MASTER OF BUSINESS ADMINISTRATION

AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM

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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
4.0 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
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 twenty-
first-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 e-
market.

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 e-
business 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 e-
business 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.scribd.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.