Identify a market entry method for a local firm to increase market share, profit

and international presence.

Conmix group of Companies

Conmix Group of Companies started operations in 1953 by building many Government

Sector Construction Projects including projects at the Peradeniya University. It is a
Family owned and run organization which its founder A.M.I.N Marikar began in Kandy.
The core product offered from the beginning has been fast construction through new
technology and today the group has developed with many new divisions within the
building construction industry in Sri Lanka.

Expanding the Conmix Group of Companies to India

As an expansion of business of Conmix Group of Companies, we are trying to expand

our business to India, where we will be able to gain more competitive advantage,
expertise and new knowledge and skills along with new technology. When moving to the
Indian market, there is a large amount of factors that should be concerned of. Mainly the
culture, systems and procedures of India etc. Because of that we may face a high
competition from the existing companies. So in order to gain more competitive advantage
and be more powerful while gaining customer loyalty towards the brand, we have thought
of coming in to a joint – venture with the Nagarjuna Construction Company, India.

A joint venture is a business agreements in which parties agree to develop, for a finite
time, a new entity and new assets by contributing equity. They both exercise control over
the enterprise and consequently share revenues, expenses and assets. There are other
types of companies such as JV limited by guarantee, joint ventures limited by guarantee
with partners holding shares.
(Extracted from http://en.wikipedia.org/wiki/Joint_venture, on 14/03/2011 at 3.05PM)
Nagarjuna Construction Company, India

Nagarjuna Construction Company Limited (NCC) is an India-based company engaged in

construction/project activities. It operates in 10 divisions: building and housing,
transportation, electrical, water and environment, irrigation, international, power, metals,
oil and gas and mining. The Company has a track record of more than 28 years. It has an
annual turnover of Rs 7,300 crore and plays an active role in developing BOT road
projects, seaports, BOOT hydropower projects, etc. We have selected Nagarjuna
Construction Company Limited for out joint venture because the two companies engage
in building houses, and also cement based products. Also the Nagarjuna Construction
Company Limited has been in business for 28 years. This ensures the reliability and the
stability of the company.

The Economic Situation of India and the future of the construction field

India is currently the second fastest-growing economy in the World. The Indian
construction industry has been playing a vital role in overall economic development of
the country, growing at over 20% Compound Annual Growth Rate over the past 5 years
and contributing ~8% to Gross Domestic Product. In 2005, the sector generated around
31 million jobs (of which only ~1 million were generated by the organized sector). The
Government of India proposes to achieve 9.0% GDP growth during the Eleventh Plan
period. To achieve growth of this scale, adequate infrastructure is the most basic
requirement. In order to overcome the current constraint of insufficient modern
infrastructure, the government is developing a program for infrastructure investment
through both public and private sectors, and expects to more than double public
investments from ~1.2% of GDP in FY07 to 2.8% by FY12. It is also partnering with
private companies on initiatives such as the ultra mega power projects and Golden
Quadrilateral project. Taking cue from the Government’s ambitious projects lined up for
the Eleventh Plan period, the demand for construction is expected to grow by at least 8-
9%, and 2.5 million employment opportunities per annum are expected to be generated.
Those looking for opportunities for accelerated learning and progress would be rewarded
heavily. There is a need for the full spectrum of employees from directly linked
professionals like civil and mechanical engineers and architects to per-day wage
construction workers and indirectly linked industrial workers such as steel and cement
manufacturers to highway toll booth operators. It would be wise to join a leading Indian
company or a multi-national with a local presence, even at the starting level, as there is
significant scope for training and rapid upward movement through the ranks for talented
individuals.

(Extracted from, http://info.shine.com/Industry-Information/Construction-and-Real-

Estate/855.aspx, on 14/03/2011 at 5.50PM)

Identifying the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of the

Conmix Group of Companies

Before expanding the business to another country, we should firstly identify what are our
driving forces and restraining forces. In order to identify them, we can use the SWOT
analysis. The SWOT analysis clearly points out the driving and restraining forces of the
company.

Strengths

 The company has a strong brand image by being in the field for fifty seven (57) years in
Sri Lanka. This means there is a huge history behind the success of the company. It also
shows that the company is reliable and that the customers have trust upon it and also
that the company has a good brand image within the country.

 Conmix Construction has gained the “M1” certification in Civil Construction which is
the highest rank given by the Government of Sri Lanka in the construction field.
 Specialized in building large scale housing projects, warehouses and multiple story
buildings

 In 1984, Conmix was the first company outside the Western Province to start
manufacturing high quality hollow cement blocks. It eventually became the benchmark
for all other manufacturers in the region and was the first to be certified with SLS
Standards. It’s still the market leader of that sector.

 Colourcon Roofing Tiles (Pvt) Ltd, which is a subsidiary of the Conmix Group, is the
first Automated PLC controlled roof tile plant in South Asia.

Weakness

 Lower level labourers are hard to be found. Even if they join, that would be on
temporary or causal basis.
 Hard to implement training and development programmes on the bottom level
employees of the company because it wont be very effective.
 The sales functions cannot be purely related to the organizational context because the
company goes for contracts etc which mostly come under networks that have been
built.

Opportunities

 The group has several subsidiaries such as Colourcon Roof tiles, Conmix
Constructions, Lifestyle Homes etc. This brings competitive advantage for the
company. The Conmix Constructions can use their own building material for their
constructions. This promotes their own products and also creates uniqueness of their
constructions.
 The Conmix Group is a shareholder and sits on the Board of Tokyo Cement Colombo
Terminal (Pvt) Ltd. which is a subsidiary of the largest cement manufacturer in Sri
Lanka. This helps to generate networks among construction field and gain more sales
for the company.
 Lifestyle Homes a subsidiary of the Conmix Group of companies has been launched
with the purpose of combining the strategic advantages the group possesses in housing
to maximize the competitive advantage and be able to pass the benefits to their
customers.

Threats

 Conmix Group of Companies involves in a wide range of a business field. For example
they involve in home constructing, building constructing, producing building materials
such as cement blocks, producing roof tiles etc. Even though it is a competitive
advantage for the company, it surely accumulates the amount of competitors for the
company. Each of those sectors has different competitors and the sales and marketing
teams will have to put an immense strength on marketing activities for each sector,
separately.
 The government rules and regulations on housing schemes and buildings may tend to
change in the future in order to reduce pollution, save greenery, save resources for the
future generations etc.
 The raw material costs and the labour costs are rising due to scarcity and rising cost of
living. When that happens the pricing should be adjusted as well. That might put a
negative effect on the company and a competitor might grab a share of the market that
the Conmix Group of Companies has acquired.
 The customers’ preference changes time to time. For a product such as Colourcon Roof
tiles, it is hard to change the setting because it is fully automated.
Environmental Scan of the Indian socio – cultural aspects relating to the
construction field.

The Indian construction industry recorded a consistent double-digit year-on-year growth

of 12% during 2000-2005, and is expected to grow at 25-30% during 2005-2010. The key
drivers of this growth are government investment in infrastructure creation and real estate
demand in the residential and industrial sectors.

The industry is experiencing increasing polarization between large and small players. The
top 10 players, such as Gammon India, Patel Engineering Limited (PEL), and Hindustan
Construction Company (HCC), contributed to 75% of the total revenue in 2005. These
players are increasing their market share through large-scale contracts, joint ventures and
foreign operations. Though an increasing number of small players are also entering the
market, most of them do not have the resources to bid for big contracts.

The Indian construction industry is facing the challenges of outdated land and property
ownership regulations, infrastructural bottlenecks and a shortage of civil engineers.

(Extracted from,
http://findarticles.com/p/articles/mi_m0EIN/is_2006_Nov_20/ai_n16851629/, on on
14/03/2011 at 6.34PM)

Political Factors

Political factors include facts such as government policies relating to the industry, tax
policies, laws and regulations, trade restrictions etc. The economic factors relate to
inflation, economic growth, interest rates, exchange rates and GDP etc. Social factors
mainly are about the socio - cultural aspects and also talk about social well being and
aspects regarding nature. Technological factors are such as of innovations, R&D
activities, new technology, automation, etc.
India is the most populous democracy in the world. In the 2009 general election
Manmohan Singh became the prime minister of India for his second term, formed a
government with a coalition called the United Progressive Alliance (UPA). Manmohan
Singh is first prime minister since Jawaharlal Nehru in 1962 to be re-elected after
completing a full five-year term. The sales teams of the Conmix Group of Companies
may encounter problems such as government not encouraging foreign constructors, and
encouraging their local services, which is common in India. We can get over this problem
because we are going to India with a joint venture with one of the leading Indian
construction company. There will also be problems such as tax problems, limiting usage
of scarce resources such as land which is essential for the construction field, etc. But
hopefully most of the government issues will be able to sort out with the help of the joint
venture between Nagarjuna Construction Company.

Economic factors

India's population policy started much earlier, in 1952. By 2045, it is assumed that the
Indian population will be more than the Indian population with the current rates. India
still contains the largest number of poor people in the world, and has a higher rate of
malnutrition among children under the age of three. The economy was shackled by
extensive regulation, protectionism, and public ownership, leading to pervasive
corruption and slow growth. In 1991, the nation liberalized its economy and has since
moved towards a market-based system. The policy change in 1991 came after an acute
balance of payments crisis, and the emphasis since then has been to use foreign trade and
foreign investment as integral parts of India's economy. With an average annual GDP
growth rate of 5.8% for the past two decades, the economy is among the fastest growing
in the world. India's economy is the fourth largest in the world at US$3.548 trillion
corresponding to a per capita income of US$3,100. India has the world's second largest
labour force, with 516.3 million people. In terms of output, the agricultural sector
accounts for 28% of GDP; the service and industrial sectors make up 54% and 18%
respectively.
As discussed previously, the construction field is also emerging to the Indian economy.
And currently the construction sector is contributing a lot to the Indian economy. Mostly
the sales teams of the Conmix Group will have to face such as being a foreign company,
and that the earning will not retain in India. That will be a huge issue when it comes to
sales in India because Indian culture mainly supports their own products and services.
But again since the Conmix Group has a joint venture with the Nagarjuna Construction
Company of India, the sales teams still have a point to show up when the above
mentioned issue arises.

Social factors

One of the main economical problems in India is the increasing population rate. India has
started family planning and has implemented strategies to reduce the population rate and
the birth rate. But then still the population rate is very high and the economically poor
population is very high in India. The last 50 years have seen a rapid increase in
population due to medical advances and massive increase in agricultural productivity
made by the green revolution. India's urban population increased 11-fold during the
twentieth century and is increasingly concentrated in large cities. The overall abortion
ratio was 17.0 per 1,000 pregnancies. India's literacy rate is 64.8% (53.7% for females
and 75.3% for males). The state of Kerala has the highest literacy rate at 91% while Bihar
has the lowest at 47%. According to the World Health Organization 900,000 Indians die
each year from drinking contaminated water and breathing in polluted air. Since the
literacy rate is comparatively low, the sales teams will have to be appointed from India
itself because they know hot to approach their people. The sales teams will have to be
skilled with at least two or more languages apart from English.

Masculinity/Femininity
This is a fact that should be highly concerned of when involving in sales aspects. In
India the society is mostly masculine dominated and mostly the decision making is
done by men. India's masculinity index is 56%, which reveals that both genders have
similar values. In fact, one should notice that there are little amount of women in high
 positions in India. So when it comes to effective marketing, the sales people should
approach the masculine sector and give them the priority.

Individuality/Collectivism
It is identified that Indians are sort of aggressive and they prefer individuality rather
than collectivism. So the sales teams should create strategies which address
individuals, effectively and make them get a good impression about the company.

Fluid time/Rigid Time

Fluid time means flexible time in other words meeting deadlines sharply is not very
much necessary. Mostly in Asian countries fluid time is considered. Rigid time is
working on time and doing the project or the deal on the promised time. In Western
countries the highly consider the fact of Rigid time. The Conmix Group of
Companies follows rigid time aspect. Even though Asians are not highly concerned
about it, the Conmix Group sticks in to standards which can be even competitive to
any other company which is a competitive advantage over many other companies.

Technological Factors

The National Informatics Centre was established in March 1975 in India. The inception
of The Computer Maintenance Company (CMC) followed in October 1976. Between
1977-1980 the country's Information Technology companies Tata InfoTech, Patni
Computer Systems, and Wipro, had become visible. Throughout the 1990s, another wave
of Indian professionals entered the United States. Within the United States, Indians fared
well in science, engineering, and management. Graduates from the Indian Institutes of
Technology (IIT) became known for their technical skills. Technologically, the Conmix
Group use high tech, up to date technologies for the production processes. As mentioned
earlier, the Colourcon Roof tile manufacturing company is the first Automated PLC
controlled roof tile plant in South Asia. This proves that the technology is competitive
enough. But when moving to the Indian market, the company has to be more concerned
about the technology that is used by Indian companies because some of them are very
large scale constructors and they have been recognized by the whole world.