Lafarge is a French company that has become the largest building and construction material company in the world. In the last decade, Lafarge has accelerated the pace of its growth into new countries, by acquiring companies, and expanding into new businesses and new products through its four divisions: (1) cement; (2) aggregates and concrete; (3) roofing; and (4) gypsum. Numerous acquisitions and joint ventures in all four divisions, and on every continent, particularly Asia, have seen Lafarge continue consolidating its position as a world leader in cement. Lafarge, today, operates in 75 countries with 77,000 employees, and achieves 14.6 billion euros of annual sales through its four divisions. Barely five years ago, in 1997, Lafarge operated in only 35 countries with 35,000 people and had a sales turnover of 6.4 billion euros. This case describes Lafarge’s policy of growth and profitable growth; by successful acquisitions and post-merger integration. The case deals with both the issues of internal restructuring of Lafarge to fuel its external strategy of growth and it traces the process of internationalisation of a French cement producer. The case also examines the basis for globalisation of what many would think of as a very ‘local business’. It presents an opportunity to examine the logic of global competitive moves. The case focuses on five of the key issues Lafarge needs to address in exploring globalisation: (1) continuing its growth strategy (strategy); (2) realisation of benefits from its restructuring programme (structure); (3) fast integration of the acquired companies to create synergy and hence value (systems and processes); (4) internationalisation of its work force and developing its managers to be mobile and to operate in a wide variety of markets, with people of diverse cultural backgrounds (culture); and (5) managing its human resource which has doubled in the last five years (people). Lafarge with its transfer of best practices, managing its people the ‘Lafarge Way’ and the way it manages cultural diversity, provides a basis for discussing the sources of superior performance in a global context. In addition, the wide array of benefits that Lafarge derives from its operations in different countries broadens conventional notions of why firms globalise. A video is available to accompany this case.
SOM, A. (2006). Lafarge : from a french cement company to a global leader. ESSEC Business School.