Saudi Cement Company:
“Survival is the name of the game in a very competitive industry”

Dr. Salem M. AL-Ghamdi
King Fahd University of petroleum and minerals
Dhahran, Saudi Arabia

Abstract

This is a case study on a Saudi Arabian company known in the cement industry. Saudi Cement Company (SCC) is a Saudi joint company established in 1955. The company is listed in the Saudi stock market. The information was collected through a structured questionnaire and from secondary data. The case write-up fits a case study in a strategic management undergraduate and graduate course. Information was organized to provide insights on how the company evolves overtime with an emphasis on strategic issues such as vision and mission, internal analysis via company’s current operation, External analysis using Porter five force model and major strategic issues

Keywords: Strategy and policy, Saudi cement industry, Porter five force model, vision and mission, SWOT analysis.

COMPANY BACKGROUND

Saudi Cement Company (SCC) is a Saudi Joint Company established in 1955. The principal object of the company is to produce cement and cement products and to invest in the cement fields.

SCC operates two cement plants in the Hofuf Plant and Ain Dar Plant in the Eastern Province of Saudi Arabia, located about 36 km apart and are both at an approximately equal distance of around 120-130km from King Abdulaziz Port at Dammam. Below is a brief history of the Company:

a. SCC started operation in 1961 at the Hofuf Plant with one kiln of 300 tons of clinker per day. b. Since then the Hofuf Plant has executed four expansions and/or renovations and upgradings of ifs facilities, the last of which, was in 1997 with the addition of a kiln of 3,500 tons of clinker per day capacity, brining the total capacity of the plant to 7,825 tons of clinker per day. c. The Ain Dar Plant commenced operation as an independent company under the name “Saudi Bahraini Cement Company” (SBC) in 1981, with 4 kilns of 1,500 tons of clinker capacity (total of 6,000 tons of clinker per day).

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EXHIBIT 1: A general view of Ain Dar Plant

SBC continued its operations independently till December 1991. As of January 1, 1992 “Saudi-Bahraini Cement Company” (SBC) merged with SCC and operations since then have continued under its former name “Saudi Cement Company”.

THE COMPANY’S CURRENT OPERATION

Marketing & Sales

Introduction
The demand for cement improved in Saudi Arabia during 2003 (See EXHIBIT 2, p.2) reaching approximately 22.7 million tons (of which imported cement constituted 0.5 million tons), compared to 20.8 million tons in 2002 (a 9.1% increase).

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EXHIBIT 2: Domestic cement sales in Saudi Arabia for 1999-2003

However, the increase in demand was offset by the high production in Saudi Arabia which reached about 22.2 million tons of clinker (equivalent to about 23.2 million tons of cement). As a result, there was a surplus of 1 million tons of cement in 2003, compared to a total of 1.9 million tons for 2002.

The National Cement Companies, through their spectacular marketing efforts, succeeded in exporting the entire surplus in addition to a quantity from their previous stock. Hence, the clinker closing stock by end of 2003 dropped to a level of 4.9 million tons compared to 6.2 million tons by end of 2002 (a 21% decrease).

Total Sales
For 2003, total cement sales amounted to 4,582,544 tons compared to a quantity of 4,479,677 tons sold in 2002 (a 2.3% increase).

Cement and Clinker Sales to Bahrain
SCC has secured its market share in Bahrain (80% of the market) by acquiring an ownership interest of 36% in United Cement Company (Bahraini Closed Corporation). Total quantity of cement exported to Bahrain for the year 2003 amounted to 502,238 tons compared to total exports in 2002 of 406,258 tons (a 23.6% increase).

The total quantity of clinker exported amounted to 137,236 tons compared to 94,428 tons in 2002 (a 45.3% increase).

Cement and Clinker Exports
The total quantities of cement exported during 2003, excluding exports to Bahrain and oil well cement exports, were 656,764 tons compared to 1,135,945 tons in 2002 (a 42.2% decrease).

Of these quantities, 534,570 tons were exported to Kuwait, 86,657 tons to Qatar; and 35,537 to Nigeria (See EXHIBIT 3, p.3).

In comparison, the total quantity of clinker exported, excluding exports to Bahrain, amounted to 195,953 tons compared to 180,968 tons during 2002.

The marketing department decided to reduce export sales in 2003 in order to meet the increase in domestic sales (i.e. higher profit margins).

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EXHIBIT 3: Cement & Clinker exports 1998-2003

The Dammam Export Terminal
In order to boost its export activities SCC has commissioned an export terminal at King Abdulaziz Port in Dammam. The terminal is able to load cement and clinker to the ships at the rates of 800 tons/hr and 700 tons/hr respectively.

The terminal is considered exceptional. Cement and clinker are transported by railway wagons from both SCC plants to the terminal.

Responsiveness Between Nations
SCC produces its Ordinary Portland Cement and Sulphate Resisting Cement in accordance with the American Society for Testing and Materials C-ISO, British Standards (BS-12), European Standards, and Saudi Arabian Standards Organization (SASO), specifications.

Oil-well cement (OWC) class G, is produced as per American Petroleum Institute (API) specifications, under API license to use API program.

Local Market Segmentation & Product Differentiation
SCC currently serves six groups of customers, namely: • Pre-Cast Factories • Block Factories • Ready-Mix Factories • Builders (35% of Sales) • Saudi Aramco (2% of Sales) • Saudi Government

To satisfy the needs of these groups, SCC produces the following types of cement: • Ordinary Portland Cement (Low Alkali) • Sulphate Resisting Cement • Oil-Wells Cement

Production / Operation

Capacity

|Production Capacities: |Tons Clinker/Year |
|Annual rated capacity (13,825 tons per day X 300 days) |4,147,500 |
|Average actual annual clinker production based on the last |4,482,587 |
|3 years (2001-2003) | |
|Actual production in 2003 |4,504,553 |

TABLE 1: Production Capacities

10 kilns for a total capacity of 13,825 tons of clinker per day as per details below:

|No. of Kiln |Year Put In |Production Capacity |Kiln Type |Total Capacity |
| |Operation |tons/day | |tons/day |
|2 |1961/1967 |300 |Long dry |600 |
|1 |1971 |725 |Long dry |725 |
|6 |2/1978+4/1981 |1,500 |Long dry |9,000 |
|1 |1997 |3,500 |Short pre-heater |3,500 |
| | | |pre-calciner | |
|10 | |13,825 |

TABLE 2: No. of Kilns in Operation

|Cement Grinding Capacity: |Tons/year |
|Annual grinding capacity (basis: 330 days operation @ 20 hr/day) |5,625,000 |
|Average actual cement grinding based on the last three years (2001-2003) |4,361,344 |

TABLE 3: Cement Grinding Capacity

|No. of Mills |Year Put in |Capacity tons/hr. |Total Capacity tons/hr. |
| |Operation | | |
| 2 |1997 |160 |320 |
| 3 |1981 |120 |360 |
| 2 |1978 |80 |160 |
| 2 |1967/1981 |Different |68 |
| 9 |Total |908 |

TABLE 4: Number of Cement Mills in Operation

Actual Production
The quantity of clinker produced during 2003 amounted to 4,504,553 tons compared to a quantity of 4,499,982 tons produced during 2002 (a 0.1% increase).

However, the clinker production produced at both plants exceeded the rated capacities (4,147,500 tons) by a quantity of 357,053 tons.

In contrast cement production for 2003 amounted to 4,557,476 tons compared to 4,482,422 tons for the year 2002 (a 1.7% increase).

Cement mills operated at high efficiency and were shutdown only for routine and scheduled maintenance. The quantity of cement produced was commensurate with the sales volume in the local market and abroad.

Operation and Maintenance
Operation and maintenance at both the Hofuf and Ain Dar plants were carried out effiiciently at the highest achievable standards. SCC achieved new production records on more than one of its kilns considered to be high level records both locally and internationally.

SCC has sustained high quality product and has the capability to produce other types of cement required if they prove economically viable.

Quality
SCC has since 7 years acquired the ISO 9001:1994 certification for both of its Hofuf and Ain Dar plants. SCC is currently revising the quality system manual and procedures to comply with ISO 9000:2000 (version). Certification to ISO is being carried by the German firm TUV.

Saudi Cement Company has the most modem and efficient Quality Control System in the Laboratory consisting of automatic sampling system, analyzing system and computer controlled “quality control system”, including the most important Fully Automatic Sample Preparation System.

The Fully Automatic Sample Preparation System in the Laboratory consists of pneumatic tube receiving form dispatch station, grinding mills, powder press, sample input box, ROBOT with control unit, conveyor belts, sample online X-Ray diffraction analyzer with goniometer, a dust controller, and controllers.

The Robotics Control System is the heart of the quality control of the cement produced as, due to full automation of sample preparation, and analysis any human error, during the basic step of sample preparation, is totally eliminated. Thereby, quality control is made most reliable.

Environmental Protection and Pollution Control
SCC has continued to coordinate with the concerned Authorities on issues of environmental protection and pollution control, and has finalized a five year special program on these issues.
SCC has successfully achieved the international standards (5Omilligram/cubic meter) in this regard – a fact that has been recognized by MEPA Authorities in Saudi Arabia. Such compliance has cost the company about $40 million riyals.

SCC is continuing its efforts to achieve much stricter and more stringent achievable limits for dust and pollution control. Such efforts will be realized in the planned project for upgrading of SCC’s facilities in the near future.

Current Weaknesses
The Hofuf and Ain Dar plants rely heavily on “Dry Process Kilns”. This inefficient technology consumes around 9 million riyals worth of gas per month.

Finance

Financial Statements
The Accounting & Finance departments produced a set of financial statements - that present, fairly, in all material aspects, the financial position of the Company as of December 31, 2003. The results of its operations and its cash flow for the year ended in conformity with generally accepted accounting principles relevant to the nature of the Company, and the articles of the Company as these relate to the preparation and presentation of these financial statements. The company maintains Arabic accounting records required by the relevant regulations and the financial statements are in agreement therewith.

Loan from Saudi Industrial Fund (SIDE)
SCC settled the final installment of the loan of SR 20 million with SIDF for its latest expansion on its due date in 2003.

Moreover, during 2003, SCC paid SIDF two installments (SR 5 million each) of the loan allocated for the Dammam Export Terminal Project.

The balance of this additional loan is payable in 4 installments of different values, the last of which is due in November 2005.

Dividends & Capital Reduction
The Finance Department utilized the Company’s liquid reserves in servicing the 2002 dividend of SR12 per share amounting to SR 244.8 million and the final installment of capital reduction repayment of SR5/share amounting to SR 02 million.

Budgets
The Finance department forwarded Budget Computation forms together with the relevant expense printouts to proponent departments. These forms and printouts assisted proponent departments in the formulation of their budgets.

Non-budgeted expenditures were only considered for items that were unforeseen at the time of budget preparation and that have become operationally unavoidable. Approval for such items were obtained from the authorized officials through the Finance Department as per Finance Policies and Procedures.

Innovation

SCC is not really involved in R&D. In 2003, total studies and research costs amounted to SR723, 000 only.

Human Resources

Current Workforce
SCC has a workforce of 1,730 employees. Costs associated with these employees are shown below:

|Description |2003(SR) |2002(SR) |
|Salaries, wages and other benefits |28,802,000 |28,299,000 |
|Training, employment and professional fees |1,232,000 |1,606,000 |

TABLE 5

Hiring and Training of Saudi Nationals
SCC continued its diligent efforts in 2003 to attract manpower and to train Saudis, both in-house (on-the-job training) and externally, by requiring them to attend courses in seminars in Saudi Arabia and Abroad.

The Company had recently signed a contract with Saudi Human Resources Development Fund and a number of Saudis were enrolled. These employees are now being trained by an International Training Firm under contract with SCC.

The percentage of Saudis as of 2003 year end exceeded 59%.

SCC was ranked number one in Saudization, in the cement manufacturing sector in Saudi Arabia, for the year 1420H, and received the Prince Nayef Ibn Abdulaziz prize in recognition of its role in hiring and training Saudis.

Incentives Based on Performance
At SCC the annual incremental salary increase and bonus are based on the outcome of the annual appraisal review of employees’ performance (See Appendix). Offering incentives based on performance has just been implemented in the year 2003.

It must be noted that management has proposed a stock based compensation plan for SCC’s Saudi employees, but the board of directors declined such proposal.

Code of Conduct
SCC’s culture is transmitted, partially, through its code of ethics, which is developed and maintained by the Human Resources department. Such code of ethics explicitly states acceptable behavior, and disciplinary actions in cases of violations.

Management

Board of Directors
SCC is directed by eleven-members Board of Directors. The members of the board are all prominent businessmen in Saudi Arabia, the Gulf and Internationally. The board members are:

Chairman:
Sheikh Walid Ahmed Juffali.

Members:
Sheikh Khaled Suliman Olayan
Shekh Mohanned A. Al-Zamil
Sheikh Adbulrahman M. Al-Abdulkaraim
Sheikh Abdulkaraim A. El-Khereji
Sheikh Suleiman Al-Gosaibi
Sheikh Mohammed Abdullah Al-Faraj
Sheikh Mohammed S. Baighonaim
Sheikh Omar Sulaiman Al-Rajhi
Sheikh Hatim All Juffali
Mr. Nooruddain A. Nooruddain

These board members are directly elected by stockholders, and they represent the stockholders’ interests in the Company. Its position at the apex of decision making within SCC allows the board to monitor corporate strategy decisions and ensure that they are consistent with stockholders’ interests. If the board’s sense is that corporate strategies are not in the best interest of stockholders, it can apply sanctions such as voting against management nominations to the board of directors. Moreover, the board has the legal authority to hire, fire, and compensate corporate employees.

For the year ended 2003, the board of directors recommended the following: • Approve the annual report; • Approve the Financial Statements for the year ended December 31, 2003; • Relieve the Board of Directors from all fmancial matters and obligations related to the previous period; • Approve the Board of Directors’ recommendations for distribution of dividends at the percentage of 34% of paid up capital i.e. SR17 per share; and • Approve the appointment of the public Auditors M/s. Deloitte & Touche, Bakr Abulkhair & Co. and M/s. Associated Accountants, for the audit of 2004 • Financial Statement – quarterly and yearly – and determine their fees or select other auditors.
Hierarchy
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EXHIBIT 4: Organizational Structure

Vertical Differentiation
With its 1,730 employees, and many hierarchical levels, SCC has a relatively tall structure.

Centralization
Authority is centralized at SCC, as managers at the upper levels of the organizational hierarchy retain the authority to make important decisions. Centralized decision making allows easier coordination of the organizational activities needed to pursue the company’s strategy.

Centralization also means that decisions fit broad organization objectives. -Furthermore, in times of crisis, centralization of authority allows strong leadership because authority is focused on one person or group. This focus allows for speedy decision-making and a concerted response by the whole organization.

Horizontal Differentiation
SCC groups people on the basis of common expertise and experience (Functional Structure). Such a structure has several advantages.

First, if people who perform similar tasks are grouped together, they can learn from one another and become more productive at what they do.

Second, they can monitor each other to make sure that all are performing their tasks effectively and are not shrinking their responsibilities. As a result, the work process becomes more efficient.

Finally, functional structures give managers greater control of organizational activities.

Control Systems
Managers at SCC use a number of strategic control systems to monitor and coordinate organizational activities at three levels in the organization: the corporate, functional and individual levels. The following table shows the various types of control systems used by SCC managers.

|Financial Controls |Stock Price / ROI / Operational Audits / Financial |
| |Statement Audits |
|Output Controls |Functional goals (See Appendix) |
|Behavior |Budget / Rules & Procedures |
|Organizational Culture |SCC’s culture is transmitted through its code of ethics, |
| |which states acceptable -behavior, and disciplinary actions|
| |in cases of violations. Also, culture is transmitted |
| |through its reward system. (See Appendix) |
| | |

TABLE 6

SAUDI CEMENT’S GENERIC STRATEGY

Currently, Saudi Cement Company pursues a cost-leadership strategy to outperform competitors by doing its utmost to produce cement at a cost lower than its competitors. Two advantages accrue from pursing this strategy. First, this allows SCC to make higher profits than its competitors, because of its lower costs. Second, if rivalry within the industry increases and other cement companies start to compete on price, SCC will be able to withstand competition better than the other cement companies because, again, of its lower costs. For these reasons, SCC is likely to earn above-average profits.

SCC has chosen a low level of product differentiation, by producing only three types of cement. Differentiation is expensive; if the Company expends its resources to make its products unique, then its costs rise.

Moreover, SCC has, partially, avoided the different market segments (Pre-cast factories, Block factories, etc...). The reason for SCC making this choice is that developing a line of products tailored to the needs of different market segments is an expensive proposition.

Consistent with its cost-leadership strategy, a technical team from SCC “represented by all departments” together with the International Consulting Firm “Accenture” completed a study on the performance of SCC’s activities in 2002. The team identified many opportunities where improvements with considerable cost reductions could be achieved.

Since then, SCC started implementing a considerable number of these opportunities for improvements and realized part of the benefits which reflected positively on 2003 results. The next three years where benefits are expected to be realized as planned are also promising.

ANALYSIS

External Threats

Some of the threats facing Saudi Cement Company include: a. Imports being dumped on the Saudi Arabian market at artificially low prices that do not reflect the normal costs of doing business (Predatory Imports). b. Royalty payable to the Saudi Government for limestone consumption. c. Substantial capital expenditure by competitors, during the last couple of years, directed towards increasing the efficiency of clinker kilns and the construction of new dry-process kilns, leading to an increase in the average capacity of Saudi clinker kilns. The change in the underlying structure of clinker production technology from wet to dry processes had substantial effects in all areas of competitors’ performance. While average profitability dipped as a result of the large amounts of capital expenditure, significant future benefits were secured as labor and energy efficiency markedly increased. d. The fixed price ceiling set by the Saudi Government. Setting a price ceiling on cement limits the profits that can be realized by most firms in the industry. Hence, most of the expansions of those firms are financed through Saudi Industrial Fund (SIDF). e. Cement production is fuel intensive. Sweet gas, which is exclusively supplied by Saudi Aramco, represents 30-40% of production costs. There is a threat that Saudi Aramco will raise the price of gas in the near future. f. Cement production is energy intensive. Electricity, which is supplied solely by SCECO, represents 30-40% of production costs. There is a threat that SCECO will raise the price of electricity in the near future. g. World Trade Organization (WTO) may increase the supply of cement in the Saudi Arabian market, which may push prices down and intensify,’ competition (global competition).

Substitute Products

Coal fly ash, blast furnace slag and other mineral mixtures can be substituted for cement in concrete mixes for buildings, saving energy, disposing of a waste product, improving the quality of the concrete, and reducing cost. Cement substitutes should be distinguished from concrete additives, such as plasticizers and air entrainment agents and from aggregate substitutes, such as ground glass or ground scrap rubber.

Below is a brief description of some cement substitutes: a. Fly ash is one of the byproducts of burning coal to create electric power. Two-thirds of the 55 million tones of fly ash produced in the U.S. in 1999 were sent to waste piles, with only 9 million tones used to make concrete. The carbon content of fly ash is of major concern. Class C fly ash, most of which is produced in the west from lignite coal, contains little carbon. However, Class F fly ash, produced primarily from anthracite and bituminous coal, contains significant amounts of carbon. Class C and Class F material also differ from each other and from source to source with regard to strength, rate of strength gain, color and weather ability. Insuring a consistent supply is a concern among concrete suppliers. b. Slag is a by-product of both iron and steel, and ground iron slag from blast furnaces can be used for making concrete. About 12.4 million tones of blast furnace slag was used in the U.S. in 1999, of which 2 million tones were used in concrete. In addition, another I .1 million tones were imported for use by the construction industry. Because the demand for the product is rising while the supply is falling, new grinding plants are coming on line to process imported slag. The added energy used to ship and grind the slag makes it somewhat less energy-saving than fly ash, but far better than Portland cement. c. Silica fume was once a cheap waste product; but high demand has made it a high-cost admixture, used primarily for bridges and other structures where top weathering performance and high strength are needed. Concrete made from silica fume is expensive, however, not only because of the material cost, but because the powdery fineness of the fume makes it hard to handle. It is often turned into slurry before use. d. Rice hull ash, as long as quality is controlled, is another material that can be used to replace cement. So far, its use remains at the laboratory stage, although a consistent-quality ash needed for concrete is available from Agro Silica, Inc. in Lake Charles, LA.

Suppliers

The Saudi cement industry exemplifies an industry that depends on very powerful suppliers. One powerful supplier is Saudi Aramco, the sole provider of gas in the Kingdom. The cement industry is fuel intensive. Sweet gas, which is, obviously, supplied by Saudi Aramco, represents 3 0-40% of production costs. So cement companies in Saudi Arabia have no choice but to use Saudi Aramco gas in their plants. This puts Saudi Aramco in a very powerful position with regard to the cement producers. The product it supplies has very few substitutes and switching costs facing buyers are high, which enables Saudi Aramco to raise prices above the level that would prevail in a more competitive supply market.

It must be noted that over the last 20 years, demand for sales gas delivered by Saudi Aramco has grown rapidly at 10 percent per year in both the industrial and power generation sectors. Today Saudi Arabia utilizes more gas per capita than the U.K., Germany and Japan. The demand for gas is expected to continue to grow at 5 percent per year over the next two decades as the country’s domestic and industrial bases expand.

Another powerful supplier is SCECO, the sole provider of electricity in the Kingdom. Similar to gas, the cement industry relies heavily on electricity, with around 1% of the world’s electrical energy used in crushing and grinding cement. Although several cement companies including SCC are trying to generate their own electricity, their success has been limited. This puts SCECO in a powerful position with regard to Saudi cement companies. Even though electricity price is relatively cheap in Saudi Arabia, SCECO has the ability to raise prices when seen necessary.

An exception to what has just been discussed is the suppliers of paper bags for cement packing. SCC has a 33.33% ownership interest in Cement Product Industry Co. Ltd. This company provides SCC with paper bags for cement packaging. Such ownership interest weakens the bargaining power of its paper bags supplier. It must be noted that purchases from the associated company during 2003 amounted to approximately SR 16.3 million.

Buyers

Customers of the Saudi Cement Industry do not exemplify an industry whose buyers are powerful. With the exception of both Saudi Aramco and the Government, customers of Saudi cement companies are composed of many small companies (pre-cast factories, ready-mix factories, etc...). Moreover, the cement industry is capital intensive, so customers cannot use the threat to supply their own needs through vertical integration as a device for forcing down prices.

Even if prices do fall in the local market because of the bargaining power of cement buyers, Saudi cement companies have developed a strong export market, which it can rely on in such situations. Although, substitutes exist for cement, as explained earlier, these substitutes are not yet available in the Saudi market.

However, cement imports being dumped in the Saudi Arabian market at artificially low prices, may give cement buyers some barging power.

Competition Profiles

Cement is a highly fragmented industry in Saudi Arabia. The fragmented structure is a result of low entry barriers (e.g. low brand loyalty, low switching costs, etc...) and the ready availability of technology and capital (See EXHIBIT 5, p.12).

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EXHIBIT 5: National Cement Companies - Sales

Future Opportunities

There are a number of opportunities that SCC may take advantage of to earn higher profits.
First, the change in the underlying structure of clinker production technology from wet to dry processes has substantial effects in all areas of industry performance. While average profitability may dip as a result of the large amounts of capital expenditure required to adopt such new technology, significant future benefits are secured as labor and energy efficiency markedly increases. As a result of these efficiency gains, the underlying costs in the cement industry will change. The proportion of labor and energy costs will fall, while the cost shares of raw materials and depreciation will increase. Overall, efficiency improvements will lead to a decline in average costs measured in constant prices. The expected decline in the average real cost of cement production is 9%.

Second, in view of the expected increase in the local cement demand and the complete cessation of imported cement, competition will tend to moderate providing greater room for expansion. The growing demand will tend to reduce rivalry because all cement companies will be able to sell more without taking market share away from other companies. This will, likely, result in higher profits.

Third, the overall performance improvement project, carried out by the Accenture Team has recently been completed. If these recommendations are implemented by SCC, cost reductions of SR45 million is expected to be realized.

FINANCIAL ANALYSIS

|Financial |Description |2003 |2002 |% Change |Favorable/ |
|Ratio | | | | |Unfavorable |
|Current Ratio |Current Assets |5.08 |2,45 |107.26 % |Favorable |
| |Current Liabilities | | | | |
|Debt Ratio |Total Debt |0.11 |0.16 | |Favorable |
| |Total Assets | | |33 % | |
|Return on Sales |Net Income |0.92 |0.86 |7.85 % |Favorable |
| |Sales | | | | |

TABLE 7: Financial ratios for Years 2002 & 2003

MAJOR STRATEGIC ISSUES

There are three major strategic issues that are currently of concern to SCC’s board of directors.

First, should the board members reconsider management’s proposal to offer Saudi managers stock-based compensation schemes? Stock options will give managers the right to buy the company’s shares at a predetermined (strike) price, which may often prove to be lower than the market price of the stock. The idea behind stock options is to motivate managers to adopt strategies that increase the share price of the company. By doing so, they will also increase the value of their own stock options.

Second, should the board members adopt a strategy of vertical integration by acquiring the businesses of their current buyers? Such integration will enable SCC to build barriers to new competition, facilitate investments in efficiency-enhancing specialized assets, protect cement and clinker quality, and result in improved scheduling.

Third, should the board members allow global producers and marketers of cement, such as Holcim, CEMEX, Heidelberg Cement, Italcementi, and Taiheiyo, to acquire a controlling ownership interest in SCC? These companies are top global cement companies. For example, CEMEX is strategically positioned in the most dynamic markets around the globe: the Americas, Europe, Asia, and Africa. Their operations network of cement and cement-related assets produces, distributes, and markets cement, ready-mix concrete, and clinker to customers in more than 30 countries, and-as one of the world’s largest cement traders- they maintain trade relationships with more than 60 nations.
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FIN Manager

HR Manager

Material
Management
Manager

Planning &
Research
Manager

IT Manager

Deputy General
Manager

Plant Manager
Ain Dar

Plant Manager
Hofuf

Deputy General
Manager MKT

General Manager Mr. Abdulaziz Showail

Managing Director
(A board member)