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Article

Leadership Strategy of LSR Group on the Russian Ceramic Brick Market

Strekalova N. D., Kaysarov A. A.

LSR Group, founded in 1993, demonstrates an impressive growth rate and business development in Russia. This company has become the largest industrial construction holding, Russia’s leader in a number of sectors of the construction industry, including the ceramic bricks production. Since 1997 when the first brick factory was acquired, the company constantly strived for the market leadership and in 10 years managed to obtain 70 per cent market share of the Northwestern region of Russia. This case describes main problems that the company had to face, and also how the company managed to solve them using various types of innovations.

By the end of 2002 the LSR Group’s management received information that the largest Austrian company  «Wienerberger» was conducting negotiations with the management of German concern «Knauf» to buy its brick factory «Pobeda/Knauf»  near Saint-Petersburg.  Wienerberger’s market entry - the world's largest manufacturer of ceramic brick – would create a real threat to the company’s business. How to prevent this threat of the attack from the powerful competitor? Strategic decisions to buy the «Pobeda/Knauf»  and to build the vertical integrated marketing channel helped the LSR Group to catch 70% of the brick market (it was 48% before the said operations). The «Pobeda/Knauf» acquired helped to the LSR Group not only increase its production power but engage more progressive “Made in Germany” management.

The case presents extensive material which allows to reveal the trends of the Russian market and the construction industry’s development, strategic analysis of the company’s macro environment, the industry’s and competition’s analysis of the ceramic bricks manufacturers in the Northwestern market of Russia. The case allows identifying the market position of the company, existing threats to the business, developing possible scenarios of future events, and possibilities to make alternative strategic decisions.

The case reveals the major problems the company faced, as well as strategies to overcome them. The case contains extensive information, which provides an opportunity to discuss the threats, and challenges modern business has to deal with, design various scenarios and strategic decisions, and analysis of the company’s business model.

The case helps to develop system and strategic thinking, strategic analysis and decision-making skills. It can be used  as a teaching tool for the Master’s programs and MBAs with a concentration in management.