Strategic analysis

STRATEGIC ANALYSIS 9

5.3 L’Ardoisière corporate level strategy

L’Ardoisière operates a slate production business in Canada, atQuebec. The company is also involved in the mining of quarries wherethe solid blocks for slate production are found. This is a companythat has been in the production of the slate products used in staircases, floors, walls, counters ad fireplaces since 1996 when thecompany was established. It is worth noting that prior to theproduction of slate products the company was making ceramic tileswhich it continues to make. The main market for the company’sproducts has been in Quebec for many years that it has been inproduction. However, the company is considering expanding its marketbase to the Eastern Coast region of the United States where themanagement of the company believes there is adequate market for thecompany’s quality and unique slate products (Dale et al., 2005).The two businesses of producing ceramic tiles and the slate productsare related in many aspects. To start with, the products produced bythe company serve almost the same purpose. The only difference isthat the slate products are natural. Both products are used onfloors, walls and staircases.

The company is engaged in two lines of business where it mines andprocesses slate for the local market and also produces ceramic tiles.The company has over the years gained immense experience and it nowproduces high quality slate which is multicolored (Moebs et al.,2010). However, the business or the operations of the business mightbe considered as being three since it is involved in excavation ofthe quarries and the processing of the slate, as well as theproduction of ceramic tiles. The two operations mining andprocessing slate are totally interlinked since one operation whichis mining, provides the raw materials for the other processingoperation. The company acquires the land where it seeks to excavatethe clay mud which it processes to slate. Recently, the companyacquired the slate fields in Nova Scotia. Although the productionplant is in Quebec, it is clear that the two operations must workhand in hand in order to continue producing the quality multicoloredslates for the local market in Quebec and for the planned externalmarket in the USA.

The company in question focuses on ceramic tiles and slate productsas the two major lines of business, it is essential to note thatmultiple business create value to any enterprise. It is worth notingthat when a company operates a number of businesses such as transportservices and hotels, the businesses complement each other in terms ofincome. One business line can support another struggling business.Another added value of multiple businesses is that one business isused to hold the assets of the entire enterprise from the risks ofliability while the other business carries the liability. In otherwords, the businesses are in a position to shield each other of anylegal liability. The company chose to engage in slate mining andproduction of slate products after considering the market for theslate products such as the ones used on floors, stairs, counters andwalls (Canadian mining journal, 2013). The sale of ceramic tiles andslate products complement each other. It is worth noting that thedemand for the ceramic tiles may go down at times and this impliesthat the sales from the slate will offer the necessary income forpaying the various bills for the company. Many companies also engagein multiple businesses for the purpose of evading additional incometax. Whereas L’Ardoisière engages in the production and the saleof both slate and ceramic tiles, the company pays a single incometax. Additionally, companies operating multiple businesses pay asingle permit for their businesses. It is also worth noting that themultiple businesses can complement each other in the payment of adebt.

Besides the complementary nature of the two businesses that thecompany operates, there might have been other motivations which ledto the start of the second business. It is, however, worth statingthat the two lines of business are indeed adding immense value toeach other and to the enterprise. Denis Bisson and his team hadnatural interest and passion for natural stone ad this one of thereasons that they founded L’Ardoisière in 1996. It is thereforeclear that the business, which was making only ceramic tiles at thetime, had different motivations which led to the start of the slatebusiness. It is also worth noting that the Canadian slate is of highdensity and Denis and his team was sure that their new products wouldhave a big market in Quebec, as well as abroad. The founders of thecompany might also have been influenced by the availability of thenatural materials that are used to process slate products. As it isevidently clear, the company has managed to buy land in Nova Scotiathat is rich with the raw material of compressed clay mud that isused to make slate products (Moebs et al., 2010). Low competition inthe industry is another incentive that made the founders of thecompany to venture into the business of producing slate products.

When two or more businesses operate together, there is enhancedeffectiveness as a result of the value they create for each other.This is the same case with the L’Ardoisière where the ceramictiles business and the slate production business complement eachother in terms of sharing losses and or increasing the profits. Thetwo lines of business ensure that the company’s bills are paid andprofits are maintained. For instance, whereas the sales of ceramictiles may be dwindling, the expansion of the slate products into theUS market will ensure that the company continues to make profits andpay its bills (Bristow et al., 2012). The marketing lines for bothproducts are also the same since they are put to the same use by theclients. This brings effectiveness to the marketing team. The twolines of business also create synergy in terms of sharing taxes andreducing the burden.

5.4 L’Ardoisière international strategy

The company is planning to enter into the US slate products marketas a way of expanding its market share. It is evident from researchthat the company produces high quality slate products that would becompetitive in the American market. The company seeks to have itsproducts in the East Coast region in the US targeting states such asNew York, New Hampshire, Rhode Island and Massachusetts (Canadianmining journal, 2013).

The company is located in Quebec Canada and it has a quarry inHalifax. Geographically, the company is near the US, which is anincentive for international market with the country. The company cantransport the products directly to the US market either through shipsor through air. The location and the country that the company islocated are favorable for the business it seeks to engage in with thevarious states in East Coast region of the United States (Moebs etal., 2010). The company seeks to apply various strategies topenetrate the US slate products market. The company sendsrepresentatives to the target international market to survey andidentify the potential that the market has. In this case,L’Ardoisière has sent representatives from Quebec, Canada to theEastern Coast region of the United States where they are assigned theduty of surveying the market and reporting back to the headquarters(Moebs et al., 2010).

The company manages its international operations throughrepresentatives in the respective countries. For instance, for the USmarket, the company will have representatives who will be carryingout market research on behalf of the company and later reporting tothe management of the company. Additionally, the company ensures thatit follows the rules and the regulations of the specific country thatit is doing business with (Moebs et al., 2010). With the advancedtechnology such as the use of emails and mobile technology, thecompany relies heavily on technology for communication with theclients. Transactions can be done online and the companyrepresentatives must not necessarily meet the clients physically.Marketing efforts in the international market are essential for thiscompany. It is critical to inform the potential customers of thequality of the slate products from Canada. The company relies heavilyon social media for reaching its international clients. Social mediaprovides a cheap and reliable form of marketing which enables thecompany to reach its target clients in outside market.

The company’s slate products have various competitive advantagesover the local slate products in the countries where it seeks toexpand its market. One competitive advantage is that the company usesadvanced technology to produce its slate products. This means thatthe company is capable of producing extremely high quality slateproducts that are not only durable, but also attractive. The slatefrom Canada is known to be resistant to frost and also it can handleimmense pressure or force without separating the layers (Moebs etal., 2010). This creates a competitive advantage of the company’sproducts in the American market that it seeks to enter. Additionally,the slate from Canada is known to be less porous and also it does notreact with acids. This makes the product extremely attractive hencegiving it a competitive advantage. Due to the durability of theCanadian slate, it is renewable and this is also another addedadvantage. It is worth stating that slates from China, Brazil andAmerica are known to contain pyrite which oxidizes after coming intocontact with water. This is not the case with slate from Canada whichmakes it number one choice for the international market. Due to theadvanced technology that the firm uses in its production process, itis able to offer the slate products to the international market atcheaper prices. This creates a critical competitive advantage sincemost clients of slate products shifted to other products such asplastic products due to cost. Lastly, the slate found in Canada isnormally multicolored. Slate from other countries such as the US,China and Brazil have a single color (Dale et al., 2005). The USmarket has a high demand for the multicolored slates hence creating acompetitive advantage for the L’Ardoisière slate products.

The strategies used in the foreign market and the ones used in thelocal Quebec market are similar and also different in various ways.The company offers the same quality products both in the domesticmarket in Canada as it does in the international market. The companymarkets its products in the local market, as well as in theinternational market. However, in the local market the company doesnot have to send any representatives since it clearly knows themarket trends for the slate products. The company sendsrepresentatives for the international market who carry out researchon the potential market and report back to the management of thecompany (Canadian mining journal, 2013). The marketing efforts areintense for the international market rather than the ones that thecompany applies in the local market. This is because theinternational market is more competitive than the local market.Additionally, the company spends more on advertising in theinternational market than it does in the local market. It is worthnoting that the international market has numerous logistics such astransport as opposed to the local market. It is therefore essentialto note that the strategies applied in the international market mightinvolve additional logistics as opposed to the local market.

Foreign operations have had a great effect on L’Ardoisièreoperations and performance. To start with, the company has had toexpand its production capacity to cater for the international market.The company has also acquired the Nova Scotia quarry which is meantto increase the raw materials and the deposits for compressed claymud that is needed for the production of slate products. It is alsoparamount to state that the company has had to purchase new equipmentfor the production of the slate products. The operations wereaffected in that there needed to be a change in the company whileinstalling the new equipment which ensured that the company wouldproduce high quality slate products. The company also needed changesthat would ensure that it has constant supply of the raw materials.The acquisition of the land in Nova Scotia was as a result of owninga quarry that would ensure that there is constant and assured supplyof the raw materials in order to serve the international marketefficiently (Canadian mining journal, 2013). The operations of thecompany have also been affected considering that the company isseeking to open a production plant at the quarry at Nova Scotia. Thisis aimed at enabling the firm to export products directly from thequarry. This will create efficiency in the international market. Theforeign operations have indeed changed the strategy of the companyand it is clear that the company is expanding its productioncapacity, seeking more reliable sources of raw materials andconsidering the advantages of having the production plant at thequarry. The corporate level of the company has also changed frombeing a local company to being an international company. This meansthat the company is now being watched from a global level and itscorporate performance must improve.

References

Bristow, C. M., Scott, P. W., Annual Forum on the Geology ofIndustrial Minerals, &amp Extractive Industry Geology Conference.(2012).&nbspIndustrial minerals and extractive industry geology:Based on papers presented at the combined 36th Forum on the Geologyof Industrial Minerals and 11th Extractive IndustryGeology Conference, Bath, England, 7th – 12th May,2012. London: Geological Society.

Canadian mining journal. (2013). Don Mills, Ont: SouthamBusiness Communications.

Dale, T. N., Gannett, S. S., Moffit, F. H., Stone, R. W., Collier, A.J., &amp Butts, C. (2005). Slate deposits andslate industry of the United States. Washington, D.C: Govt.Print. Off.

Moebs, N. N., Sames, G. P., &amp Marshall, T. E.(2010).&nbspGeotechnology in slate quarry operations. Pittsburgh, Pa.: U.S. Dept. of the Interior, Bureau of Mines.