Porter´s Analysis

RIVALRY WITHINTHE
INDUSTRY

BARGAINING POWEROF THREAT OF NEW

SUPPLIERS ENTRANTS Leyend:
0 No threat
1 Very low
2 Low
3 Moderate
4 High
5 Very High
BARGAINING POWEROF
THREAT OFSUBSTITUTES
COSTUMERS

BARGAINING POWEROF COSTUMERS: It is limited, because Cementos Pacasmayo is the

only producer of cement in the north region and there are no companies that produce goods with
higher added value based on cement. In 2015, CP increased its prices and maintained its market
share, reflecting a low level of bargaining power of customers.

RIVALRY WITHINTHE INDUSTRY: As mentioned above, the Peruvian cement market is divided
by geographical zones, so the rivalry between companies is low. In the north region, Cementos
Pacasmayo is the only one that operates and sells cement. The other cement companies sell and
distribute in the central and south regions. Additionally, Cementos Pacasmayo has created a
strong entry barrier with the new cement plant in Piura, strategically covering the entire north of
the country.

THREAT OF NEW ENTRANTS: There are high barriers to entry due to the following reasons: 1)
distribution networks that are very difficult to replicate, 2) high levels of investment and 3) due to
the good strategic positioning of CP. Currently, the main entry threat are imports, but these do
not represent more than 0.5% market share in the north region. However, the fact that the cement
market is a monopolistic market by regions makes it attractive to enter to compete, generating a
latent risk.

BARGAINING POWER OF SUPPLIERS: Reduced bargaining power of suppliers due to the low
cost of inputs such as limestone, which comes from its own quarries. In addition to this, the energy
costs come from Transmisión Guadalupe company, which is under its same corporate structure.
With respect to oil and coal, these depend on the international price.

Threat of Substitution: It is low, because there exist no product with similar characteristics that
substitutes cement or one with greater added value.