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Modern Roots of Strategic Management: Cement Roadstone Holding (CRH)




  1. INTRODUCTION ——————————————————————– 3
  1. STRATEGIC POSTURE (first deliverable?)

CRH Position ——————————————————————————–4

Building Materials Industry —————————————————————4

Building Materials Growth —————————————————————-4

  1. STRATEGIC AUDIT (second deliverable?)

Outside-In View —————————————————————————-4

PESTLE —————————————————————————-4

Porter’s 5 Forces ——————————————————————-4

SWOT Analysis ——————————————————————–4

Inside-Out View —————————————————————————-5

VRINO ——————————————————————————4

Strategic Positioning ———————————————————————–7

Strategy Clock ———————————————————————5

Internationalisation ————————————————————————-7

Drivers ——————————————————————————5

Methods —————————————————————————–5

Stakeholder Expectations ——————————————————————7

CRH Future ———————————————————————————-7

  1. CONCLUSION ———————————————————————— 3

BIBLIOGRAPHY ————————————————————————12

APPENDICES —————————————————————————-13



The Modern Roots of Strategic Management




CRH Position

Cement Roadstone Holding (CRH) is a global leader in building materials, acting as the parent company for an international group of diversified building materials (CRH 2015). CRH was listed as Ireland’s biggest company until early 2016, when Ryanair took over the top spot (Mulligan 2016). To date, CRH operates in 31 countries and employs 89,000 people, acting as the largest building materials company in North America, a regional leader in Europe and a growing presence in Asia (Roadstone 2016) (Appendix A). Operating across multiple industries, CRH focuses on three divisions: Materials, Products and Distribution with Materials being their largest division and core competency (CRH 2015) (Appendix B).

Mission To be the leading building materials business in the world.
Objective To be a responsible international leader (Appendix C) in building materials, delivering superior and sustained shareholder returns, while reducing its dependence on individual markets and achieving a balance in its geographic presence and portfolio of products.

(Appendix D)

  1. Continuous business improvement: through operational, commercial and financial excellence.
  2. Disciplined and focused growth: use strong balance sheet, cash generation capability and focused allocation of capital to achieve optimum growth.
  3. Leadership development: attract, develop and empower the next generation of performance oriented, innovative and entrepreneurial leaders.
  4. Extracting the benefits of our scale: leverage group scale to fund expansion by acquisition and to build leadership positions in local markets.

(CRH 2016)

CRH was formed through a 1970 merger between Cement Ltd and Roadstone Ltd in Ireland, and has continued to grow inorganically from the start. CRH’s business model outlines and explains this inorganic growth by placing great emphasis on a Proven Acquisition Model (CRH 2016) (Appendix E). The company “creates value and growth by identifying and acquiring strong businesses that complement [their] existing portfolio of operations” (CRH 2016). This inorganic strategy of growth expands their Group presence globally by acquiring companies that have a foothold in their respective locations (CRH 2015). Often, CRH acts as the parent company of various organizations, while keeping the original company name to hold the trust and familiarity associated with the brand (CRH 2015). CRH has a dynamic capability to continually invest their capital back into the market through acquisitions as well as enter into new and emerging markets in Asia and South America.

Building Materials Industry

The global market for Building Materials is projected to exceed $1 trillion by the year 2020, driven by improving world economic outlook and an upswing in construction activity (Nasdaq 2017). Operating in an oligopoly, CRH ranks as the third largest Building Materials organisation in the world (Business World 2015) (Appendix F). The industry consists of a core group of large organisations, including companies such as Cemex, Eagle Materials, USG Corporation, Headwaters Incorporated and CRH (Nasdaq 2017). Smaller organisations attempt to break into the market; however, are quickly bought out by the larger organisations such as CRH (Appendix G). This dynamic has allowed a select few organisations to control the output and supply of Building Materials to the world, with few substitute products available to the customer (CRH 2015). The Building Materials Industry operates as a red ocean in the Western markets, as it is a well-defined industry with fierce competition between the top organisations as well as heavy barriers to entry (Johnson et. al. 2014). Due to CRH’s significant share of the market, the company has encountered accusations of cartel involvement and price fixing scandals both abroad and in Ireland. Currently, Irish Cement, a subsidiary of CRH, is being investigated due to anti-competition practices in the sector (Inter Trade Ireland 2015). CRH is progressive in understanding their environment and acquiring companies abroad, but it is important to question their level of expansion and potential legal barriers that could arise as they gain larger portions of the market. This concern as well as increasing saturation of the market has led CRH to invest in opportunities in emerging markets, where great risk and reward stands to be made in the untapped market.

Building Materials Growth

The 2008 recession shook the global economy, and specifically affected the construction industry with the bursting of the housing bubble. The construction industry was identified as one of the top five industries hit hardest by the recession (CNBC 2012) (Appendix H). The recession not only affected construction production, but also directly influenced the Building Materials industry. Due to this ripple effect, the customer greatly lead the industry boundary, as construction was no longer affordable, the Building Materials industry was hurt by a decrease in demand. With a decrease in construction, CRH’s Materials, Products and Distribution divisions experienced a decrease in earnings. CRH has followed a deliberate strategy over the course of their company lifetime, sticking to their business model focused on acquisitions and operating through Materials, Products and Distribution divisions (CRH 2015). This traditional strategy resulted in decreased profits during the recession, due to the company’s inability to change with the environment. CRH experienced a 40% cut in profit from 2008 to 2009 (CRH 2009).

Today, CRH is experiencing positive growth due to an increase in construction activity. Comparing CRH Group profit from 2010 to 2015 highlights this growth in the industry – 2010: €439 million | 2015: €729 million (CRH 2011; CRH 2015). In five years, profit has increased by approximately 40%, mirroring the profit cut experienced from 2008 to 2009. This increase in growth varies across CRH’s respective areas, with North American markets experiencing the greatest percentage of growth following the recession (CRH 2015). Specifically, the United States has experienced a rebound in the housing and construction markets, while the European markets are slower to bounce back (CNBC 2012). Because of this dynamic, CRH has focused heavily on their Group in North America, now leading the Market in many areas and acquiring a new five-year highway bill which will provide large scale infrastructure for the company (CRH 2015) (Appendix I). The future looks bright for CRH and the Building Materials Industry with large projects, increased demand and new opportunity abroad projected for the coming years (CRH 2015).


Outside-In View [865] – 1054

“Strategy is the match an organization makes between its internal resources and skills…and the opportunities and risks created by its external environment” (Grant 1991, p. 114). Keeping this in mind, it is important for CRH to have a deep understanding of both their external and internal environments in developing strategy. By observing the macro-environment, CRH can view their industry and strategy through a broad lens, understanding and anticipating the vast number of external factors that directly impact their companies’ success. Factors such as global forces, technological forces, social forces, macroeconomic forces, political forces, legal forces, and demographic forces affect the industry’s opportunities and threats. This outside-in approach allows for CRH to firmly grasp and predict their environment, in turn having the ability to make proactive strategic decisions. “The point of industry analysis is not to declare the industry attractive or unattractive but to understand the underpinnings of competition and the root causes of profitability” (Porter 2008, p. 5). Through the use of IPESTEL, Porter’s Five Forces, and a SWOT analysis (specifically the opportunities and threats), a thorough exploration of CRH’s competitive industry will ensue.

The PESTEL framework categorizes environmental factors into key types. Highlighting six environmental factors, the framework “underlines that the environment is not just about economic force: there is an important non-market environment” (Johnson et al. 2014, p. 34).

  • Donald Trump’s presidential victory boosts CRH shares by over 2pc as US market opens  rocketing share price by added €2 billion to company’s market capitalisation (Manning & Co 2016).
  • Strict government policies and regulations in U.S. increase research and development costs of building materials firm.
  • CRH must be aware of the various laws and regulations as they operate in over thirty countries, all with different carbon emission laws and regulations.
  • Demand for Building Materials in emerging economies on increasing scale due to population growth, urbanisation and improvement in purchasing power (Build & Interiors 2015).
  • 2016 Growth Rate: China = 6.7% / U.S. = 1.6% / EU = 1.9% (Trading Economies 2016)
  • Large increase in demand for Corporate Social Responsibility, specifically in the Building Materials Industry where there is great amount of possibility for environmental waste (CRH 2015).
  • Developed economies growing demand for green building materials (CRH must invest more into their R&D for green building materials to compete with more advanced green competitors).
  • Investment in green building materials may give CRH competitive edge over rivals.
  • Industry relatively basic in terms of technology. More focused on price and quality, technology does not have large impact on the industry or strategy (Johnson et al. 2014).
  • E.U. heavily concerned with tackling climate change issues, strict carbon emissions laws and regulations.
  • China, India and USA not as strict with regulations.

(CRH 2015)

  • Hefty fines and bad reputation will follow if CRH does not follow carbon emission as well as health & safety of workforce laws and regulations.
  • CRH has experienced lawsuits regarding anti-competition laws. The organisation must be aware of their control of the industry in each of their operating countries and remain diligent as to not break any such laws (Inter Trade Ireland 2015).

Porter’s Five Forces Framework aids to identify “the attractiveness of an industry in terms of five competitive forces: threat of entry, threat of substitutes, power of buyers, power of suppliers, and extent of rivalry between competitors” (Johnson et al. 2014, p. 41). The framework is a strategic tool to identify opportunities in the industry coupled with threats associated from external forces.

Force Building Materials Industry Impact on CRH
Threat of New Entrants
  • High investment cost in plant and machinery  difficult for organisations to have enough capital to compete
  • CRH has large percentage of natural world resources and reserves (15 billion tonnes)
  • Traditionally, industry made up of multiple ‘family-owned’ smaller businesses; however, industry experiencing consolidation: smaller firms being acquired by larger firms such as CRH
LOW: Larger firms in the industry control most of market. Difficult for new entry, possible new entry in emerging markets.
Threat of Substitutes
  • Primary materials and Heavyside materials building products have no substitutes on the market.
  • Main threat is new “green building materials”, CRH must invest in such materials and R&D as sophisticated markets (i.e. USA, Ireland, UK) demanding environmentally friendly building materials.
MODERATE: Main materials have low threat of substitution; however, CRH falling slightly behind competitors in terms of going green.
Bargaining Power of Buyers
  • Transport extremely costly: high weight per unit, and materials are relatively inexpensive per kg. Therefore, markets must be local for manufacturers to compete. Competing on basis of price, quality and reliability.
  • Buyers have multiple options; building materials operate as a commodity product. Customer sets the industry boundary.
  • Mature markets: main infrastructure already in place, manufacturers heavily competing on RMI (repair, maintenance, improvement)
HIGH: consumers set the industry boundary. Buyers can easily switch to competitor if not happy.
Bargaining Power of Suppliers
  • Supplier must have multiple manufacturing plants in order to reach all customers. Due to high expense of transport, local plants are crucial for success.
  • Emerging markets: manufacturers have greater power as the main infrastructure is not yet in place.
LOW: CRH mergers and acquisitions allow for vertical integration and greater access to reserves
Competitive Rivalry
  • Organisations compete on basis of price, quality, and reliability.
  • Consolidation in industry: few big players control majority of market share and continuously acquire smaller “family owned” businesses to expand their reach and resources
  • Big players: CRH, Holcim, Lafarge, Saint Gobain
  • Red Ocean: Mature economies (USA, EU)
  • Blue Ocean: Emerging economies (India, China, South America)
MODERATE: While CRH is one of the main competitors in the industry, other organisations are currently more successful in green building materials. CRH current focus on advancing to emerging markets and less on advancing their green materials.

(CRH 2015)

Finally, the SWOT analysis “provides a general summary of the Strengths and Weaknesses explored in an analysis of strategic capabilities and the Opportunities and Threats explored in an analysis of the environment” (Johnson et al. 2014, p. 92). The SWOT analysis relates to both the outside-in view (Opportunities and Threats) as well as the inside-out view (Strengths and Weaknesses) of a firm. CRH has many opportunities in their current environment as well as future possibilities. Emerging markets in Asia and South America are relatively untapped markets, presenting vast opportunity for firms in the Building Materials industry. The maturing and saturated markets in the EU and USA exist as current threats to CRH with hyper-competition and building materials operating as a commodity for the customer.

Inside-Out View [865] – 704

While many theorists focus heavily on the link between a firm’s external environment and strategy, the role of firm resources cannot be understated in relation to strategy. These views should not be seen as mutually exclusive, instead they are complimentary and essential for a company to gain competitive advantage. While the outside-in view focuses on the macro-environment and external threats and opportunities, the inside-out view explores an organisation’s resources and capabilities. By understanding internal strengths and weaknesses, as well as external opportunities and threats, CRH can develop a sustainable corporate strategy, which in turn should yield competitive advantage.

As seen above in the SWOT analysis, various strengths and weaknesses have been identified for CRH. CRH’s strong brand identity and proven customer service have acted as strong incentives for customers to retain business with their firm in a hyper-competitive market (CRH 2015). In addition, their magnitude of resources and capital have allowed the company to acquire other businesses and stay competitive in pricing, which is imperative in such a saturated market where price and quality are of the utmost importance.

The Resource Based View identifies the resources and capabilities of the firm as the foundation for its long-term strategy. Reasoning behind the RBV view rests upon two premises: “first, internal resources and capabilities provide the basic direction for a firm’s strategy, second, resources and capabilities are the primary source of profit for the firm”  (Grant 1991, p. 116). This belief that company resources drive performance within an industry places great importance on the firm’s distinct resources and competencies (Collis & Montgomery 2008). It is extremely important to distinguish between threshold, distinct, and dynamic capabilities. In the competitive building materials industry, resources such as capital, brand identity, basic technology, and knowledge/expertise are required for any and all firms in the industry, making them threshold resources. CRH’s distinct capabilities check all of the boxes in the VRINO table below, identifying them as valuable, rare, inimitable, and non-substitutable. In order for a resource to be dynamic, an organisation must be able to “renew and recreate its strategic capabilities to meet the needs of changing environments” (Johnson et al. 2014, p. 71). A step further than distinct, dynamic capabilities are organisational core competencies that offer sustainable competitive advantage. CRH dynamic capabilities can be seen below.

Natural Resources & Reserves

Short Term (< 1yr) Medium Term (1-5yrs) Long Term (>5yrs)
Valuable X X X
Rare X X X
Inimitable X X X
Non-substitutable X X X
Organisation X X X

CRH has an abundance of natural resources and reserves, with 15 billion tonnes of aggregate reserves (sand and gravel, crushed stone) as well as 690 quarries in the USA and 350 quarries in Europe (Johnson et al. 2014). This amounts to over 80 years of production (long run) and rivals amongst the highest in the sector. This is exceedingly rare as there are a finite number of natural resources in the world, proving to be valuable, inimitable and non-substitutable for CRH. The organisation has been able to use this distinct resource time and time again as it reaches customers all over the globe due to the vast geographical distance their quarries are able to reach. As their natural resources and reserves checks all boxes in the VRINO, it secures basis for sustained competitive advantage.

Acquisition Model

Short Term (< 1yr) Medium Term (1-5yrs) Long Term (>5yrs)
Valuable X X X
Rare X X X
Inimitable X X X
Non-substitutable X X X
Organisation X X X

CRH relies on its acquisition-led expansion as the industry continues to consolidate. According to Goldman Sachs findings, the organisation has “the best track record of its peer group…of growing returns through acquisitions” (Johnson et al. 2014, p.644). The company’s bolt-on acquisition strategy aims to enhance “vertical integration, bolstered long-term reserves or filled out regional product positions” (Johnson et al. 2014, p. 644). CRH’s acquisition strategy has proven “very difficult to replicate”, and accounts for over 70% of company profit growth (Creaton 2000). The company has continuously utilized this core competency, with each new acquisition giving rise to further opportunities. Although many organisations in the industry utilize acquisitions as a key form of inorganic growth, CRH’s tacit knowledge surrounding their specific method of acquiring companies yields advantage. This makes CRH’s specific method of acquiring companies difficult to imitate, bestowing competitive advantage.

Strategic Positioning [1257] – 1177

CRH has followed a planned strategy, with “clear and articulated intentions, backed up by formal controls to ensure their pursuit, in an environment that is acquiescent” (Mintzberg & Waters 1985, p. 259). CRH’s corporate management in Dublin enforce an explicit, enduring and continually reinforced strategic stance to achieve competitive advantage by providing value to customers. Through rigorous measurement, evaluation and control processes, CRH is able to “formulate their intentions as precisely as possible and then strive for their implementation…with a minimum of distortion” (Mintzberg & Waters 1985, p. 259). This type of strategic management is of the utmost importance in a company such as CRH due to their corporate parenting style of management (Johnson et al. 2014, p. 644). With a heavy reliance on acquisition for company growth, CRH follows a deliberate plan for expansion and acts as the parent company to acquired firms. Goold et al. (1995) explain how the parent company can create value if “the parent’s skills and resources fit well with the needs and opportunities of the business” (p. 2). This fit holds great importance in CRH’s proven acquisition model and is the main determinant throughout all acquisition processes. To date, CRH has found strategic success in matching strong fit between corporate parent and its businesses (Goold et al. 1995).

Through acquisitions and vertical integration, CRH has been able to create additional market share, add shareholder value, acquire capabilities, scale and scope economies and deliver consistent service levels and share competencies across the business. Due to CRH’s position as a parent company, concerns with communication amongst the Group must be noted. While the Board of Directors may have a clear company strategy, this message may be difficult to portray to all acquired companies, located across over 30 countries. While CRH emphasizes a strong performance measurement and evaluation, the parent company must ensure their strategic focus is understood across all of its businesses. The organisations strategic position is concerned with their impact on strategy of the external environment, resources and competences, goals, and culture.

External Environment Following the global recession, the building materials industry took a major hit. While this economic downturn hurt CRH’s profit, current upswings in emerging markets provide opportunity for the firm to expand into China, India and South America (Johnson et al. 2014). Due to the mature state of the Building Materials industry in Western markets, CRH has focused on consolidation and acquisition-based growth. The development and growth state of emerging markets has led CRH to act as a first mover in attempts to gain cost leadership and control over the market (Appendix ??).
Strategic Capabilities * See VRINO Model above in Inside-Out View 

Dynamic Resources  – CRH Natural Resources & Reserves

Dynamic Competences – Acquisition Model

Organisational Goals The firm’s vision, mission, and objectives strive to achieve industry success by operating as the leading business materials business in the world (CRH 2015).
Culture CRH places great importance on company culture. This can be seen through their emphasis on strategic fit when looking to acquire various companies, as well as their emphasis on internal hiring (Mintzberg & Waters 1985). With low turnover and internally developed employees, CRH ensures the company meets the needs of existing employees. Since the firm’s corporate office in Dublin is relatively small for the size of their company, the Group relies on managerial knowledge and expertise in their respective geographical locations. This trust and autonomy yields a motivated work force and confident culture (CRH 2015).

CRH initially operated a cost leadership strategy, focusing on becoming the lowest-cost organisation in an industry structure where competitiveness is primarily based on price and quality (Johnson et al. 2014). Today, the firm combines this cost leadership strategy with a differentiation strategy as they enter into emerging markets. Porter warns against the blurring of strategic structure; however, Cliff Bowman’s Strategy Clock offers a framework for which a firm may change strategy over the course of the company lifetime (Bases of Competitive Advantage: The ‘Strategy Clock’ n.d.). Accounting for hybrid strategies, Bowman’s clock aligns with CRH’s mix between low-price strategy and differentiation strategy. Providing relatively low-prices and high-benefits, CRH is able to make aggressive bids for increased market share and enter new markets overseas. By understanding where the competitive forces are weakest, CRH has been able to identify emerging markets in China, India and South America to create opportunity for long-term profitability within the industry (Porter 2008).

The Strategy Clock


(Johnson et al. 2014, p. 203)

While this deliberate hybrid approach has allowed the company to grow into a global Business Materials supplier, it has possibly blinded the company from acting as a first mover into the new age of Green Building Materials. The sophisticated EU and USA markets have existed and matured, constantly pushing the industry boundary, forcing suppliers to operate and supply what the customer demands. In today’s market, this sophisticated customer is extremely cognisant of their environmental footprint, forcing the Building Materials industry to turn towards more eco-friendly materials. Other top competitors, such as Holcim, have pioneered new Green Building Materials and lead the industry. Strategy requires a firm to make trade-offs in competing, not only focusing on what they are doing, but also to choose what not to do (Porter 1996). CRH must decide whether or not they will continue to compete in this new ‘green’ space, or if they will look for opportunity elsewhere. Such opportunity may shift the firm’s geographical focus to Asia and South America, new emerging and relatively untapped markets.

Thus far, CRH has operated as a first mover in such emerging markets, jumping at opportunities to expand into India, China, and now South America. CRH may decide to forgo competing in overcrowded industries (USA, EU), and instead focus their energies and resources in creating “blue oceans of uncontested market space” (Kim & Mauborgne 2004). While CRH has found much of its success in the EU and USA, such markets are currently operating as red oceans, where industry boundaries are defined and accepted, and the competitive rules of the game are well understood. As this space reaches maturity, with majority of urban infrastructure previously built, CRH has looked into new opportunities for diversification in Asia and South America. While such spaces look advantageous the great risk in acting as a first-mover into relatively unchartered territory cannot be ignored. CRH’s preferred method of expansion is through inorganic growth (mergers and acquisition) and while this method has worked for the company in the past, their formula for success may need to be re-evaluated when expanding into China and South America. The cultural differences as well as differing legal and political structures should not be taken lightly. CRH gives great autonomy to acquired companies and relies on the knowledge of local managers respective markets, legislation, competition and customers (CRH 2015). This freedom may not work as well in developing countries where technology and industry knowledge is not nearly as advanced as the Western World. In addition, the company must familiarize themselves with new policies and regulations, ensuring they abide by foreign law in operation. While a blue ocean strategy holds the capacity to yield great strategic success and competitive advantage for CRH, it also holds major risk (Johnson et al. 2014). As a first-mover, the unknowns account for potential large company costs. Based on current and predictable environmental changes stated above, CRH may need to evaluate strategic decisions moving forward to account for opportunity and risk in the emerging markets.

Internationalisation [710] – 1052

As CRH ventures into the emerging markets of Asia and South America, a strong emphasis must be placed on following their deliberate international strategy. International strategy refers to “a range of options for operating outside an organisation’s country of origin” (Johnson et al. 2014, p. 262). While CRH has operated outside of Ireland since 1973, they have primarily ventured into countries with similar culture, customers and governmental structure. The differences in governmental regulations between the EU and the USA should not be understated; however, entering into Asian and South American markets is a complete shift for the Ireland-based company. Before CRH commits to investing billions in acquisitions in the emerging markets, a re-focused international strategy should be underpinned by a careful assessment of trends in China, India and South American markets. In the past, CRH entered into EU and USA markets based on strategic capabilities the company calculated in attempts to provide sustainable competitive advantage (CRH 2015). Due to the specific industry CRH operates in, the global-local dilemma may not have a large effect as building materials may be standardised across national boundaries. Since markets appear similar across the globe (homogeneity), potential scale and profit for CRH is massive if centralised (Johnson et al. 2014). In evaluating such moves, CRH must assess five main themes as seen below. Both company-specific as well as environmental drivers directly affect the firm’s international strategy. This strategy then affects the market a firm will attempt to enter into as well as the method of entry.

(Johnson et al. 2014, p. 261)


Three Key Drivers

1. No other strategic choice While CRH continues to find success in their current markets, the business materials industry operates heavily on RMI (repair, maintenance, improvement) with fewer opportunities for new construction in a mature and urban market.
2. Opportunity to leverage a mature product into untapped market New opportunities to be a first mover into emerging economies of China, India and S America (Blue Ocean). CRH has been extremely successful and has the opportunity to leverage this success in new markets.
3. Take advantage of international variation With declines in the euro value, and potential repercussions of Brexit, CRH may benefit from stronger currencies in China (Prodhan 2016).

George Yip (2012) found that newly internationalizing firms do not typically follow a highly systematic approach to internationalisation; however, organisations that did make use of a systematic sequence of steps better performed abroad. Firstly, firms must understand the various internationalisation drivers, which could potentially affect their success. His framework for internationalisation drivers sees “international strategy potential as determined by market drivers, cost drivers, government drivers and competitive drivers” (Johnson et al. 2014, p. 264) (Appendix ???). While all drivers are relevant, those that have the greatest impact on CRH are explored below.

Driver Impact on CRH
Market Drivers
Similar Customer Needs & Tastes While customers in emerging markets are not as sophisticated as CRH current consumer market, it has been shown that their tastes do not differ greatly when it comes to enviro-conscious building materials (CRH 2015). CRH must continue to invest in their R&D for new sustainable products.
Cost Drivers
Favourable Logistics Building materials have a very high cost per kg of transportation. CRH must acquire companies in emerging markets with existing raw materials (quarries etc.) to supplement their new geographical market as moving products across countries is not an economically viable option.
Country-Specific Differences The cost of labour in Asia and South America is cheaper than countries such as Ireland and the USA where CRH currently operates. This difference is favourable for CRH. In addition, the acquisition costs would be considerably less in the emerging markets when compared to similar sized organisations in their mature markets (CRH 2015). The over saturated markets CRH currently operate in (Push Factor) heavily contrast the relatively untapped market in China, India and S America. The increase in urbanization and demand for construction in China, India and South America far outweigh the demand in CRH’s current market space (Pull Factors).
Government Drivers
Technical Standards This would be a relatively seamless transition for CRH as the technology required for building materials operations is rudimentary in nature.

Michael Porter’s Diamond further explains “why some locations tend to produce firms with sustained competitive advantages in some industries more than others”, suggesting that locational advantages “stem from local factor conditions; local demand conditions; local related and supporting industries; and from local firm strategy structure and rivalry” (Johnson et al. 2014, p. 266). These four interacting determinants of locational advantage are applied to CRH’s

interest in emerging markets below:


















CRH has grown inorganically from inception and continues to acquire companies in synergistic strategic moves. CRH places great emphasis on their proven Acquisition Model, developing “value-based growth platforms…emphasizing accelerated integration, greater coordination, enterprise management and portfolio rationalisation” (Johnson et al. 2014, p. 641). CRH aims to target premium assets in emerging markets (primarily in cement) in partnership with established local organisations. This initial, low cost, presence allows for the Group to learn about the “market function, competitive environment, nature of government-business relations and employee skills and expectations” (Johnson et al. 2014, p. 644). The courtship between CRH and acquisition opportunities takes time to determine potential synergies between companies, focusing on strategic and organisational fit. The organisations that have been acquired share many common characteristics, as medium-sized, private, geographic leaders, with potential to enhance Group operations through geographic expansion (Johnson et al. 2014). These similarities allow for CRH to predict organisational fit as they have discovered a strong match between their company and family-owned firms.

The Group prioritizes a friendly deal as they retain managers to preserve the tacit knowledge such employees have regarding their geographical area and customer base. As CRH primarily acquires small companies (deals typically cost less than €20 million), the acquired company is integrated through symbiosis (CRH 2015). As CRH operates as the parent company, acquired companies strongly depend on the Groups presence; however, also retain a significant amount of autonomy in their respective geographic areas. To capitalize on local market knowledge, a high degree of responsibility is given to local managers followed by a rigorous evaluation and review programme (CRH 2015). Such methods allow for the Group to extend reach of CRH in terms of geography and resources, which is the most effective and efficient method of growth in the building materials industry due to increased consolidation in the market and need for vast geographical reach.

Stakeholder Expectations [945] – 781




  • Competitors


  • Employees
  • Local Community
  • Activist Groups


  • Government
  • Creditors


  • Owners/Shareholders
  • Customers
  • Managers


Operating as the parent company for an international group of building materials businesses, CRH has many stakeholders affecting the success of the organisation. These stakeholders directly affect the firm and the firm directly affects the stakeholders. CRH management must recognize each individual stakeholder and understand which groups hold the most influence and power over the company. By understanding the level of interest and power each stakeholder has, they can be broken into four categories: minimal effort, keep informed, keep satisfied, and key players (Johnson et al. 2014). This matrix may shift depending on the issue at hand and therefore must be re-evaluated dependent on the situation and country CRH is operating in. This is a difficult task for managers to evaluate and maintain; however, the importance of understanding and maintaining the level of interest and power of some key stakeholders may be critical to the success of strategy (Johnson et al. 2014). Due to CRH’s parent style of management and strategy, as well as their central corporation office in Ireland, it may be a concern for stakeholder expectations in specific geographical locations as it is difficult for CRH to successfully and efficiently monitor each of its businesses and locations.

The identification of specific stakeholders, such as customers, shareholders, and creditors is important for the formulation of strategy; however, wider influences such as corporate social responsibility (CSR) can impact vast groups of stakeholders and society as a whole. Due to the industry CRH operates in, their impact on the environment is heavily scrutinized and maintained by government policies and regulations and customer demands. “Increasingly, investment and support may hinge on the public’s perception of a firm’s dedication to social responsibility” (Crilly 2012). CRH recognizes the importance of public perception and is “committed to delivering a built environment that is sustainable and of value to the communities [they] serve” (CRH 2015, p. 14). The organisation understands the surge in environmentally conscious customers and applies a strategic approach to sustainability, collaborating with stakeholders to ensure objectives and ambitions are achieved. While CRH has made significant steps towards improving their environmental management, the organisation has fell behind other competitors in relation to green building materials (Nasdaq 2017). The Board of Directors recognize the interest CRH’s sophisticated customers, community, and activist groups have in CSR and must continue to invest in R&D to minimize their environmental footprint and maintain the satisfaction of stakeholders.

CRH plc is “not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly” (CRH 2015, p. 70). As a public limited company, CRH sells their shares to the public, with ownership in the hands of individual investors and management delegated to the corporate governance. The Board of Directors manage the Group operations and devote considerable amounts of time and resources each year to shareholder engagement (CRH 2015) (Appendix ???). Today, CRH’s focus is on restoring their debt metrics to normalised levels, integrating their acquired businesses and shareholder value creation (CRH 2015). The company greatly values their shareholders and focuses on improving TSR (Appendix ??). The company continually delivers strong TSR numbers in comparison to competitors, maintain a strong reputation for potential investors. This may be, in part, due to their reliance on shares for raising capital. In 2015, the company completed a placing of 74,039,915 new ordinary shares raising a gross proceeds of €1.6 billion (CRH 2015). Due to this strong reliance on value creation, shareholders would be considered a key player for CRH plc and would have both a high level of interest and power within the company.


CRH Future [470]

“The winners of tomorrow will be those whose leaders have the vision and conviction to capitalize on the turbulence created by challenging markets while establishing competitive advantage for the long run” (Connolly 2009, p. 31). CRH currently stands at a cross road with a choice to continue to compete in the mature markets of the EU and USA or expand their reach and venture into the new and emerging markets of China, India and South America. Their corporate strategy of inorganic growth and emphasis on low costs in a commodity market has yielded sustained competitive advantage in the building materials industry since inception of CRH as an organisation. This competitive strategy may not shift in practice, but rather in geographic location. As CRH looks to the future, the company recognizes a maturing market in the EU and USA with continued consolidation and potential advances into green building materials. There is also great potential in the emerging markets of China, India and South America where less advanced infrastructure coupled with growing urbanisation and economic status poses future opportunity for the building materials industry (Build & Interiors 2015). CRH must recognize this vast opportunity and may choose to act as a first mover into this blue ocean, taking on greater risk with the potential for great opportunity and growth abroad.





































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Appendix A – Map of CRH Operation

(CRH 2016)

Appendix B – CRH Divisions

(CRH 2009)

Appendix C – CRH 2015 Sustainability

(CRH 2015)

Appendix D – CRH Vision 2015

(CRH 2015)

Appendix E – CRH Business Cycle

(CRH 2016)

Appendix F – CRH 2015 Performance Highlights

(CRH 2015)

Appendix G – CRH Acquisitions

(CRH 2016)

1970 Van Neerbos (Netherlands): First international purchase, concrete producer and distributor in the Netherlands
1978 Amcor (USA – Utah): Concrete products group *base of USA division
1985 Callanan Industries (USA – New York): Aggregates and asphalt producer
1990 Raboni SA (France): Builders merchant company and drainage systems and concrete vault manufacturing group
1990 Betco Block & Products Inc (USA – Maryland)
1994 Balf Co. (USA – Connecticut)
1994 Lebanon Rock (USA – Pennsylvania)
1994 Keating (USA – Massachusetts)
1994 Sullivan Lafarge (USA – New York)
1995 Holding Cement Polski (Poland): Major cement producer
1996 Allied Building Products (USA – Northeast)
1999 Finnsementti Oy (Finland): Finland’s only cement producer
1999 Lohja Rudus Oy (Finland): Finland’s top producer of aggregates and ready-mix concrete
2000 Jura Group (Switzerland): Cement, concrete and aggregates operations as well as regional Distribution network
2000 Shelly Group (USA – Ohio)
2002 Mount Hope Rock Products (USA – New Jersey)
2003 Cementbouw (Netherlands): Market-leading DIY store chain and building materials producer
2004 Secil (Portugal): Cement producer
2006 Heilongiang Cement (China)
2006 Ashland Paving and Construction APAC (USA – Georgia) *Largest acquisition
2007 US Materials Division (USA)
2008 My Home Industries Ltd. (India): Cement company
2008 Pavestone (USA)
2015 C.R. Laurence (USA): Leading manufacturer and distributor of custom hardware and installation products
2015 Lafarge Tarmac (United Kingdom): Building materials producer

Appendix H – Ireland GDP v GNP v Construction

(Inter Trade Ireland 2015)

Appendix I – America Leadership Positions

(CRH 2015)

Appendix J – CRH Earnings

(CRH 2015)

Appendix ?? – Yips Internationalisation Drivers

(Johnson et al. 2014, p. 264)

Appendix ?? – Membership of the CRH Board

(CRH 2015, p. 66)

Appendix ?? – Investor Relations Activities

(CRH 2015, p. 70)

Appendix ?? – Total Shareholder Return (TSR)

(CRH 2015, p. 73)

Appendix ?? – 2014 Plan

(CRH 2015, p. 82)

Appendix ?? – TSR Performance

(CRH 2015, p. 93)

Appendix ??? – Board of Directors

(CRH 2015)

Position Name Description
Chairman Nicky Hartery
  • Appointed to the Board in June 2004
  • Nationality: Irish
  • Age: 64
  • Experience: Was Vice President of Manufacturing and Business Operations for Dell Inc.’s Europe, Middle East & Africa operations from 2000-2008
Chief Executive Albert Manifold
  • Appointed to the Board in January 2009
  • Nationality: Irish
  • Age: 53
  • Experience: Joined CRH in 1998, has held a variety of senior positions. . Previously, was a Chief Operating Officer with a private equity group.
Finance Director Senan Murphy
  • Appointed to the Board in January 2016
  • Nationality: Irish
  • Age: 46
  • Experience: Was the Chief Operating Officer at Bank of Ireland.
Group Transformation Director Maeve Carton
  • Appointed to the Board in May 2010
  • Nationality: Irish
  • Age: 57
  • Experience: Joined CRH in 1988, has held a number of roles in the Group Finance area (Group Controller, Head of Group Finance, Finance Director). Previously worked as a chartered accountant in an international accountancy practice.

Appendix ?? – Industry Life Cycle

(Johnson et al. 2014, p. 378)

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