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Firms’ performance

It is very obvious in theory that, when there is no competition in the market, firm’s profitability is high. Nut on the other hand, there is no tendency for firms to bring efficiency, improve product quality and make technological upgrading. But to prove this theory is right, we present the following findings.

Ø Profit margin: in the next paragraphs, we assume that; firm have both quarry and processing plant-looking at different levels of value chin as a single value –added process.

Because of different in product quality and size of production, profitability of afghan marbles business differs within the market .but we would like to look at the profitable of three different product, namely chest-e Sharif, afghan white (from khogiani in Jalalabad) and sang Tara khel (from Kabul), assuming they are all produced and finishing of one ton of chest and khogiani marbles is around 5000 tons per year.

According to our calculations, the cost of extraction, transport, processing ,polishing and finishing of one ton of chest and khogiani marbles is around 100$ whereas that of Tara khel marble is round $60 .this cost variation is due to location and location and availability of public good such as energy , road and market access. Also we found that , quarries and processing plant employ standard technology, one ton of marbles can produce 10m2of slab or 30 slabs- each having 1m length, 30cm breadth, and 2cm thickness (as show in following figure) .

Figure 6: one ton of marbles can produce 30 slabs

The market price of 1m chest marbles (with 30cm breadth, and 2cm thickness) is $24 to 28, while 1m afghan white marbles is sold at a price between $16 and $20 , and the tearkhel marbles is priced $10 to $12 . Normally, 30 percent of the final price is the profit of retailers. therefore, the net profit of marbles producer (both in quarrying and processing activities ) calculated as the total revenue minus total cost and retailers profit is 476 for the chest marbles $322 for afghan white marbles and $222 for Tarakhel marble. Table 6 estimates the profit margin for different types of afghan marbles.

Efficiency: It is very difficult to precisely measure the efficiency of marbles firms in Afghanistan. But roughly speaking we can have the overall picture of firm’s efficiency by looking at this size of production and the technology they employ.

Size of production: normally, marble quarries in Afghanistan produce 2000 to 4000 tons annually whereas the average annual production of Italian or Egyptian quarries is between 30.000 and 40.000 tons. Therefore the produce efficiency of marbles firms in Afghanistan is low, as they cannot take advantage of the economies of scale.

Technology : among all firms working in marbles quarrying and processing only two firms (one in Heart and the other in Jalalabad ) use standers equipment and technology . The rest of the other firms in Afghanistan employ traditional and unproductive methods such as blasting. Cutting with hombre polishing with hand etc….There are two reasons that firms do not employ standard and productivity technology one is the lack of competition among firms which is influences by market structure and the other is lack of public goods – such as industrial parks access to electricity , transport infrastructure etc. . Those firms cannot do much about it



Product quality : many reports and survey which have been done by Mitchell and survey which have been done by the ministry of mines which the argue that chest and khogiani marbles have been favorable compared to Carrere marbles , an Italian marbles recognized to be one of the best quality marbles in the world . Nonetheless all of this report agrees that afghan marbles is not acceptable for international markets due to the poor polishing and finishing process they receive. therefore in most cases quarried marbles is exported to Pakistan for processing purpose – much of this shopping happens illegally .these are often imported as higher value added polishing marbles product, or exported from Pakistan to international; markets as Pakistan marbles.

During our interviews with marbles processing firms, we learned that afghan firms pay less offer to employ advanced polishing technology and do not care much about expanding their marketed both domestically and internationally. Such behavior of afghan firms may have been influenced by two factors .first acquiring modern technology for marbles polishing require substantial amount of capital which these firs do not possess. Lack of access to finance is a major constraint for economic development in Afghanistan .secondly, afghan firms do not have long-term insight for their nosiness development due to lack of strategy management skills.


Date: 2015-01-29; view: 594


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