Mba Cne Assignment

MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM Note: Students must attach this page to the front of the assignment before uploading to WECSERF. For uploading instructions please see the help file online Name of Student:  Zubair Saleem  Student Registration Number:  KL102047  Module Name:  Competing In Networked Economy  Module Number:  WEC-MBA-12-0406  Assignment Title: Opportunity Recognition of a Business Opportunity In Networked Economy  Submission Due Date:  01 November, 2009  Student’s Electronic Signature:  Zubair Saleem 

Plagiarism is to be treated seriously. Students caught plagiarizing, can be expelled from the programme

Assignment Form MBA Jan04

1.0 EXECUTIVE SUMMPARY This Opportunity Analysis report broadly identifies the use and importance of e-business opportunities along with methodology of opportunity recognition, focusing its major components and setting the future plans and business model for e-business. This included idea generation of setting-up a new firm (Dream&build.com) which is also a first mover in e-business of construction materials market within Pakistan and the contribution of IT in the growth of Yunus Brother’s Cement with collaboration of some other major companies of Pakistan of the sector. The e-business opportunity is highly viable since there is a great demand in the construction sector after the aftermath of a recent earthquake and a boom in the population and these issues were discussed in this report together with the business plan that was formulated. The expected investment is PKR 4,88,642,000 with an annual interest being paid to the investor at a rate of 10% which is a lot higher than the current returns obtainable from fixed deposit placing. Deam&build.com has a strong value proposition of prompt and timely delivery, ease of availability of ordering (24/7), no stock-out situations, cost leadership and value added services such as financing of material purchased wherein the customer will pay the partner banks on a installment basis. These value propositions will provide the competitive advantage needed for Dream&build.com to rival any intending new entrances to the e-business market of construction materials. To the potential investor, we have researched and evaluated all the possible business scenarios including business trends, existing and future competitors, customers, brand name and the final assessment is that Dream&build.com has a cutting edge future and growth in the construction material business. Followed by the CRM we concluded in section of our e-business modeling that our customer have to pay PKR 285.958 instead of traditional selling cost of PKR 386 with a privilege of 26%

on orders through our website and in the end we concluded our opportunity recognition and analysis that company must make its move for its business goals and for customer privilege.

Homepage of our website www.dream&huild.com

CONTENTS

1.0

Executive Summary---------------------------------------------------------------------------

02

2.0

Our Business Concept------------------------------------------------------------------------

05

3.0

Opportunity Recognition---------------------------------------------------------------------

09

3.1 Current And Future Trends Of Market-----------------------------------------------

10

3.2 Our Potential Customers---------------------------------------------------------------- 15 3.3 Current And Future Competition------------------------------------------------------

17

3.4 Our Value Proposition------------------------------------------------------------------

18

Seizing the Opportunity----------------------------------------------------------------------

21

4.1 Partners And Allies---------------------------------------------------------------------

21

4.2 Business Model--------------------------------------------------------------------------

24

5.0

Conclusions------------------------------------------------------------------------------------

30

6.0

References--------------------------------------------------------------------------------------

31

Appendix 1----------------------------------------------------------------------------------------------

33

Appendix 2----------------------------------------------------------------------------------------------

34

Appendix 3----------------------------------------------------------------------------------------------

35

4.0

20

OUR BUSINESS CONCEPT

The Return on Investment ROI has emerged as the buzzword to justify the IT investments which seems to be the increase in potential of technology implementations. But basically ROI craze came to replace speed-to-market craze of the new economic era. Be the first to e-business and don’t let your competitors get an edge were the motivators of an era where speed was more concern of the market than money. Slower economic times have brought the e-business as the basic need of business organizations. (Buxbaum, 2002) Global situations are changing, markets are innovative and turbulent and business concepts have been changed from traditional business to e-commerce and then to e-business or electronic commerce. According to Cronia, 2000 “Billion dollar question is how an enterprise that really does move, grow, and produce profits at Net speed. Masters of internet will become the titans of the twentyfirst-century. Companies that can’t make the transition to creating sustainable digital value will struggle just to survive the decade.” Internet and electronic business is now not only a competitive advantage but became the reason for survival and sustainability of the organizations. While e-business opportunity is not a business concept or idea but is electronic need of external environmental to be fulfilled, want to be addresses, fear to be relieved within the limitations of time. Since two months I was working on different ideas regarding our project and was trying to evaluate the best possible e-business opportunity during which had many sessions with our module facilitator and after a thorough review and after discussions with our facilitator I thought to work on a e-business opportunity within Pakistan because in Pakistan e-business is not in practice and it will be first move to start an e-business within Pakistan.

After this decision I looked at many local and global perspectives of business like continuous and high growth in local population, globally increasing demands of information communication technology (ICT), what an organization must think to be in the business, what are human needs of this time? And how much is growth? How much information is required and how to satisfy the customers? According to Wikipedia.com the world population growth rate is highly increased from 1.6% to 2.0% in past few years. People need more energy, more place to live, more food to eat, more soft water to drink and all other basic as well social needs are increasing day by day. After discussion with the module facilitator we came to the decision and took Cement industry as our core business and e-business opportunity looking on the domestic market and customer needs and chosen a well known group of industries i.e. Yunus Brothers group of industries. Our group of industries i.e. Yunus Brothers is serving in Islamic Republic of Pakistan since decades and have 2 largest Cement industries, four textile mills and some other small industries. Among all of our industries the scope of Textile is not seemed to be growing within the country so we have already bought the Royal Linen global warehouse which supports a lot to our textile sector. “A survey of Charleris plc looked a variety of e-business initiatives in 12 sectors during 2002, found the vast majority of organizations starting out on e-business initiatives expected to reduce cost and increase revenue as a result. In practice, what they achieved above all was “Improved Marketing”, with cost reduction only coming second, some way behind.” (Charteris Plc, 2003) Looking on our business and social goals we now dream to enhance our Cement industry not only outside but within the country also. Not only this but in future we also dream to provide all the building and construction materials on one place to our customers. We have analyzed that within the country our customers are facing problems when they buy our products or any other construction material from many aspects like lack of availability of material at certain places, poor quality, distributor behaviors, increasing duplication and many other aspects which have leaded us to launch an e-business opportunity to order directly from the organization in whatever quantity and at whatever time time.

Most of the people within Pakistan build their houses in installments whenever they got money and due to this they survive if they don’t get the same quality product. We provide the opportunity to our customers by delivering them the required material within 12 hours wherever they want along with an additional provision of credit based sales. These include shipping costs and the selling price of the product but if we see the traditional way, the material is mostly being freight again and again and due to its passage through many channels customer get the material very expensive and of poor quality because of passage of time to reach. The growing trends of global business and its concepts towards online marketing and selling leads us to be the first mover in the local market and provide an opportunity for the customers to order anytime, in any quantity and from anywhere. Looking on these new trends of e-business and networked economy we have decided to deliver our products directly to the customer through our e-site www.dream&build.com. Our e-business through dream&build.com provide an opportunity to our customers to order their need from anywhere, anytime to get the high quality, timely delivery, less price, get all information regarding our products and consult directly to our industry through this website.

Source: Self Made Dream&build.com is not only an online resource for our customers to reach directly to our products from anywhere just by some clicks but it also will help them to communicate to us and provide their feedbacks to improve our products quality and to know the growing needs of our customers.

The easy steps and timely delivery provide you an advantage to order and receive our products at right time and right place with wide variety of choices, quality conscious team and online customer service to order and follow your order. Also e-business provide us to be first mover in the online market and gain a competitive advantage on our future competitors who are still following the traditional business channels to sell their products as substitutes.

30

OPPORTUNITY RECONITION

Opportunities are situational and take form in real world due to changing conditions, leads and lags of society, knowledge gaps, confused situations, inconsistencies, and uncertainties. (Kotler & Keller, 2006) “If we look at what differentiates successful entrepreneurs from the unsuccessful ones, the most important craft is “Opportunity Recognition.” Entrepreneurs who have the most success are those who are able to find a real niche in the market that offers enough of a margin to meet their needs and aspiration. Successful entrepreneurs understand that importance of “failing on paper.” They carefully assess their idea to make certain that it has an adequate market and enough profit margins before they ever launch their venture.” (Weblog Network, 2001) The recognition or the identification of opportunity leads us to the decision that we should go with the opportunity or should leave it if it does not support our business goals. The Heuristic Model of opportunity recognition goes through four main stages of Prevision of opportunity, Vision of the opportunity, its development on the basis of Pros and cons of opportunity by Evaluating, elaborating and Modifying it and in the end making decision of whether should go with opportunity or should quit as shown in the following figure.

Source: Marketing Management, 12th edition, Kotler & Keller, 2006 Our core business is concerned with Cement industry and our main focus will be on the Cement industry while our main target for the e-business is not only bound for own products but to provide all the construction materials to our customers directly through dream&build.com.

To view our target and its achievement through the e-business, we can only view as successful after the recognition of this opportunity and considering some very important factors like the local market, Current and future trends of the market, our competitors and their channels of supply, customer focus and how our products add value for customers to chose our products at best possible price etc. 3.1 CURRENT AND FUTURE TRENDS OF MARKET

Islamic Republic of Pakistan is ranked at 6th position having the largest total population of 176.3 Million and according to Central Intelligence Agency the growth rate is about 1.94%. It’s a very high growth rate compared to other countries and as a Pakistan national I have analyzed that government of Pakistan is seemed to be failure to control its population growth rate and is increasing day by day. But from the business point of view and usage of our products this increasing growth is a favorable and supporting condition to achieve our goals and target of e-business as our competitive advantage. If we think critically the traditional business channeled companies are basically not our competitors but are substitutes for the customers to buy the products but we are concerning to the long term business goals and for that we have kept in sight that even we are the first movers, our competitors will also realize this opportunity and need of the market and will move in the emarket.

Yunus Brother’s own Lucky Cement Limited having its two branches in district Pezu of NWFP with production capacity of 13000 tons/day and another in Karachi, Pakistan with a very huge production capacity of 12,000 tons/day. Lucky Cement limited achieved highest share price of PKR 147.0/share achieved in 18th April, 2008 according to Wikipedia. This not only shows the highest range of production but its success to brand and loyalty in minds of its customers.

Trends of the Market There are mainly four main types of trends to be focused during opportunity recognition as given in below figure and within these four trends showing the current and future trends of our market we will be focusing only the related factors to our industry.

Economic Trends According to US central intelligence agency (CIA) the population is about 176.3 million, growth rate is reached to 1.94%, birth rate is 27.62 births/ 1000 population while death rate is 7.68 deaths/ 1000 of population and the fertility rate has reached to 3.6 born/woman. This all data shows that not only always focused oil, fuel, gas and other basic needs are increasing but this also shows that the need of our construction market and usage is increasing day by day. CIA also gives estimation in its fact book that Pakistan’s Gross domestic product (GDP) was estimated at $427.3 billions this was maintained and increased by 6-8% from 2004 to 2007 increase per annum while from 2007 to 2008 it was increased by 2.7% only.CIA estimated GDP per capita of Pakistan as $2400 in year 2006, $2500 in 2007 and was maintained as $2500 in 2008. CIA also provides information that the unemployment rate was 5.6% in 2007 which was increased to 7.4% in 2008.

While the inflation rate (% increase in prices) which was estimated as 7.6% in 2007 and was increased to 20.3% in 2008. These economic situations were not only changed in Pakistan but almost in all countries due to economic crises, increase in oil prices, environmental factors and many other visible and invisible factors. This all data gives a buzz to the business organizations to be more focused and conscious towards the KPI of competitive advantages, business goals and improvements in their strategies. Our industry has responded the environments and is going to enter into the new economy by ebusiness not only to provide an opportunity to the customers but to be the first mover in the online market and to gain a competitive advantage. Demographic Trends Islamic Republic of Pakistan is an Asian country with a very huge population of 176.3 Million people with population growth rate of 1.947%. Almost 92% of the total population is Muslim and other 8% include Hindu, Christian and others. Out of the total population 10% population i.e. 17.5 million people are familiar with internet according the statistical data of “Central Intelligence Agency”. CIA further elaborates that the 37.2% of the population comes under 0 to 14 years 58.6% of the population is of 15 to 64 years, and the remaining 4.2% of the population is over 64 years. In Pakistan people not only need houses, hotels, industries, roads, bridges but the 95% of the population is Muslim and they need to build the religious mosques to pray as their basic need in the region and not only this but within Muslims also have different ideologies and people with different ideologies living in this region need to build their separate mosques.

Looking on these main perspectives of population we have also focused our local market to achieve our organization’s financial and social goals keeping better and long term future opportunities in sight. Socio-Cultural Trends If we look at the concerned issues of socio-cultural issues of Pakistan addressed by Central intelligence agency the urbanization was estimated at 36% of the total population in 2008. While 64% of the population is still living in villages and being a respondent of the local conditions more than 50% people in villages are still living in houses made with Mud and some even uncovered and simply covered with spiked wooden stick type formation. Therefore we have a wide range of customers who still need to build the houses and use our construction materials. Also as a cultural value when a person marries in Pakistan is thought to be having his own house and this also provides us an opportunity. If we go further in depth then this segment of market have cultural values of dreaming the best house at best price while almost all the Cement industries are providing Cement through many of the channels while we are directly concerning to the customers through this website which gives them a lowest pricing advantage also. Being the first mover we have an opportunity to apply cost leadership strategy after the coverage of our development costs and introducing the online market which also covers our social goals to increase the concept of new economy in the nation and attract them towards internet because our products will be cheaper than other substitute channels and as we have seen that the GNI and other factors are forcing people to focus cheaper goods. Political/Logical And Technological Trends Pakistan government supports healthy business environment and there is no any political pressure and also to the internet and new economy through e-business.

Therefore we will have government support in our e-business as a first mover and growing the informative business environment with many competitive advantages like reduction in inflation in our products. Also the laws of Islamic Republic of Pakistan for the businesses are very flexible which provide a facility to the business organizations who promotes the e-business by the government in which the taxes are less than the traditional business channels. Also Pakistan Telecommunication Authority (PTA) supports by providing free of charge internet facilities to the companies which promote the e-business within the region as per regulations of the government and laws for internet business cited in PTA website.

3.2 OUR POTENTIAL CUSTOMERS According to CIA from the total population of 176.3 Million people 17.5 million people are familiar with internet as an official number but according to some local students of Mehran university of Engineering & Technology, Pakistan the total number of internet users within Pakistan is more than 30 million people which they analyzed during their local projects analysis in October, 2008.

At the same time the number of people using internet is higher than Taiwan, Malaysia and Philippines and with this data provided by Miniwatts marketing group Pakistan became on 7th position by 2009 in countries of Asia with reference to large number of people using internet.

In the field of business whether it is traditional or through networking, it comes on the first priorities that “What should be the core business and where the firm should do business?” This gives a competitive advantage to the company to choose the best products in best possible segments of market through out the globe either in traditional or e-business. Looking at this large number of internet users which though is less in percentage of total population, we have a huge segment of customers. But in construction industry we can not segment the market on the basis of age or sex so we have selected the segment on the usage basis.

On 29th of October 2008 Pakistan faced a major earthquake in the north part of Balochistan province which wiped out almost 10,000 houses and 30,000 people were killed and left almost 15,000 people homeless which was a very sad condition but it also increased the demand of Construction materials particularly in that area which might be fulfilled in many years as people are still trying to set themselves and rebuild their houses. Not only to achieve our social responsibility but as whole the media, government and nation of Pakistan is focusing the people affected by the earthquake, we have the strategy to introduce our e-business opportunity and cheap price goods to this area which will give a boost of advertising to our opportunity to buy online.

3.3 CURRENT AND FUTURE COMPETITION As we are the first mover in the online business of construction materials in local market so we don’t have any competitors and also being the best quality producer with a very high range of production than all other substitute channels we have many competitive advantages. Reduced prices through direct B2C marketing, partnership with some main cement industries of Pakistan like Dadabhoy Cement industry, Pakistan cement industry and Pakistan steel mills etc,

quality production, timely delivery within 24 hours, and order placement in high quantity provide us competitive edge for our entrance in the new economy and online market. Within Pakistan 28 cement industries are producing cement along with two of our group industries to fulfill the need of local and international demand of cement As a forecast we also have to focus the future trends and might be in future some of the companies shift their channels of supply from traditional to direct selling through e-business. But as we have discussed that our industry is until now the largest quantity producer of the Pakistan and we are still expending our projects to fulfill our increasing international orders which will also strengthen our competitive advantage and as we produce high quantity so the prices are less than others in the same quality of cement.

3.4 VALUE PROPOSITION Dream&build.com will be the first website for the customers to place their orders their required construction materials from wherever and whenever. The website provides facility to order 24/7 and company promises to deliver their order within 12 hours. Further company aims to provide an opportunity to its customers to order their required materials from one source rather than searching each material from different traditional channels. Because in Pakistan mostly after the owners or builder get the “Bill of quantity” from workers, they have

to find the best possibility of the required material and have to wait sometimes if traditional channels don’t have enough capacity to support them. Our competitive advantages of partnerships with the major companies, Technology expertise, warehouses spread through out the country to deliver the goods on time, quality conscious production system, large quantity production range, secure internet based infrastructure and customer focused management enable us to provide additional values to our customers as given in following figure and discussed below.

Source: http://www.bitwiseusa.com/offshore_value_Proposition.aspx Timely Delivery Our warehouses through out the world, technology expertise, partnership with major construction manufacturer companies, large quantity production range and customer focused management give us competitive edge to deliver the order on time to our valuable customers. Easy Availability

Now customers don’t have to search around in the traditional market and be worried for their required goods. With our e-site they can place their orders from where they want and at whatever time they want. Dream&build.com provide them 24/7 facility to place their order just by some clicks. Reduced Total Cost of Ownership For the first time our organization provides the total cost of ownership to our valuable customers and that also at a very low cost. Now they can order their products and company is liable to provide the best quality products with low cost and will be liable until the usage of the material and if customer finds any faulty product, company will change the faulty goods with the new one without any extra charges. Value Added Service Our company is always customer focused and will improve their products/services continuously and will provide best possible value addition to our valuable customers. Wide Range of Construction Material Dream&build.com provide facility to its customers to select all ranges of Cement products from different industries in any color as per requirement of the customer, like Ordinary Portland Cement in dark and light shades, Sulphate resistant Cement (A long lasting and anti Alkali cement product), Slag cement (A durable and reduced life cycle cost product) of any of brand from our company and partners and a wide range of length and diameter of steel bars etc. Credit Sales Not only the above values but looking on the income levels and poverty of the nation our organization provides them an additional facility by which now they don’t have to wait and collect money to do their construction works in installments but for the first time in Pakistan now they can place their orders by the payment of only 20% of the total amount required to buy their

required construction materials which is termed as Credit based orders. With the help of some banks as given in the section of Partners and allies they now can pay their remaining liabilities in installments directly to banks.

40

SEIZING THE OPPORTUNITY After evaluating our e-business opportunity that it has market growth, profitability, technological innovation, market and institutionalization of success we must seize the opportunity before that it becomes a competitive advantage of our competitors. To seize the opportunity we will be discussing our partners and allies, what value they provide to us and what value we will provide them followed by the business model of our e-business opportunity as below. 4.1 OUR PARTNERS AND ALLIES

Our organization though having highest production capacity of 25,000 tons per day (Dry cement) in the cement industry of Pakistan, is not only supplying cement to the domestic market but is also the largest cement exporter of Pakistan. Though we produce high quality, large quantity, low cost and highest efficiency in our products which provide us a competitive edge but to seize and achieve the e-business opportunity in domestic market, to supply products on time, to cover the largest area of population, to provide a variety, to create a barrier for our competitors in future and to achieve customer satisfaction we have offered some major products and services from our partners and allies as given below. Our e-business opportunity will certainly attract the largest segment of the domestic market while if we look at the figures provided in Appendix 2, the total consumption of Pakistan in financial year 2009 was 30,774,856 tons while our share was 5,903,639 tons as a largest cement industry among 28 cement industries of Pakistan. But this production will not support our opportunity and growing market population, therefore we selected Dadabhoy Cement industry and Pakistan Cement Industry as our partners to support the demand. These companies will be only outsourcing companies for our organization as per increasing demand of their products and to support the demand of domestic market while Habib Metro bank will be our partner to achieve our social goals, to attract as many customers as possible and to provide credit based sales as value added service to our valuable customers. Dadabhoy Cement Limited Dadabhoy Cement Industry is the second largest Cement industry of Pakistan and in future can be our competitor; therefore being proactive we intend them to work with us to supply the demand of cement through out Pakistan.

Not only this but group comprises of many other companies which will support us in the future to achieve our goals of supplying all construction materials through one source i.e. Dream&build.com The M.H. Dadabhoy Group of companies comprises: 1.

Dadabhoy Cement Industries Limited (DCIL)

2.

Dadabhoy Sack Limited (DSL)

3.

Dadabhoy Energy Supply Company Limited (DESCL)

4.

Dadabhy Hydrocarbon Company Limited (DHCL)

5.

Dadabhoy Construction Technologies (Private) Limited (DCTL)

6.

Pak German Prefabs Limited (PGPL)

7.

Dadabhoy Trading Corporation (Private) Limited (DTCL)

8.

Dadabhoy Unimineral Limited (DUML)

To initialize the opportunity they will be termed as an outsourcing industry and will not be liable of any payments while our opportunity will help them to increase their products demand though their advertisements on our e-business.

Lafarge Pakistan Cement Limited Lafarge Pakistan Cement limited is a subsidiary of Lafarge group of industries who are global suppliers of construction materials in 76 countries. We intended to work with them as per their high quality, global standards and internationally known brand in construction materials. Lafarge will provide us a competitive advantage of world level branding and this will be a motivator for us to build our brand name more effectively as per global standards.

In Pakistan Lafarge doesn’t have high market shares and we will enhance their business and brand name in domestic market. While for initial investment decisions Lafarge Pakistan limited will also be termed as a outsourcing company to support our business and demand of domestic market. Habib Metropolitan Bank Habib Metropolitan Bank is the subsidiary bank of Habib bank group and is working in all of the major cities of Pakistan. Our customers will be ordering on credit through this bank and will need to buy the credit cards from the bank which in future will be expanded and they will be able to use all banks for their orders. According to policy of this bank customer will have to pay 20% of the sales with a limit of PKR 100,000 and further installments will be made on yearly basis while the least period of payment is set by the bank as 6 months while last as 3 years easy installments. We will provide the facility to the bank, to grow their business with a boost of loans and credit cards. 4.2 BUSINESS MODEL According to Michael Rappa, 2009, “A business model is method of doing business by which a company can sustain itself—that is generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.” Rappa further divide the web based business models in brokerage, advertising, informediary, merchant, manufacturer (direct), affiliate, community, subscription, and utility business models in his online website digitalenterprise.org. Our organization lies under the manufacturer or direct business model in which we aim to reach the customer directly and compressing the distribution channels in future. But as our e-business will be first move in Pakistan in the construction materials market, we need to focus some other

main perspectives of our e-business opportunity in order to achieve our business goals along with our e-business objectives, to sustain in the new economy and avoid any future losses. The factors to be considered to improve our products/services and to seize this opportunity are reduced cost of products and manage profit margins, and other investment decisions with customer focus that why they must prefer to buy the construction materials through our website dream&build.com. Improvement of Our Products/Services In our e-business we have focused the customer satisfaction as first priority and we intend to improve our products/services consistently as per requirements of our customers and growing market. To analyze the requirements of our customer we intend to practice the Customer Relationship Management by which we will not only serve our customers needs in best possible way to acquire their trust and loyalty to our brand but with this we will also gather data to improve our products/services as per needs of our customers as a irreversible process as given in following figure.

Source: Osterwalder & Pigneur 2002, An e-business Modeling Ontology for modeling e-business Through our website, we will provide all adequate information to our valuable customers regarding our choices in quality products, best services, timely delivery, and an easy and fast way of ordering the needs at the lowest possible cost by excluding the intermediaries. This will make them to feel the best features of our business and e-business opportunity which will lead us to have their trust and loyalty.

While as a reversible process and our website feedbacks their trust and loyalty will make us to feel the needs and serve them best and gather the information regarding new trends and market requirements to improve our products/services up to the best possible extent. Required investment To calculate the total investment required we need to analyze that what are the requirements of our e-business and what it will cost. As we discussed that Pakistan telecommunication authority provides a facility to launch and run a website for free to promote the e-business in the region so it will only cost us to make the website through any website builder who mostly cost PKR 50,000 to PKR 100,000. In our case we need to make our warehouses in all major cities of Pakistan from where we deliver the order within limitations of time except Karachi, Hyderabad and Pezu which are very near to our industry and these cities already have our warehouses. Our next warehouses will be built in different districts of Punjab, Sindh, Balochistan, NWFP provinces and Azad Kashmir on the basis of requirement and consumption of construction materials as given below.

The building and setting expenditure of each warehouse are different depending upon the land value, distance from our company and competitors, different labor costs and freight cost of materials. But we have concluded that the average cost per warehouse will be PKR 500,000.

After the setting of each warehouse we will need to store a quantity of material in each warehouse on the basis of consumption projection of the area covered by the warehouse. This will include the cost of goods, freight cost to transport the goods and labor costs. But here again we have different distances of warehouses from the company and competitors’ manufacturing plants, different required quantity of each product in the different region because some regions have large projects (Projects of roads, bridges, housing schemes, industrial buildings etc), cost of goods, different freight costs and different labor costs we have taken an average that each warehouse will need goods of average PKR 16,500,000 cost, average freight cost of PKR585,000, average labor costs of PKR66,500. Looking on these average values our total investment costs on building, setting, storage of goods, freight cost, labor cost will be as under.

These calculations made are for the initial setting and storage materials for the first month and the quantity will be maintained on the monthly basis. Looking on these calculations our industry will need PKR 4,88,642,000 for the setting of the warehouses to be ready to supply the products to our potential customers while the consumption of our domestic market is much more than this but as it’s a start of new business and people are not well aware of our opportunity so the quantity and materials are to be managed very less which will be maintained as per requirements of our customers.

The total cement stored in all 28 warehouses of Pakistan costs 4,62,000,000 which is almost 80% of the production of our industry but from this total material 51% will be provided by our organization and remaining 49% will be of our partners and with this our industry will sell about 40% of its total production through this channel in local market while these figures will be maintained as per requirements of our e-business and customer requirements. If we look at the figure provided by Mirza Rohail (2009) in wordpress.com, the expected cement consumptions of Pakistan till end of the year is about 30 million tons while we are providing almost 0.288% of the total consumption.

Difference of Costs of Product from Traditional Marketing If we look at the figures provided in the profit and loss statement of Lucky Cement as given in Appendix 1, our cost of sales in financial year is PKR 16,519,138,000 while in the Appendix 3 our grand total sales in terms of tons is 5,903,639 tons. If we divide price with quantity i.e. 15,519,138,000/5,903,639, this will give us the price of 1 ton i.e. 2628.74 rupees. While price of 1 kg will be 2.62874 rupees and we find that one bag of 50 kg becomes 131.437 rupees. This price is an average of local and export sales of bagged and lose form both while the lose cement becomes of less price and the export packaging of our industry is also different which increase the cost of exported cement that means cost of cement supplied in local market must be even less than the calculated but in our traditional market when our products pass through different channels and again and again profits, freight cost, labor costs, taxation are applied on our products to reach to the customers, the price of one bag becomes so high which nowadays is PKR 386 per bag of 50 kg. While if we look at our projection of investment in upper section for our e-business, the total cost of goods to be stored in each warehouse is PRR 16,500,000 and if we divide it with our

calculated cost i.e. 16,500,000/131.437, it gives 125535.4 which shows the total number of bags to be stored in each warehouse and if we divide the building and setting cost of each warehouse with total number of bags stored i.e. 500,000/125535.4, it gives an increase of price of one bag by PKR 3.982 and similarly if we add the further costs of freight and labor and divide with number of total bags to be stored i.e. 385,000+66,500/125535.4, it gives an other increase of PKR 3.596. Now if we calculate our all costs on one bag through our e-business opportunity where no costs are applied on ordering, it becomes; Estimated cost of one bag (50kg)

PKR 131.437

Estimated cost of one warehouse/bag

PKR 3.982

Estimated freight and labor cost/bag

PKR 3.596

Total Estimated direct cost/bag

PKR 139.015

Now if again we go to our profit and loss statement in Appendix 2 and less the cost of sales from total revenue generated i.e. 30,915,035-16,519,138, it gives 14,395,897 which is 87% of cost of sales. This shows that our company is charging extra surcharges of 87% to cover the taxation, administrative costs, operating income and other expenditures. If we calculate this 87% of company expenditures in our estimated cost supplied through our ebusiness directly to the customer, it becomes PKR 120.943. While through our e-business opportunity on each order placement we are charging an access of 26 rupees per bag of 50 kg as a shipping cost from our warehouse to the customer doorstep. These 26 rupees include 5% of globally standardized wastage reduction (i.e. from 139.015 it becomes PKR 6.95), our labor costs of delivery, maintenance costs and some miscellaneous costs. Again if we include all these costs of 46% company expenditures and shipping costs of 26 rupees i.e. 139.015+120.943+26), the total cost per bag of 50 kg becomes PKR 285.958. This shows that if the products are directly supplied to customers through our e-business, they have to pay PKR 100 less than they buy from traditional business. That means we will have a privilege of almost 26% on their each sell and whole the quantity they buy through our website.

5.0 CONCLUSION Pakistan is the best sector for the construction industry based on its population, number of internet users and potential customers, knowledge gaps, confused situations and mistakes made by traditional suppliers of the cement. Our easy availability of materials, timely delivery, reduced TCO, wide range of choices, focus of new era, makes us able to seize this opportunity through e-business with the help of our partners. Our offerings of reduced cost of products/services up to 26% through our e-business will attract major portion of the domestic market with provision of high quality first time offered easy credit sales option in the region. Business philosophies has turned stones of Networked economy in the new era as the reason of survival and concepts have been shifted from traditional and physical to Informative and technological. Practitioners have revealed that customer focus is more important for business organizations to achieve their long term goals rather than focusing on short term goals.

Advertising, marketing and selling the products is speed upped by Networked economy and innovations in ICT. Companies in Pakistan must take first move to be the part of new era, to survive in the future markets and to maintain their ROI. Looking on the best features of e-business opportunity as calculated that 50kg bag will be sold in PKR 286 instead of traditional channels price of PKR 386, our organization will go for it without experimentation and having supportive comments as e-business is not only for making money but is for survival and customer satisfaction and responsiveness at the same time. Customer Relationship Management will lead us to our future goals and availability of improved and best services in our products through Dream&build.com.

6.0 REFERENCES

•

Philip Kotler & Kevin Lane keller, 2006, Marketing Management (12th Edition), Englewood Cilffs, NJ: Prentice Hall, 2006.

•

Charteris plc, 2003, Business actually achieved from e-business, A survey report, London.

•

Philip Kotler & Gary Armstong, 1996, Principles of Marketing (7th Edition), Prentice Hall Inc, 1996.

•

McCarthy, E J (1960), 'Basic Marketing - A Managerial Approach', Illinois: Irwin, 1960

•

Osterwalder & Pigneur 2002, An e-business Modeling Ontology for modeling e-business, 15th Bled Electronic commerce conference: University of Lausanne.

•

Dobra Hawkins, 2009, E-business workbook: Dobra Hawkins, New York.

•

NTU, 2009, Networked Economy, A notebook, Nottingham Trent University, UK.

•

Chanakya, 2009, Information Technology for Business projects, A presentation, Online, Retrieved on 18th October, 2009 from http://www.pdfcoke.com

•

Peter A. Bauxbaum, 2002, ROI: Blessing or buzzword, E-business News and analysis, Online, Retrieved on 10th October, 2009 from http://searchebusiness.techtarget.com/originalContent/0,289142,sid19_gci827267,00.html.

•

Business School Limited, 2009, e-business, Online, Retrieved on 8th October, 2009 from http://www.businessonlybusiness.com/channels/ebusiness/ebusiness-concepts.htm

•

Dane Carlson, 2005, Opportunity recognition, Online, Retrieved on 13th October, 2009 from http://www.business-opportunities.biz/2005/07/19/opportunity-recognition/.

•

Higher Education Commission Pakistan, 2006, Pakistan research, repository, Online, retrieved on 16th October, 2009 from http://eprints.hec.gov.pk/2065/1/1984.htm.

•

Mirza Rohail, 2009, Cement Industry, A report, Online, Retrieved on 13th October, 2009 from http://economicpakistan.wordpress.com/2009/02/01/cement-industry/.

•

William koty, 2001, UCI certificate in Internet Marketing, Online, Retrieved on 17th October, 2009 from http://www.highlatitude.com/presentations/uci_bizmodel/sld010.htm.

•

Dr James E. Bruke, 2008, The Business Model, Online, Retrieved on 16th October, 2009 from http://www.prudens.com/patens/ebusiness/busmodel.html

•

Michael Rappa, 2009, Business Models on the Web, Online, retrieved on 17th October, 2009, from http://digitalenterprise.org/models/models.html.

•

Civicus, 2001, Budgeting, Online, Retrieved on 20th October, 2009 from http://www.civicus.org/new/media/Budgeting.pdf.

•

Aalpha Information Systems India Pvt: Ltd, 2006, Current e-business Trends, A Perspective, Online, Retrieved on 15th October, 2009 from http://www.aalpha.net

•

Lucky Cement, 2009, Annual Report for the financial year 2008-2009, Online, Retrieved on 12th October, 2009 from http://www.lucky-cement.com/Financialreport%20pdf/Financial %20Results%202008-09.pdf

•

Google, 2009, Some quotes from e-books’ overview, Online, Retrieved on 14th October, 2009 from http://books.google.com.my

•

Wikipedia, 2009, Some unofficial facts and figures, Online, Retrieved on 13th October, 2009 from http://www.wikipedia.org/

Appendix 1

Appendix 2

Appendix 3 Our production is 25,000 tons per day which makes 7,50,000 tons per month while 7,50,000,000 kgs.

Our total storage costs are PKR 4,62,000,000 while the price of per kg is being calculated as PKR 8. So if we divide total amount with per kg (i.e. 4,62,000,000/8), it makes 57,750,000 while dividing by 1000kg/ton we get 57,750 tons of storage. Which is only 0.288% of the total expected cement consumption of Pakistan as stated by Mirza Rohail, 2009.