Holcims Romanian Unique Venture Yields Positive Results for all Stakeholders - Essay Example

Holcim's Romanian Unique Venture Yields Positive Results for all Stakeholders The Holcim Group, a Dutch cement and aggregate company operating in 70 countries, made its presence in Romania when it acquired three cement plants in Turda, Campulung and Alesd between 1997 and 2000. The plants were to produced the whole range of Holcim products - slag cement, pozzolan cement, fly ash cement, limestone cement, multiple blends and even Ordinary Portland cement. Holcim Romania also provides treatment and valorization of industrial wastes.

Opening up production in the country offered many benefits to the company. First and foremost, the cement plants were already established thereby minimizing eliminating construction capital costs. The plants needed only refurbishment and improvement. Secondly, operating in the country offers opportunities to widen the company's market share as the country can serve as a gateway to other countries of Eastern Europe. Furthermore, Romania is relatively politically stable and has a friendly business atmosphere.

Romanians were also known for their enterprising character. One of the concerns usually arising from cement production is that the process uses large amounts of fossil fuel and involved large amounts of CO2 emissions. What Holcim did was to use contaminated and expired pet foods as a fuel substitute. 13,000 tons were gathered from the country's groceries and manufacturers. This endeavor was undertaken with all the environmental and safety regulations inspected and audited by a third party. Holcim discovered that each ton of pet food replaced 1.

2 tons of traditional fossil fuel. Along with the use of fly ash instead of clinkers, the use of the pet food reduced C02 emissions by 74%. It also helped the country tackle with its toxic waste disposal problem. Believing that people are the foundation of value creation, Holcim offered wages that were 7% higher than the cement industry average and 15% higher than Romania's general industry. The work force was also represented by an independent trade union. The company also offered programs such as medical screening, drug and alcohol awareness, disease and stress management and procedures for life threatening diseases.

This was done to improve the Occupational Health and Safety (OH&S) performance of the company. Employees were also empowered to discuss issues of job satisfaction with their supervisors. A system to collect and handle employee grievances was also placed. Due to these remarkable features, Holcim was able to obtain financial support of the government of Netherlands and Romania. The venture served as a model for other Holcim ventures in other countries. Because of this, Holcim was able to have an increase in sales from 13,215 (in millions of dollars) in 2004 to 18, 468 in 2005.

The company's value increased from 656 (in millions of dollars) in 2004 to 1,254 in 2005. Although the company registered an increase in expenditure due to research and development for environmentally safe systems and increased labor costs, in the long run it profited from the venture (Holcim, 2005) The numbers only goes to show that when you invest in sustainable development and when you address stakeholder concerns appropriately, it can actually translate to financial profit for the company.

This can serve as a good model to improve the business environment in the Acme automotive plant in Nuevo Laredo, Tamaulipas, Mexico. The concerns in the plant are mainly about the poor working conditions existing in the facility (brainmass, 2000). This is typical of a production plant in a poor foreign country where the labor force is usually exploited. Learning form the Holcim example, this must not be the case. Exploitation leads to unrest and unrest leads to strikes- which are very costly in terms of lost opportunity time.

Addressing the concerns of all the stakeholders can be costly but it is profitable in the long run as the Holcim example have shown. References;1. Holcim Foundation (2005). Corporate Sustainable Development Report 2005. Retrieved October 22, 2006 from http://www.holcim.com/gc/CORP/uploads/CSDR_2005_rev.pdf2. brainmass.com (2000). Business Management Problem. Retrieved October 22, 2006 from http://www.brainmass.com/homeworkhelp/business/management/20769/