Buzzi Unicem SpA is a cement production company located in Italy in the town of Casale Monferrato, which is was formerly known as the ‘cement capital’ of Italy. It was founded in 1999 by two brothers Antonio Buzzi and Pietro Buzzi who later acquired Unicem also a cement manufacturing company in Italy. This firm’s head quarters are in Casale Monferrato and its subsidiaries located in different regions of Italy the firm’s name later changed its name to be Buzzi Unicem SpA (Buzzi Unicem SpA, 2014). The company also operates in other countries like Germany, Luxembourg, Mexico, Russia, Ukraine, Slovakia, Czech Republic, Poland Netherlands and the USA. In the USA alone, the company operates In addition to cement production, the firm also manufactures other construction materials like ready-made concrete and others. However, the firm is the second biggest cement manufacturer in Italy (Buzzi Unicem, n.d). The company website can be found at http://www.buzziunicem.it/online/en/Home.html.
In the present business environment, just like any other organization, Buzzi Unicem SpA is tasked with the need to compete extensively. This is due to the globalization affect on the business context that has made the business environment become so challenging and complex to business enterprises (Kotabe & Murray, 2004: 7). That is, this environment has become so uncertain and the increasing use of technological applications that are also rapidly changing (Folmer & Tietenberg, 2005: 97). Just as Pride & Ferrel (2008) explain about sustainability of a competitive advantage by an organization, that a firm should have a form of advantage that is not easily imitated by other competitors and should have a life (64), this effort is strived by Buzzi Unicem SpA. In this company, gaining a competitive advantage is a major evident of outdoing the competitors, guarantees survival in the challenging business landscape and prominently positions the firm in the market (Doole & Lowe, 2012: 4; Global Cement News, 2014; Buzzi Unicem SpA, 2014). The question is how effective is the present business strategy for the organization in the economic environment to realize its stated organizational objectives? And what are the significant capabilities and resources that should be identified as the foundational sources of attaining a competitive advantage for this firm?
Barksdale & Lund (2006) inform that when a firm consistently experiences shortfalls to realize its set objectives and low performance levels relative to its competitors like Holcim Ltd, and Societe Lafarge and others, are good signals that indicate that the strategy developed is poor. Signals like: sales and income growth trends, trends in stock prices, general financial strength of the firm, rate at which customers are retained and new customers acquired and sound internal operations of the company that reduce production of defects, workforce productivity, customer satisfaction, and others. Thus, in an economic environment, a firm needs to develop a business strategy that matches its capabilities and resources at hand. That is, a firm is positioned to succeed when it is has sufficient resources at hand to create a value for its customers (5-7). For Buzzi Unicem SpA, just like most firms today, has learned to embrace resource-based strategies that enable adequate resource exploitation in ways that rivals cannot be able to imitate. Such strategies include, (a) incorporating highly efficient centers for distribution that contribute to reducing costs to levels that are much lower than those of the competitors (b) establishing strong relationships with suppliers that are key to the production processes that ensure that the firm gets consistent supplies throughout even during hard-times. This is in addition to the other unmatched capabilities that are offered by suppliers like sharing of significant information that is aimed at improving product value and creating product differentiation in the market, and maintaining low levels of inventory since the suppliers have constant information about the production schedules of Buzzi Unicem SpA among others (Love, Louis & Ellison, 2008: 90; Global Cement News, 2014; Buzzi Unicem SpA, 2014).
According to Cassidy (2005), popular types of competitive capacities and valuable resources considered by organizations are listed to include: (a) specialized expertise (b) suitable locations and use of advanced technological applications (c) valuable workforce (d) valuable organizational processes and assets (e) organizational alliances and ventures (67). When employing each of these factors to evaluate the competitive advantage for Buzzi,Unicem SpA the following is realized respectively: (a) The company has considered to incorporate a specialized expertise that gives the firm an ability to: (i) conduct business activities in low-cost operations (ii) produce innovative goods and services (iii) easily and quickly get products newly created to the market (iv) have unmatched supply chain management initiatives and (v) consistently offer good customer support services. (b) Buzzi Unicem SpA is equipped with highly advanced technological applications which imply that internal processes are improved following changing demands occasioned by external forces. However, the firm is not suitably located to allow easy access to the plant by customers it is rather located near the sources of its raw materials (c) Buzzi Unicem SpA is well equipped with a proficient workforce that is talented in the key areas of all the company’s business activities. This workforce is well managed by a managerial team that is adequately knowledgeable of the technical business processes and also has a sound training on how to run the organization successfully to meet its stated business objectives. (d) The operations of this company are strongly supported by sound management standards that such as quality control, distribution networks, retail dealership processes and others. Also, the company has been in the business long enough and has managed to earn a good business reputation through its social responsibility initiatives, also, through the production of quality products and market segmentation, the company has managed to create and maintain a powerful brand name that has a strong customer loyalty in the market today. (e) Joint ventures with foreign companies like Shanshui and Sinoma have supported the operations of this company by giving it access to advanced technologies that match the changing demands of the external forces while satisfying organizational needs internally, provided more specialized training that has improved key areas of the business operations, and gaining access to markets that are located in different parts of the world (Doole & Lowe, 2008: 34-35; Global Cement News, 2014; Buzzi Unicem SpA, 2014).
The evaluation of the competitive abilities and resources of Buzzi Unicem SpA informs of how strong it is in the highly competitive business environment. However, according to Mintzberg (1994), the value of a resource is said to be determined when it passes through four different types of tests. Which are: (1) is the value created by the resource competitive enough. In that, some have the potential of enabling a company gain a competitive advantage and others don’t (2) are the resources considered rare to find which can be equated or made better by rivals? (3) Are the resources used easily imitated by others? That is, others can afford to copy it. This makes these resources lose a competitive advantage (4) can the resources considered by surpassed by rivals’ substitute resources? Applying these tests to determine the power of Buzzi Unicem SpA’s key resources, it is found out that attributes like company’s reputation, patent protection and brand royalty are very expensive for rivalry companies to afford and thus are resources that are hard to imitate. However, these resources stand a chance of losing their competitive advantage if there exist competitors’ substitute resources that are equivalent to them. This aspect can be understood more when competitors have better production technologies than Buzzi Unicem SpA. In that technologies used can be imitated and even made better by the rivals. Being unable to match technological inputs and even having better applications is said to easily lead to business failure in the economic environment (159-162). This again leads to the question how can the company sustain its competitive position over the next three years?
The strategic direction for Buzzi Unicem SpA is to ultimately lead in performing highly in the business environment it operates in while its efforts are founded on a sustained competitive advantage (Buzzi Unicem SpA, 2014). This ideology is also supported by Hills and Jones (2008) who argues that market leadership is ensured when organizations have the capacity to remain ahead of their competitors who are presently existing and those who are about to be rivals as well. To attain this competitive advantage, a firm needs to have a business model that perfectly matches its internal capacities and these capacities are fully exploited to produce a customer value that is hard to imitate and to be outdone by the rivals’ substitute products or services (77-78). To achieve this, Buzzi Unicem SpA endeavors to study critically the operations of all its competitors which include those existing and the potential ones too. This it achieves by determining their strengths and weaknesses and crafting what opportunities could be realized from the gaps identified that another company could find solutions to these gaps. Moreover, the firm also attempts to evaluate strategies that are incorporated by other established firms performing well in their markets, so as to find ideas that it can borrow to develop its competitive advantage. Another way is to be familiar with significant factors that exist in the external environment that can act as suitable sources of gaining a competitive advantage. Importantly also, the firm strives to determine what sources of competitive advantages that the competitors have as well as their business strategies. This it manages by studying the reports publicized annually, networking, and others Grunig, Clark & Kuhn, 2010-25-30).
Decisions made always produce actions that give results and thus performance results of any organizations are based on the decisions that the business leaders make (Abraham, 2012: 45). Triantis (2013) argues that organizational decisions are made following a strategic framework that offers guidance and focus. Hence the strategic framework that places a company in a competitive position is said to be referred to as a competitive strategy whose main goal is to create a sustainable competitive advantage in the highly competitive business environment (345). For Buzzi Unicem SpA the strategic choice that it goes for is one that creates a sustainable competitive advantage that answers the over aching questions like: (a) how can the business be defined today and tomorrow? (b) What kind of markets and industries does the company compete in and how intense is the competition that influences the profit margins of the firm as well as its competitive attractiveness? (c) How the firm responses to the external competitive forces that exists in the industries and markets chosen? (d) What are the approaches that are fundamental towards gaining a competitive advantage for the firm? (e) What position in the market does the firm strive to attain? And (f) what methods of growth are best for the company? Thus in general, the strategic choice that a firm opts for is one that: (i) effectively enables it to balance organizational needs today and its opportunities in future (ii) consistently leads in organizational performance in terms of profit margins, revenue growth, and shareholder’s total returns and (iii) sustains the competitive superiority position over a long period of time throughout business cycles, management changes and industrial disruptions (Lowitt & Grimsley, 2009: 1; Doole & Lowe, 2006: 70; Buzzi Unicem SpA, 2014).
Integrating together all the facts discussed in the previous sections, it is appreciated that it is crucial to understand the competitive strengths of key resources identified in a firm which enables it to determine which resources are to be developed further so as to support the organization in realizing its future business strategies. Also, other resources can also be measured by the tests to determine their potentials. This can be achieved by assessing what sources of competitive advantages competitors have and other firms that have remained successful in the market to gain ideas. This can also be done alongside changes in customer demands and preferences. For Buzzi Unicem SpA, these business strategies that are resource based are compelled to weaken the competitive efforts of rivalries both existing and upcoming ones in future. This is especially realized by identifying competitive weaknesses of competitors’ key resources and coming up with substitute resources that play the same role and even more better before other rivals can. This for example can be continuous employment of technological advancement, getting closer to understand customer behaviors that are covered in demand forecasting and demand management systems and others. Thus, one strategic formulation can be said to include careful and consistent development of competitive resources that have proven to effectively substitute competitors’ key resources (Fogg, 1994: 35-40; Capon, Farley & Hoenig, 1996: 9). This development also covers furthering development of internal resources that have the potential of enabling the firm meet its stated business objectives. These are especially those that can be easily imitated by others like technological applications.
As Lussier (2008) argues, the strategic formulation discussed previously cannot be accomplished effectively without placing an emphasis on company’s core competency in performing all its business activities. This organizational competency is said to vary accordingly throughout a business operation. Competency is expounded to imply doing something proficiently. Thus certain business operations demand expertise skills like controlling inventories, selecting locations and others. Other competencies that are multidisciplinary like those involved in product development are made up of efforts bundled up from different groups of people. These people are said to be equipped with adequate knowledge of the market, engineering, low-cost production processes and others. Such different forms of competencies collectively form a company’s core competency that develops its capacity to operate successfully in a highly competitive marketplace. This competency model forms the foundation of a sustainable competitive advantage (145-150).
Carlock & Ward (2001) & Bohm (2009) also mention about capitalizing on the strengths of the company to capture reasonable business opportunities available in the economic environment and also to protect the organization against possible threats that hinder its potential successes. This conveys the importance of determining strengths and weaknesses of a company’s key competitive resources. A weak competitive resource puts an organization at a disadvantaged position in the market place. This ultimately is evaluated to mean that a business strategy can heavily place demands on weak points of the company. This is explained to mean that resources that have not been tested should be avoided and they can include: untested expertise or skills in business activities that are highly competitive, organizational assets that have a deficiency or have low capabilities in performing in major activities of the business and others. Thus, it can be said that when identifying the strength of company’s key resources, potential areas to consider are: (a) very strong intangible assets of the company (b) very strong financial position that easily grows the business (c) good and sound product innovation capacities (d) a strong ability to ensure a wider coverage of suitable geographical locations for a strong product distribution around the world (e) corporate ventures and alliance for the purposes of maintaining superior technological skills and patent protection (f) better quality management systems than those of the rivals (g) organizational capacities that have proved to make improvements in production processes of cement and others. These extreme abilities of the company’s key resources are found to enable an organization to capture business opportunities like: (a) expanding the market share by covering more markets geographically and furthering efforts to cover more needs of the market (b) utilizing knowledge and skills to enter in new forms of businesses and product lines (c) acquisition of competitor firms that have sound technological capabilities and expertise and others. This can be explained to mean that without proper tests of the capabilities of the company’s key competitive resources, a firm would fall into risks such as: (a) having weak intangible assets of the company, narrow product lines in comparison to those of the competitors, falling in too much debts that burden effective operations of the firm, having weak core organizational competency and ultimately losing a clear direction of the business strategy. This point recommends that Buzzi Unicem SpA should critically evaluate the strengths of its key competitive resources so as to realize its 3year business goals more successfully than to fall into such potential business threats (149-150).
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