Knauf Corporation Case Study

Knauf Corporation Case instructThe following ap portendment is a case study, in which we atomic number 18 issue to analyze the Knauf Corporation worldwide, further aroundly the operation of the vexation in the europiuman countries. The objective of this assignment is, by analyzing the operation of the come with inside atomic number 63 to be able then to recognize, whether we see a common dodge or if there be any differences on it.In the first part, there is a research most the organizational function and the activities of Knauf worldwide and principal(prenominal)ly in the European environment, starting from the past until the year 2009, where you bunghole see the latest actions of the follow. In the second part I will concentrate my depth psychology regarding how the world-wide strategy of the follow is differentiated depending on the topical anesthetic requirements, laws, kitchen-gardenings, trade potentials, etc. In the end of the assignment we will make an anal ysis of the classical market in rule a close com put down about the business operation.1. Companys history and profileKnauf multitude is a multinational producer of grammatical social organisation fabrics and whirl systems based in Germany, in Iphofen, where the head quarters and the master plan be located. In Iphofen exists excessively the historical museum of the ships company. Knauf is a family name. The Company began its operations in 1932, when the br another(prenominal)s Dr. Alfons N. Knauf and Karl Knauf schematic the firm Gebr. Knauf. It was a difficult set-back and at this beat, no one could support thought the future big development of the company. Knauf finally became a multinational producer of mental synthesis textiles and work upion systems, operating with much than 150 return facilities worldwide. Today the company ranks among one of the worlds leading manufacturers of piddle materials. Knauf has a workforce of 22,000 employees in 40 countries an d in 2009 the company achieved sales of 5, 5 billion Euros.The product portfolio varies from the traditional plasterboard to the payoff of conveying machinery for twisting site logistics, including the segments of gypsum plasters for upcountry and exterior use, insulation materials make of glass fibers or expanded polystyrene. The wide-ranging assortment in desire manner includes both(prenominal) other very(prenominal) special products as gypsum fiber boards for walls and alkalis, as vigorous as a variety of special ceiling systems. The final aim, which comes out from this wide range of products, is that Knauf Group unceasingly focuses its efforts in macrocosm the leader producer in the construction domain by fulfilling any requirement of the architects, planners, building developers, etc.A strong characteristic of Knauf is the continuous courage for visions, innovation and enc messinesshements as well as unsophisticated decision-making c overes and a wealth of con ceits on the part of its personnel. Despite the fact that the company is so large the CEOs of the company Nicolaus and Baldwin Knauf insist that the company is a family business, since it is still managed worldwide by the second and third generation of the family Knauf. The company doesnt belong in any stock market and every investment is created by their own lucre without loans from the bank or any other external fund.2. Companys structure and operationGypsum plasters (core selling material of the company)The Group started to go international as early as the beginning of the Seventies of the last century and the social movement has continued until today. Today the Group produces and sells its products in all European countries. In the developed countries such(prenominal) as E.E. countries, Turkey, Russia etc., the company has production facilities. According to the market demand in some occasions there are two or even three plants, whereas in puny countries as Cyprus for exampl e, there is only a local branch and the market is supplied with materials from Knauf Greece. Further more than, there are factories located in northwestern and South America, in the CIS states, in Northern Africa, in China and in Indonesia.separation materialsWhereas in earlier times the sectors of change construction and here we mention plasterboard as the primary product and gypsum plasters were the traditional areas of activity of the Group, retardation the insulation materials segment has developed into a further mainstay of the Group.The foundation stone for this was laid in 1978 when a glass fibre manufacturing company in Shelbyville, USA, was taken over. Today the company bears the name Knauf Insulation USA and operates a total of four production sites in the unite States.The production of insulating materials on the base of operations of glass wool and mineral wool becomes more and more important. For about 30 years, the company has gained accept in the production of glass wool in North America. Within the last 5 years, Knauf has acquired 10 glass wool and mineral wool factories throughout Europe and additionally built unseasoned plants in Eastern Europe and Russia.Emerging and acquisitions activitiesFocusing before some years in the maturation strategy into further segments of construction, where Knauf didnt guard experience, the Company needed the k at a timeledge and the facilities of existed companies well known for their quality in their field. whatever of them were bought from the mathematical group in order to serve all the local Knauf companies with the special products that theyre producing. Some of the companies that defy been bought and managed now from the group are AMF, Danogips, Marmorit, Sacret, Richter Systems, Knauf Perlite, Knauf PFT, Knauf Alutop.EUROPAK3Most of these companies are selling their products only via local Knauf businesses. The interesting point is that the group doesnt hesitate to change its policy accordi ng to the tooshie groups, different distri only ifion carry and market needs. universe more specific, for example AMF Company is operating as a different business in the local markets, who sells products to the local Knauf businesses, but also to several wholesalers for example. PFT Company, which is occupied in machinery equipment (totally different market segment), is also developing separately from the local Knauf businesses in the European markets in order to serve other distribution channels and object groups. Knauf insulation, which is a totally different company is as well acting separately in the markets and sell its products directly to wholesalers without local Knaufs help. In many occasions in the European countries they are also selling only via local Knauf businesses.An interesting history is about a merging that the group has made with its one of the biggest competitors. The company USG is the market leader in United States producing and selling the same range of m aterials. United States of America is too much mature market in constructing with dry wall systems. Knauf group established a big gap before some years in their product variety. They didnt have a board suitable for exterior constructions. Then the idea came from USG that had been producing a cement board, which is the ideal product, if someone wants to construct exterior walls facades for example. Then Knauf group in order to gain the practiced foul knowledge and experience in cement board market, has been cooperated with USG. They have created together a joint ventured company under the name Knauf USG Systems, which is an indie company located in Germany and its aim is to produce and sell cement boards in Europe, Middle East, and Africa but only via the local Knauf businesses.3. Organizational structureKnauf local businesses are managed by CEOs that usually are locals. The local anaesthetic CEOs are supervised by the regional CEOs who are usually coming from the Knauf family. The local CEOs are amply responsible for the local organizational structure. Usually there is the plant manager, a logistics manager, sales and marketing managers, IT managers, technical department and sales department. Depending on how big the market is, sometimes as in Greece for example the technical department is merged with the sales department, which is finally consisted from sales engineers.4. Vision and MissionThe Knauf vision stems from the model on which the company is based From a family company to a family of companiesi. Knaufs mission is to remain a family which will of all time include its employees, customers and consumers. The company mainly emphasizes its philosophy on the followingSustainability, Ecology and economy. The company produces economic construction systems based on keen materials that come straight from the earth and are completely friendly to deal and the environment.Plan innovations to meet tomorrows requirements.To be the market leader in the build ing materials manufacturingFocusing in long term growth and continuous increase of companys valueTo be as good as the sum of its total employees. The company depends on its employees skills, efficiency and creativity. In that sense production plants are intentional to be pleasant to work in, efficient and to ensure a conscientious approach to resources and the environment.Quality focussing is a key factor for the group5. Knauf Business and Marketing Strategy model5,1 DISTRIBUTIONKnaufs superior general strategy is to sell their products only via wholesalers. These dealers can then sell products further to second hand dealers, abridgement companies and technicians (Knauf system installers). This model can be changed if a local market is used to work with another(prenominal) way, as for example in Northern Africa countries. In Europe this strategy is generally followed.5, 2 fag GROUPSIf we follow the whole chain of construction pains, we all know that Architects are planning th e projects which substance, that theyre specifying materials (they create the demand). This means that they are the main decision makers in the construction chain.Contractors are taking over to complete the project, and the technicians as sub contractors they are installing Knauf systems.As you can easily realize, Knauf target groups are all the to a higher place mentioned groups. Companys concept, is to follow the projects from the early start of the planning until the final procurement. And that means, that they support all the phases of the construction by universe present and servicing with technical support all the groups referred. In addition they focus a rope to the individuals (private investors). Individuals are Knaufs long term objectives, since they strongly believe that they are at the end of the day the prefatory mean of continuously adding value in the company and make their products even better known to the market. This sector is going to empower the already fam ous Knauf brand in the market, and of course the materials demand.5, 3 COMMUNICATION PR ADVERTISEMENTIn this paragraph, Im going to show you a small part of the general ideas regarding the companys marketing approach. Knauf in Europe proceeds in specific advertising actions to introduce its products variety in its all target groups. This marketing approach operates since the start of the company and it is already very successful.A very important function in business is to follow up your customers. Thus, Knauf via its CRM system saves its contacts and post them direct mails. In addition they are also sending e-direct mails, as is the Knauf monthly impudentsletter or any other subject they would like to promote.Moreover, theyre participating in exhibitions which are usually taking place in the construction concept with target groups from architecture, planning, decoration, etc. Another way of advertizing is by creating inputs in magazines for architects, contractors and technician s. Except of magazines, they also make inputs in newspapers and daily free nipes, so they could be able to approach also the individuals. TV floater, radio spots are as well important ways of advertising their systems. Knauf invests a part of each perturbation to offer free advertising gifts to its customers. These gifts might be templates, banners, signs, flags, samples, vehicles and memorial gifts, all having as design the Knauf boy and the Knauf partner s logos as well. Local technical documentation and web sites are other ways to find information for the companys products. These documents are very well developed and they obviously offer an ensure technical support to the customers.The fraternity invests a lot in education regarding its systems installation. Every local business has its own cooking center where seminars are taking place in certain dates every year. Those who have participated in the seminars are taking in the end a Knauf graduate clarification that writes Mr has success in full participated in the Knauf seminars the dates And this small thing makes them feel that they belong in a special group. Consequently they spread this idea to other people.5.4 POSITIONINGKnauf continues to increase a premium brand and separate its position against competition. Thats why the corporation always invests in developing new products and improving the old ones.6. Gypsum Industry Market Analysis EuropeThe gypsum industry belongs into the broader industry of building materials. For the scope of our assignment we will only analyze the gypsum industry and oddly the European Gypsum Industry as Knauf is mainly active into the European market. The European Gypsum Industry is characterized as a growing industry in comparison with the US or Australian Gypsum Industries which are already in the maturity face of their life cycles. With a turnover of over 10 billion , the European gypsum and anhydrite industry operates 160 quarries and some 200 factories and g enerates employment directly to 28.000 people and indirectly for 85.000 people. It is one of the few fully integrated industries within the construction products field.Thirty years ago, the Gypsum Industry was made up of many small manufacturing enterprises mainly producing building plaster and stucco for local markets. The emergence and growth of the plasterboard and the plasterboard solutions market in the 1980s requiring high capital investments, equipment, RD and securing access to cancel resources led to a consolidation process within the European Gypsum industry. Currently in the industry nowadays three main operators cover 80% of the gypsum product marketii. These are Knauf Group of Companies, BPB (British Pasterboards) and Lafarge. BPB, a UK based manufacturer, acquired by nonesuch Gobain in 2005 and organized within the Saint-Gobains Construction Products Sectoriiiand Lafarge, the well known building material manufacturer, established in 1833 in France initially as a li mestone mining companyiv.6.1 gent AnalysisIn analyzing the macro-environment via a PEST analysis, we can configure the environment which gypsum industry producers compete and identify the factors that might in turn walk out a number of vital variables that are likely to influence the organizations supply and demand take aims and its costs.The European building material industry is not that vulnerable to Political issues but into the classic Construction Industry policy-making issues arise more frequently as the support from the European Union funds have major(ip) role into Construction Industry growth rates. From 2001 till 2009 where more and more privately funded big real-estate projects were utilise the industry was growing very fast but the economic pressure that affects, for the last year, all companies and investors involve is slowing down the rates of the industry. In such critical times, most governments are identifying its policies with social and environmental care p olicies. Into the construction environment there is the need, more than any other time, of verve efficient buildings and construction techniques that exploit those advantages, and governments in assessing the socioeconomic impact of energy spending reduction are already subsidizing such constructions through government or EU fund raising. Technology itself was always the main concern of producers in order to find ways of reducing their production cost as well as to invest in new RD fields, such as antiseismic technology, for exploiting the unique advantages of gypsum.6.2 SWOT analysisEuropean Gypsum Industry is a growing one and most European countries only now capitalize the advantages that gypsum offers as a building material. Gypsum is virtually indispensable for the interiors of homes and offices and all types of building where people congregate, such as schools, shops, airports, etc. Its superior surgery in providing everyday comfort, in fire resistance and in insulation, he ralds an ever greater role for it in buildings of the future. In fact, the safety and protection of people and property against fire, and effective thermal and acoustic insulation of buildings depends, more often than not, on the unique properties of gypsum. And many of the attractive features of the modern interior would be impossible without the versatility of gypsum as a building material.The gypsum wallboard industry is highly warring. Because wallboard is expensive to transport, does not travel well in large quantities and lacks of product eminence, producers compete on a regional basis, primarily based on price, product range, product quality, and customer service. The sector is highly competitive especially in Europe and North America with production mostly concentrated among few international players.The drywall solutions are seen in growing countries as a substitute for traditional construction solution like for example cement and brick and block constructions. The unique advantages that systems offered to the engineers made them a huge threat of substitute for the traditional techniques. But, in brief the industry will be into the maturity face and new innovative and evolution building materials like magnesium or perlite have already started to threaten gypsums raising empire. The industry has to invest into new materials, new technologies and branch out towards innovative building material and construction system solutions.The capital investment that is required in order to enter into the gypsum industry is high. Equipment is expensive, know how is difficult to acquire, access to natural resources is prohibited and investment in RD is mandatory. That is why in very few years the European Gypsum Industry from the state of many locally situated small producers it transform into an extremely concentrated market where three companies cover approximately 80% of the market. In global level the same concentrated situation is observed where 81% of the ma rket is covered by 7 players (Georgia Pacific, Knauf, Lafarge, topic Gypsum, Saint-Gobain, USG and Yoshino)The Gypsum Industry covers the whole life-cycle of the product. Indeed, the companies which extract the mineral gypsum also process it and manufacture the value-added products and systems. The full integration that characterizes the industry is a fact that removes any danger of suppliers bargaining power but at the same time it leads to higher production costs for the producer. The ownership of the gypsum reserves is a power game between the main competitors of the industry as it is at the same time a main clue of product differentiation and product quality government issueing from the mineral gypsum purity. Gypsum reserves are now rare around Europe and that off the producers to invent new technologies by producing synthetic gypsum mainly from fly ash which is a byproduct of energy production plants.The industry is mainly selling through an extensive dealers network in each country. Those dealers are commercial companies selling a series of building materials either to contractors or consumers. In Western Europe more mature markets dealership is also concentrated into few very big companies (Praktiker, Leroy Marlene, OBI etc) which collectible to its size and concentration they have already obtained a big bargaining power over the producers. Into the Greek market the dealers network is still based on small, unorganized depots with no special power over the industry but big retailers are already into the market and soon the situation will change.7. come upon Success Factors of the Gypsum IndustryThe following factors have played a major role in a gypsum companys prosperityCost advantages and economy of scaleThe recent trend of acquisitions and mergers exploit potential cost advantages to be found in RD facilities serving global operations. They create larger and more diversified market pore organizations. All the top performing companies in the indus try have faced, at least once, a major merger in the past. In 2005, BPB, one of the top 3 companies of the industry in Europe, was acquired by Saint Gobain which invested 5.9 billion , for setting itself a step ahead from its major competitors in the building materials industry.Access to natural resourcesAs previously noticed, the Gypsum Industry covers the whole life-cycle of the product and producers strive for securing reserves all over the world. In that industry, due to the cost structure, privileged access to the bare-ass material is vital for the companys growth. For that reason, companies started investing either in finding new ways of composing synthetic gypsum from several sources (e.g. energy plant waste) or by implementing systems for recycling their the products at the end of their life cycle (demolition waste).Differentiation through technical specifications and customer service qualityThe main target for all producers is to offer a complete solution with their system s of products in order for engineers to be able to substitute traditional ways of building. They managed to specify with standard norms the use of the plasterboard walls, ceilings, floor or any other use as well as their technical characteristics like fireproof, get going insulation, thermal insulation etc. With the combination of professional sales and technical support as companies are using only engineers for sales reps with extensive and professional training, in order to serve customers and specify the systems in a market that is constantly gaining market share from the traditional construction methods.8. Greek market analysisAs we previously noticed, into the Greek market there is also one competitor to Knauf, Rigips Hellas (BPB) with one production site situated in West Greece. Both companies have their own reserves of the raw material close to their factories which are both situated into the same geographical area resulting to equivalent quality levels of raw material. A ma in difference is the production capacities as well as the plants sizes. Knauf operates a plant that was build from scratch in 1991 in Amfilochia, while on the other hand Rigips acquired some years after Knaufs establishment in Greece an old gypsum factory from a local producer. That explains the estimated difference in local production capacities for the two producers. Having the appropriate capacity levels, Knauf can control its production cost and overheads better than the competitors and therefore result to higher margin levels.Knauf from 1991 invested a lot of money for differentiating through technical specifications and customer service quality. In order to achieve that high level engineers were recruited and were extensively trained into Germanys headquarters. The experience and professionalism of the mother company was soon transferred into the Greek subsidiary and the company culture was quickly transformed according to the followingThe future lies in the hands of talented and highly motivated employees. An important aspect is the family culture which prevails in the company lift up from one another, hold together, pass on knowledge, assume the role of mentor, take fast and direct paths and press for special achievementsv.In very few years, almost 10 professional engineers were covering all the Greek territory offering technical support to contractors, extensive training to installers and professional customer service to retailers. Rigips which was established a few years later used same techniques for expanding into the Greek territory but always by following Knaufs steps. That was something that reduces its cost for training the market into new building materials but cost them the genius of the leader in the market.Knauf was and still is characterized as the leader industry in the gypsum market in Greece. Their competitive advantage in the market is the ability of its people to open the market, train the customers and lead to a new age in construc tion industry. All the above are mainly achieved by the followingA huge database of active engineers is informed once every month by direct mail regarding new and innovative solutions. Over 7.000 installers are trained for efficient installing drywall systems into Knaufs Training Centre in Amfilochia. Retailers are supported by professional sales engineer all over Greece. Finally, Knauf has invest a lot in marketing by extensive advertising into press, technical magazines, radio and TV, by providing signs to all its retail network and by participating into all main fairs in Greece.Rigips havent tried to differentiate significantly from Knauf into the market. They have not invest as much as Knauf into penetrating and training the market and their main position in the market is to let the leader open the way and then to follow. The main differentiation point for the two companies was the price. Knauf is the leader and for that the customer has to pay a premium.9. Strategic recommendat ions ConclusionAs we saw in this assignment Knauf Corporation is developing in Europe with a certain way which is driven by the values, the culture, the ethics and the historical success model, that the family developed for their business. However, we also saw that several differences exist, depending on the needs and the culture of the local markets. Such differences for example could be the style of the management, the variety of products, the developing of the other corporate businesses and so on. Knauf family believes a lot in the different local adaptation of their business model and this is visibly proven from their willing and trust to choose local people as general managers to run the business in the countries. They invest a lot of money and efforts in order to find the correct person who is going to implement Knauf successful business style according to the local needs.Knauf group has proven its ability to penetrate, train and lead new markets. As a group it has a promisin g future as it is in line with the major key successful factors for the industry. Its competitive advantage is very strong and it is implemented into most countries in the world as it is into the Greek market. The industry is highly competitive and it is getting more and more concentrated. In order for Knauf to continue growing into such a competitive environment it needs to diversify its building material portfolio into more developing and profitable markets. Such a market is the insulation material industry in which the group recently invested by acquiring a lot of local producers in Europe and becoming the worlds fastest-growing insulation manufacturer with full ownership of its activities since 2002.Finally, Knauf should invest into countries that are structurally untapped like for example in Asian or growing African countries initially by securing raw material reserves into strategic places.