of your industry. | | |Compare the industry attractiveness five years back and today due to the shift in the forces. | | |Guidelines for the assignment | | | | | |Brief introduction of your company, its product portfolio and the markets/segments it caters to. If it | | |is in multiple industries, choose any one industry for the purpose of this assignment. (refer to 2008 | | |HBS note for definition of industry) | | | | | |Consider each threat individually. Take each factor in it and explain its role and significance in your | | |industry. Rate its effect based on the above explanation. (template if shown in class may be used for | | |structured approach but the spirit of the analysis matters more than......

Words: 254 - Pages: 2

Premium Essay

Assignment

...and analysed to present their financial standing at the end of the year. Comparing the relationships of these ratios reveals that Orica decreased their liquidity, but suffered lower profitability with heavy influences from Minova’s impairment of goodwill. With high asset utilisation and stable efficiency, Orica should focus on improving their maintenance and reliability by addressing the Kooragang plant shutdown. Furthermore, Orica is financing more with debt than equity which introduces some risk to the company given their higher expenses for 2012. Finally, the investment ratios indicate that Orica could be poised for high growth with a stable return, but should first focus on maximising their plants and equipment. Sample Assignment: Part of the content removed II TABLE OF CONTENTS Executive Summary ............................................................................................................................. II Table of Contents ............................................................................................................................... III A. List of Tables ...............................................................................................................................IV 1. Introduction ................................................................................................................................... 1 2. Ratios....................................................................

Words: 2155 - Pages: 9