Marketing research and analysis of the construction of steel in Yemen Essay

In every organization the management carries out research work about how the operations and performance of a company are taking place so that goals and objectives are achieved within the stipulated period of time .The aim of research work is to ensure that all operations within the various departments are taking place within the stipulated period of time. Market research refers to the process of gathering, recording and analyzing data and information about the customers, competitors and the market at large.

Yemen country is a small country that has been growing slowly due to lack of the necessary resources and personnel who can implement policies that can bring about growth and development within a country. In the past it has been constructing its building using locally available materials, but due to increased demand for modern houses and scarcity of this raw material the management of these organizations has been importing construction material such as steel so that they can construct strong and durable buildings that can last for a longtime.

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The country has been frequently attacked by terrorists and this has adversely affected the performance of the country as investors have been confident in investing in the country. The country has been engaging in various sectors of the economy such as agriculture, tourism, and construction, industrial and manufacturing industries so that it can generate as much revenue for the economy as possible. The economy of the country has been performing poorly this is because of continued wars and attacks, therefore has been venturing in various businesses so as to generate income for their income.

1.1Yemens economy

There were different kinds of wars that took place in Yemen that adversely affected the economy. The different kinds of wars were; American Warship United States Cole’s that occurred in October 2000, attacks that occurred on September 11 2001,and also the Limburge explosion that occurred in October 2002.The effects that were observed during and after the wars were declined oil prices that increased from  United States $8to $12 per barrel. There was low economic growth rate, high inflationary rate, and larger deficiency in commercial expenditure that resulted from the dependency on the oil resources.

The tourism sector as also affected this because visitors could not visit war prone countries. The unemployment rate rose as no investment took place within the country. The other issues that arose as a result of the war were deterioration of the local currencies exchange rate, increase of prices of goods, cost of production was also high and insurance costs also rose up during this time. The government recorded a loss of US$500 million thus it could not continue with its investment project due to this deficit.

The Yemen government assisted the Iraq government in invading the Kuwait government that led to the alienation of the Saudi Arabian and Kuwait government during the Gulf war that occurred in the year 1990-1991.The Saudi Arabian government further on expelled the Yemeni workers from their country and this affected the Yemen’s governmental budget. In the year 1994 there was civil war that affected the economy such that the country sought financial aid from the international agencies such as the World Bank and International Monetary Fund. International Monetary Fund gave the government credit facility that amounted to United States  $190 million which was later on added to United States $500million ,but there were restriction that were  imposed that stated that the government had to restructure the  economy by reducing poverty and enhancing growth so that it could receive more funds from the international agencies.

In the year 2002 the bilateral and multilateral agencies together with the World Bank assisted the government by funding it with more money that amounted to United States $2.3 billion whereby 80% of the funds was in form of concessional loans. In the year 2005 the international agencies stated their dissatisfaction with how the government implemented its policies since poverty levels were still higher than was expected of them, therefore it said it would reduce its finances to more than one third percent of the promised funds.

Yemen produced small amounts of oil although it did not belong to The Organization of Petroleum Exporting Countries (OPEC) that produced large amounts of crude oil that was later on sold to the foreign countries so that they could generate income. The amount of crude oil that was produced by the country contributed to 70% to 75% of the governments revenue while 90% of it was exported to the foreign countries.

It was reported that the crude oil reserves amounted to 4billion barrels although after a period of 15 to 20 years the oil reserves and fields were expected to decline with time due to exhaustion. Recently the country has been producing the Liquefied Natural Gas (LNG) so that it could be exported to other countries in the world. It partnered with the privately held companies in order to facilitate production of quality products for its customers. The plant was noted to produce over 6.7 million tons of Liquefied Natural Gas (LNG).According to some analysts they stated that the Liquefied Natural Gas would contribute to over United States $350 million revenue thus would increase amount generate by the government as revenue to its budget .This revenue would be used to facilitate to the development of a petrochemical industry within the country.

 The ways in which the government has been encouraging non-oil business like steel business. The government has been providing funds to various sectors of the economy such as agriculture whereby it has been giving the farmers quality seeds so that they can grow quality foods that can be exported to the foreign countries. For instance it has been venturing in agricultural activities Yemen non-oil products has been agricultural products such as fish and fish products, vegetables and fruits. It exports and imports were reported to be increasing and decreasing due to changes in the oil prices. The agricultural sector faced challenges that were as a result of environmental degradation such as soil erosion, sand dune encroachment and deforestation that hindered the agricultural practices to take place within the country. It irrigated its fields with water from the wells, but they were depleting each day therefore the activities would not be undertaken effectively.

The Yemen government imports steel from the Middle East countries so that they can construction business within the country effectively.

1.2. The importance of the construction industry in Yemen

The government of Yemen stated that it was in the process of constructing an iron and steel plant in the city of Rayan that was located about 50 kilometers in the Northeast Mukalia Hadramount Governnorate.It was noted that the plant would occupy an area of 180,000 square meters and would cost over $26 million .The aim of constructing the steel plant was to meets the increasing demand for steel products that were demanded by the investors who wanted to construct good building that would last for a longtime hence meet the need of the growing population within the country.

At the end of constructing the plant it would be in a position to produce products such as ; steel bars that have different diameters, steel would be used in the hangar construction and other steel structures. Within the plant over 300 domestic workers would be employed within the organization.

The importance of the Yemen construction company has been its construction of rich, characteristic and uniform buildings that have been attractive to the investors. It was reported that the country’s industrial sector led to 47.2% gross domestic product of the country. In this industry it hired over 25% of the labor force who would produce goods and services for the sector. Oil refining industry contributed to the largest number of gross domestic product for the country that led to over 40% revenue of the country.

In the year 2000 there were over 34,000 small businesses that were managed by two to five people who also employed over 115,000 workers. The businesses were involved in the processing of food products, and beverages. They also produced cooking fat and flour which was increasing each day. The agricultural and herding  sector employed  most of the people who were in that country, while the services, construction and commerce sectors was composed of less than 25 percent of the work force within the country.

It was noted that the country’s civil service consisted of large, poorly paid workers who were awarded inadequate salary differential that ranged between high and low skilled jobs such that they did not attract and retain qualified personnel within the country. In the year 2004 civil service salaries was increased from 20 to 40 percent as this had been stipulated within the act of the company. There were different concessions that were implemented within the organization that involved increasing the civil service wages by 10 to 15 percent each year.

2. Construction building products

The country built buildings of different types that depended on the materials that were accessible to the customers. Yemen used the following building products for constructing the building within the country; concrete block was the most preferred building material as compared to the old material that was known as stone that was cheaper since most of the people were low income earners therefore could not afford to purchase expensive raw materials. The traditional type of materials that were used in Ancient Sana of Yemen was; stone, mud straw, with oil and wood. Rocks formed part of the traditional building that was supported by two or more floors. Soil was mixed with straw that was used to make huts, while burnt mud or brick formed part of the building materials that were used in the capital city of Sana. Wood was used for construction was known as Shibam  as it was used on the ceilings of mud house that formed  part of wood  building .Sticking master material was used for sticking interior decorations on the interior wall blinds, internal and external parts of  the building.

Shibam city limestone was used on the walls so they would pick up residential soils that would be used to glaze the glasses .Gravel together with the adhesive material were used on the pool roof ,kitchen and the bathroom so that they would prevent water from seeping out of the organization. Steel was used for reinforcing the constructed buildings. Steel was a rare commodity as one had to import from other international countries such as; Turkey, Russia and Korea since it does not produce steel by itself. The ironsmiths and welders had different skills that enabled them to perform their duties such that they produced swords, shields, arrows and spears that were used by the Islamic soldiers that were present during the Old World Millennium day.

Burnt red bricks were used for decorating buildings while the gypsum and whitewash were used for decorating the inner and outer sides of the building .The above material had been constantly used in reducing the variation in the houses built since the climatic conditions and other factors had been changing rapidly. The climatic conditions included; temperature, humidity while the other factors were their strength to withstand pressure and durability of the materials used.

3. Government organization that are in the construction industry

The government organization that were involved in this industry were Organizations of Economic Cooperative and Development (OECD) and the non-governmental organizations that implemented  policies lead to the improvement of the company’s performance within the stipulated period of time. The policies that could  be implemented within the organization involved creation  of awareness of constructing good projects within an economy, construction documents that showed how the procedures would  be followed within the organization as   stipulated within the companies act, how  labor intensive methods would be used as was   cheaper as compared to the capital intensive systems.

The local contractors and the non-governmental organizations were encouraged to participate in small and medium projects so that they could provide affordable housing projects and thus decrease the work that was undertaken by the informal sectors within an economy.

4. Construction steel market

It was reported by the Chief Executive Officer Mr. Roman Madhok of Trade Line Company that the steel future contracts would be implemented while at same time 10-tonne steel reinforcement would be launched and would have steel billets of contract implemented within the organization so that quicker delivery of services to the customers as this would be strictly adhered to by all the parties involved. It was reported that the implementation of its facilities would be carefully monitored since the fluctuation of the steel prices would adversely affect the performance of a country.

5. Current market situation

The construction industry in the year 2006 experienced economic and technical problems such as use of excess capital, time and resources that affected the national economy and the nations socio economic development .The macroeconomic conditions that were affecting the performance of the industry were unemployment, inflation and the equitable balance of payments. The industry lacked the necessary infrastructure while its administrative and financial institutions were weak therefore could not perform its activities effectively.

According to Mathew Walkins he stated that during the middle year of 1995 steel prices were strong, as this was as a result of regional demand that lead to the soaring demand for the product. The strong demand for the product in North America and Brazil contributed to the increased profits for the construction company. On the other hand steel supply side was affected by the unplanned outages where there were reported cases of accidents that occurred in the North America and Brazil. The cost of raw materials contributed to the high prices of the product .For instance Middle East steel producers required oil ores that came from china, India and Turkey which were expensive to import. While other raw materials and intermediate products such as scrap metals, steelbillets and direct reduction iron were to be imported and this lead to increased cost of production for the company.

The reasons why steel is rare found is that it is found in few countries in the world and the cost of  transporting it is high therefore few investors venture into the steel business. The cost of paying the workers who are involved in the steel business is quite high therefore the reason why it rarely found in the market.

Steel in the construction industry is used for the following purposes; imported steel plates and bars were usually twisted and shaped in ways that would enhance their strength and beauty. It was also used during the process of reinforcing the building so that they would be compatible with the desires of the investors and thus remain stable for a longer period of time. It is used in the construction of roads, railways infrastructure ad buildings within a country. It is also used in the construction related applications such as in making of bolts, nails and screws for fixing the plats and machinery to their respective places within an organization.

6. Demand and supply.

The demand for petroleum products increased   to 100,000 barrels per day since the country was intending to expand its business activities within the country. The steel industry of late experienced low demand of its product since the cost of transporting it from one place to another was extremely high and the resolution of the supply of problem resulted to stable prices for the steel products. There has been increased demand for construction of quality building this is because of the locally available material cannot be satisfy the demand for cities that require building  that are made from good quality materials. The population of the country has been growing steadily and this has resulted to the construction of many buildings that can accommodate the people that are living in the country.

The prices of the materials of construction have been changing significantly this is because of economic conditions within the country that has been changing thus have been influencing the prices charged on this construction materials. There are instance where the suppliers of this construction  materials has been hiding  the products so that they can wait to be distributed to the customers when their prices increase in the market and be in a position to maximize their profits

References

Alsaleh, H., 2004, Toward PracticingArchitecture within the Concept of Sustainable

Development,King Faisal Scientific University Journal, Basic and Applied

           Science,Vol.5, No.2, pp107-134. (Arabic)

Ofori, G. (2001), “Indicators for Measuring Construction Industry Development in

Developing Countries”, Building Research and Information, vol. 29, no. 1, pp.40–

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