The Success of Oxidized Bitumen and the Failure of

Waterproofing Membrane in Frontier Company

Submitted by: Kashma Khalid Omer

Supervised by: Mark deweaver

A thesis submitted in partial fulfillment

Of the requirements of Executive Masters in Business Administration at

American University of Iraq, Suleimani.

Cohort 11, April, 2018

i

Certificate of Completion

It is hereby recommended that the thesis submitted by KASHMA KHALID OMER

titled "THE SUCCESS OF OXIDIZED BITUMEN AND THE FAILURE OF

WATERPROOFING MEMBRANE IN FRONTIER COMPANY" has been accepted

in the partial fulfillment of the requirements for the degree of Executive Master of

Business of Administration

Supervisor

Mark Deweaver

ii

Abstract:

This study about two products in one laboratory, first product is Oxidized Bitumen which

is successful and has a good profit. Second product is Waterproofing Membrane; it is not

successful and has no return profits. The research has identified the existence of a basic

work plan for the success of the work and its absence causes slow and impeding work.

The plan will be identified in details, how to use it, and how it helps to progress work for

the best.

iii

Declaration Statement

I declare that no portion of the work referred to in this thesis, as defined by this course,

has been submitted in support of an application for another degree or qualification of this

or any other university or institute of learning. Further, all the work in this thesis is

entirely my own, unless referenced in the text as a specific source and included in the

bibliography/references.

iv

© 2018

KASHMA KHALID

ALL RIGHTS RESERVED

No part of this thesis/case study may be reproduced, stored in, or introduced into a

retrieval system, or transmitted in any form or by any means (electronic, mechanical,

photocopying, recording, or otherwise) without prior permission of the researcher or

relevant department of AUIS

v

Dedication

To all my family members whose love and support have helped turn this once lifelong

dream into a shared reality

vi

Acknowledgment

First of all, I would like to express my sincere thanks and gratitude to my advisors

professor Mark Deweaver for his continued support in my MBA research and study.

Thanks for your patience, your constant stimulation, your enthusiasm and your

tremendous knowledge. His advice and guidance were available throughout the research

period.

I would like to thank Frontier Company employees: Saman Jaff, Zana Amin, and Fryad

Kamal for the stimulating discussions, for the sleepless night we worked together. Last

but not the least; I would like to thank my family for supporting me spiritually throughout

my life.

vii

Table of Contents

Certificate of Completion ............................................................................................. i

Abstract ........................................................................................................................ ii

Declaration Statement ................................................................................................. iii

Copyright...............................................................................................................…...iv

Dedication ................................................................................................................... v

Acknowledgment........................................................................................................ vi

Table of Contents ....................................................................................................... vii

1. Introduction..............................................................................................................1

2. History .....................................................................................................................2

3. Product description .................................................................................................3

3.1. Waterproofing Membrane ....................................................................................3

3.2. Oxidized Bitumen ................................................................................................4

4. Literature review .......................................................................................................6

4.1. Business Planning ................................................................................................6

4.2. Strategic management for competitive advantage................................................7

4.3. Strategic planning basics for managers.................................................................9

5. Methodology............................................................................................................11

5.1. Unsuccessful product (Waterproofing Membrane) ............................................11

5.1.1. Economic reasons...........................................................................................11

5.1.2. Quality reasons...............................................................................................12

5.2. Successful product (Oxidized Bitumen).............................................................16

6. Conclusion................................................................................................................19

7. References ................................................................................................................20

viii

1

1. Introduction

As the business plan decreases, it is difficult for the company to have a clear vision. The

business plan is defined as the best way for companies and laboratories to deal with the

challenges of work. Through this thesis we were able to do a comprehensive study of the

factors that helped the success of one product and failure of the other which they are

produced in the same plant.

Over time, many institutions and companies faced many difficulties due to lack of

experience and lack of proper study of work. Frontier Company producing different

types of oil products, the most successful one is Oxidized Bitumen ،and the least

successful one is Waterproofing Membrane. The success and failure of these products is

linked to economic reasons, quality reasons, and a business plan, having a good business

plan before start, helps greatly in the progress of the product and its successes.

Phoenix International A/S is a company that has global operations in Denmark. This

company started with the road building at 1907, over the years they gained extensive

experience with bitumen and learn about its properties and the right conditions for its

success (Phoenix International A/S).

Frontier Company is a leading partnership with phoenix in Iraq, Frontier company has

been major success in Iraq by improving main product as well as introducing developing

new product include bitumen grades, and construction product. Frontier company

producing different types of oil products Paving Bitumen Grades, Polymer Modified

Bitumen, Emulsified Asphalt, Waterproofing Membrane (Modified bitumen

membrane),and Mastic

During this research, Study and analysis being done to find out the reasons for the

success and failure of some projects or products were studied. A thorough study was

conducted of the product and the reasons for the success and failure of the products were

found also, linking the subject with the business planning to make it clearer. In section 1,

2

it talks about the introduction which gives a general idea what the thesis about and a

general idea about the company that I chose. In section 2, it talks about the history of the

company. In section 3, describes the tow products in details, section 4, it’s about the

literature review by linking between the two products and business planning. Section 5,

is about the methodology by talking about the problems and the reasons in details. Finally

section 6, it’s about the conclusion.

2. history

In the late of 1970s IN Denmark a new section was formed (Phoenix Pipe Protectors),

which was very successful and they gained a very good reputation from the customer

about it. In 2001 they made another section which was about developing and marketing

bitumen products that use for pipeline, cable protection, concrete surface, and pipeline

rehabilitation. With their constant determination to maintain quality, Phoenix

International A/S obtained the ISO 9001 certificate and their entire product in line with

international standards (Phoenix International A/S).

Frontier Company started in 2012 a partnership with Phoenix Bitumen plant to arise

Bitumen Oxidation Unit (BOU) in Arbat province near Sulaimaniyah city in Iraq, the

capability of production is (750 Metric Tons per Day) which produces and supplies

bitumen products to the local and international market. Throughout its work history,

Frontier has kept a good standard and high-quality of services and products within the

local and international market within the sectors. Conforming to high standards has

cultivated in continuously increasing satisfied customers and positive impact on the

market.

3

3. Products description

3.1. Waterproofing Membrane

A waterproofing membrane (Modified bitumen membrane) which is one of the products

that Phoenix Bitumen company producing, Phoenix Bitumen Company has started to

produce waterproofing membrane in KRG during 2014 as a first manufacturer in Iraq,

and during these years the company faced with several problems economically and

technically, the Reasons behind the failure of this product are two factors, economical

which is the cost of raw materials and quality issues during production (S. A. Jaff,

personal communication, March 12, 2018)

Waterproofing membrane is a thin layer of water tight material that is put over a surface.

This product does not allow water to pass through it. Modified bitumen membranes are

combined sheets which consisting of bitumen, modifiers, reinforcement. Modified

bitumen membranes display the thermoplastic quality to be softened by heat. They are

usually bonded to substrates by torch or asphalt. This membrane consists of thin layers of

waterproof material. Generally most of them are about 2 to 4mm thick. There are two

types of waterproofing membranes, liquid applied membranes and sheet based

membranes. Ideally, this waterproofing membrane must be strong enough, flexible, tear

resistant and extendable so that it can spread to cover cracks and shift as the design of the

place. If the membrane is in the place that unprotected from the sun, then it should be UV

standard (Understand Construction, 2017).

Commonly it used as materials for roofing houses and commercial places. As people

demand for the living environment being higher and with the development of the

economy, the demand of this product also increased. There are hosts of applications that

could use waterproofing membrane for example over balconies and porches, under and

around ground floor, in water tank linings, in swimming pools, landscape flooring, and in

channels (in gutters). Due to increased public awareness of the direction of these

materials and its uses and benefits, it is expected that the demand for it will increase in

the coming years (Understand Construction, 2017).

4

3.2. Oxidized Bitumen

Phoenix International A/S has started to produce bitumen materials in KRG during 2014

as a first manufacturer in Iraq. Considered as first Iraqis supplier in the international

market, non-familiarity with their capacity quality, and exporting ability. The almost raw

materials and packing system are provided from Iraqi market and the finial price of our

bitumen including feed cost, packing charge, production, energy cost, and manpower fee,

which are decreasing in 2017 due to decreasing oil price internationally and cost

decreasing attempts in our factory. (S. A. Jaff, personal communication, March 12, 2018)

Phonics Refinery can provide oxidized bitumen at any degree. This is determined by

using two numbers as a mean for the center points of the softening point and the

penetration point for oxidized bitumen. When the bitumen type is determined, two

numbers are used (for example, bituminous 115/15); they indicate the quantity of the

results of the softening and penetration test respectively. The Phoenix refinery ensures

the production of types of oxidized bitumen according to the criteria EN 13304:2009 to

obtain the types desired and required by the customers. The types of oxidized bitumen

that produced at the Phoenix refinery are Bitumen 85-25, Bitumen 85-40, Bitumen 95-25,

Bitumen 95-25, Bitumen 95-35, Bitumen 100-40, Bitumen 105-35, Bitumen 110-30, and

Bitumen 115-15. (S. A. Jaff, personal communication, March 12, 2018)

Due to the presence of raw materials and packing system in Iraq, which mean lower cost

on operations, transportation, the marketing strategy, quality, and quantity of our

production helped the product to be very successful during 2017. Also, in January and

February of 2018 our total production have been doubled compared with same months in

2017 and rise 400 percent compared same months’ data in 2016. The key components of

above mentioned developments are competitive quality and price in global market of

bitumen. On The Other Hand, worldwide market has been increasing dramatically; the

5

international marketing and quality upgrading are the two main function of this

movement. (S. A. Jaff, personal communication, March 12, 2018)

For international advertisement, Frontier Bitumen Company’s stuffs have been

participating in the AMEA bitumen conference held in India in July 2017. The main

manufacturers, suppliers and customers from Africa, Asia & Middle East are acquainting

with the price, quality and our capability for exporting bitumen from Iraq. On the whole,

the marketing strategy, quality and quantity of our production have been boomed during

2017. Also, in January and February of 2018 our total production have been doubled

compared with same months in 2017 and rise 400 percent compared same months’ data

in 2016. The key components of above- mentioned developments are competitive quality

and price in global market of bitumen. (S. A. Jaff, personal communication, March 12,

2018)

The oxidation bitumen is produced by passing air through penetration levels. In this way,

the bitumen acquires more rubber properties than its original structure. Because bitumen

is a solid that is controlled under certain temperature conditions as a material or a non-

slip layer in the manufacture of piles, roofing felts, roofing and waterproofing, protection

of electrical cables , and many others. One of the main specifications of oxidized bitumen

is that it is fully water resistant, has high elasticity, durable, and is chemically very stable

compound. The oxidized bitumen is a very flexible compound, not only stable in

chemical terms, but also a very durable compound in addition to its complete resistance

to water. And finally has very prominent technical advantages that help to make it a

compound used in several areas (Oxigil).

The process of producing the oxidized bitumen is done by heating the bitumen to 230-

270 ° C and then it is transferred to the production towers where it is exposed to air in the

towers and then cooling the dissolved bitumen using water and then packing. There are

two procedures used in its production the continuous blowing procedures and

discontinuous blowing procedure. In order to implement these two procedures the method

6

of catalysis and anti-catalysis is used, which means adding some chemicals to reduce the

reaction time. (RAHA Bitumen Co, 2016)

4-Literature review

4.1. Business Planning

The business plan is a useful tool with many benefits. It is considered as the best friend of

business people in the world business and the high competitiveness of the day. So

whether it's a big business or a small one, you cannot imagine success and growth

without proper planning. A business plan is essential especially if you want to start a new

project, looking for a new partner, if you need money, your business needs better

management, and to measure the current work with planned. A good business plan helps

you focus on aspects that need special attention in your business, identify your core

competencies, identify weaknesses and threats that can be exposed to work, help to see

new opportunities and increase the ability to understand competitors in the workplace and

help you use resources Finance more profitably and manage business more efficiently

(Introduction to Business Planning, 2011).

Each business plan should examine some of the core problems that can be divided into

several areas such areas include marketing, sales, operations, human resources, finance,

technology, and management information. It is therefore very important to make a plan

before starting any project or product because it helps you identify the infrastructure of

the business, the integration of your functional activities, the critical assumptions in the

business, help you to have reliable financial breakdown of cost, revenue, profit, and cash-

flow projections. (Introduction to Business Planning, 2011)

Planning is a decision-making approach and a guide to progress and improvement of

work performance. Planning determines the direction of work and is followed by

programmatic, technical and administrative units. Planning helps organizations to study,

analyze and discuss existing alternatives, facilitate decision making, gain more benefits

and reduce risk reduction. Planning is one of the main management practices. It aims at

7

defining the organization's goals, determining the direction to be followed in the future

and unifying the collective effort towards one direction. Planning is essential because it is

the best way to achieve your business, especially if it is determined before starting the

Action is to search for the most suitable way to convert from the current situation to the

desired or desirable situation. (Karen Johnson Lassner, 2008).

The planning types differ in terms of their organizational scope and the period they need

to be implemented. The organizational scope mean the areas and levels, the

implementation period is the time needed to implement the plan. On the basis of these

two sides are chosen, planning can be strategically or tactically. Strategic Planning is a

long-term planning that is comprehensive and encompasses all areas and levels, it is

relatively general. It focuses on several issues and for a long period of time in a manner

that ensures the effectiveness and survival of the organization. Strategic planning is the

responsibility of the Director of the Organization and the responsible levels on

implementation. (Karen Johnson Lassner, 2008).

4.2. Strategic management for competitive advantage

The successful entrepreneurial source of the giant companies is their significant

investment in strategic planning and through the development of strategic planning

processes. To understand this, they undertook a systematic study to understand the

relationship between formal planning and strategic performance across a wide range of

companies. In the planning system for these companies, and through the study of their

development in these companies, it appeared that the formal planning and strategic

decisions are intertwined effectively and closely. (Frederick, Stephen, & A. Steven, 1980)

The evolution of formal strategic planning can be divided into four consecutive stages.

These four phases are very useful for assessing systems and institutional planning

processes and finding ways to improve their efficiency. (Frederick, Stephen, & A.

Steven, 1980)

8

First phase is basic financial planning. The efficiency of the first phase depends mainly

on the CEO and the top team, whether they know their products well, their companies'

markets, and the movements of their competitors. Also, according to their knowledge of

the cost structure of them to what extent they can estimate the impact of the product or

the marketing change on their sales, distribution system, and on their factories.

(Frederick, Stephen, & A. Steven, 1980)

Second phase is forecast based planning. This phase improves the effectiveness of

strategic decision-making. Management focuses on addressing long-term decision-

making effects and thinking about the potential commercial impact of current trends. The

issues considered at this stage, for example, the impact of inflation on future capital needs

or the risk of invasion foreign producers for local markets. Often helping to make

business decisions at a time helps to strengthen the company's competitive position for

the long term. (Frederick, Stephen, & A. Steven, 1980)

Third phase is externally oriented planning; resources are allocated at this stage

dynamically and creatively. Planners of this stage are looking for an opportunity to turn

business into a more attractive business or sector, including by developing business

capability or by redefining the market to suit the strength of their companies. The

important step in the third phase, which distinguishes it from the second phase, is that the

planners are expected to present companies with a number of alternatives to senior

management. One way to find whether a company has advanced the third phase is to ask

managers if their boss would regard presenting strategy alternatives as a sign of

indecisiveness. (Frederick, Stephen, & A. Steven, 1980)

The final phase is strategic management. The fourth phase involves linking strategic

planning with management. Successful organizations are not only characterized by

planning style but also by how management is linked to strategic planning and strategic

operational decision making, and this is done through three steps, create a planning

framework that goes beyond original organizational boundaries and makes strategic

decisions easy on customers and their resources, Develop planning that stimulates

9

entrepreneurial thinking, and develop a system for the company that increases the

commitment of managers to the strategy of the company. (Frederick, Stephen, & A.

Steven, 1980)

4.3. Strategic planning basics for managers

Strategic managers are used to properly deliver guidance to the staff and to direct as

much as possible in the workplace. Practical techniques based on best global

management practices include. Strategic planning is a process to look into the future and

identify trends and issues related to management priorities and offices. Within

departments and offices, it means aligning the partition, or team with a strategy of a

better level. In the United Nations more often than not strategy is about reaching the goal

in the most effective and efficient way, strategic planning is about understanding the

challenges, trends, and issues. Good strategy leads to focus, accountability and results

(United Nations).

The first step in strategic planning is to try to gather the information needed to understand

and point out the trends, challenges, and issues that will have an impact on the

management, office, mission, and strategic program. The external environmental survey

means all the factors that root out the entity, gathering the necessary information about

the target customers to understand and determine how to group the customers. This is

done by revealing what sources of information are available for data collection.

Information about the problems in each category or sources of information that is more

relevant with the type of work (United Nations).

When looking outward done, then they are looking inside to understand the factors and

issues that can affect the strategy. The most famous and easy-to-use method for internal

analysis is the SWOT analysis. This analysis examines strengths, weaknesses,

opportunities and threats. SWOT summarizes the perspective of the inner circle

(leadership, staff) in terms of internal strengths of the work, weaknesses, opportunities

that need to be exploited, and external threats that must be taken care of (United Nations).

10

After conducting external and internal analyzes, the administration determines the overall

objective and direction of the office or team. Vision statement plays a big role in strategic

planning, providing focus and long term alignment. In vision, the phrases used must be

meaningful to be valuable. For example, the use of positive phrases helps to motivate

employees and successful vision must contain three elements. The time horizon that

determines the time period required for implementation of the strategy and vision, usually

between 3 and 5 years, measurable means a set of measurable objectives to assess the

degree of progress, a unique approach consisting of a summary statement of how the

services are provided to achieve the vision successfully (United Nations).

The next step in strategy development is which ties to set goals, goals in the program or

services. Where the targets are selected within each category of a group of categories,

know how to deal with customers to achieve vision In particular, a service must be set up

in the initial stage, the services necessary to give high value to customers, work to excel

in internal processes to support services, find ways to maximize the assets of recruitment

and knowledge to carry out operations, and choose the best way to increase Budget

acquisition and customization (United Nations).

Performance measures have an effective role in the strategic plan to determine the quality

of the work or office and the extent to which it progresses towards achieving the goals,

and helps to focus management on issues related to achievement. For each goal, two to

four metrics should be developed to see how the goal progresses towards completion

(United Nations).

Strategic initiatives are one way to advance strategy. It is necessary to distinguish

between goals and initiatives, where initiatives must have the capacity to have a clear

impact on goals and measurable impact on targets. Some initiatives may come to mind

immediately, some may be within a preconceived plan, and some may require

brainstorming (United Nations).

11

Effective strategy needs to be primarily risk management. This comes from the top in the

organization, that risk planning in institutions is one of the main means of leadership.

Risk management may be defined as being used to identify and mitigate risk, which

hinders the implementation of the strategy. Strategic risks include potential risks from the

external environment, potential risks from the internal environment, risks that are likely

to affect the formation of the strategy, and risks that could affect the strategic initiatives

(United Nations).

To obtain the desired value of strategic planning, leaders must ensure that strategy is used

as an effective management tool. Meetings to review the strategy can help focus on

organizing the processes and getting desired results (United Nations).

5. Methodology

5.1. Unsuccessful product (Waterproofing Membrane)

5.1.1. Economic reasons

The most sources of raw materials for the waterproof membrane are from Iran (80% of

raw materials usually receiving from Iran) and consequently the transportation cost of

raw materials sometimes is higher than EX prices of that raw material in the

manufacturer source in Iran, EX works terms means the buyer will take all the

responsibility of shipping costs and liabilities, sometimes it called EXW or Ex Works and

it’s an international shipping term (Investopedia, 2018).

Also, the packing and transportation cost of filler which is one of the raw materials that

from Iran to Sulaimaniyah is higher than gross price in the manufacturer company.

The Key components of our roofing material are recycled polypropylene and polyester

tissue mat are not supplying in local area and importing from Iran and china respectively.

The KRG and local investors are not support local industries and the most of factories

have to provide required raw materials from other countries. Consequently, it made

several problems in case of quality and cost swelling. (S. A. Jaff, personal

communication, March 12, 2018).

12

On the other hand, the total Fuel Oil (Mazut) consumption that necessary for Boilers,

polymer unit, mixing lines and roofing lines warming up is costly too because of high

cost of fuel and no electrical or gas consumption in our factory for boilers, also, there Is a

lack of governmental grid line for NGL in Iraq . On this account the raw materials and

energy (Fuel) cost are two main problems to make waterproofing in KRG. Furthermore,

the customs of importing from Iran-Iraq border is 0.02 USD per meter and it is not

considerable amount to stop or even decrease import from abroad and supporting local

production. (S. A. Jaff, personal communication, March 12, 2018).

5.1.2. Quality reasons

There are unstable raw materials during the production of waterproofing membrane and

that impact the quality of final product due to following issues, accepting various sources

of crude oils, because of obtaining the crude oils from different sources, and that leading

to a defect in product quality. Accepting different viscosity of bitumen residues, and

because it is one of the components that enter the composing of waterproofing

membrane, so it will affect the quality of the final product. Viscosity of oils governs the

sealing effect of oils and the rate of oil consumption, viscosity can be used for oils

impedance to flow. The acceptable degree for viscosity is from 50 Cp up to 300,000 Cp,

and because we received the residues bitumen from different sources, it has different

viscosity which will affect the quality of the waterproofing membrane (Machinery

Lubrication, 2007).

Change in heavy oil percentage in the bitumen 60/70 which enters the composition of

waterproofing membrane. The heavy oils in bitumen 60/70 helps to increase the

flexibility of waterproofing membrane, thus, the more flexible the product, the more

endure environmental conditions. (S. A. Jaff, personal communication, March 12, 2018).

13

Unstable quality of received APP for modification of the bitumen, modified bitumen is

one of the common types of roofing systems that contractors believe to be an inexpensive

choice for roofing. It’s made up of asphalt that conducted some modifications on it, by

adding polymer to create plastic or rubber which help the product to be more likely to

resistance to brittleness, to be more elastic and strength, and resistance the cold

temperatures (Prestige Contracting).

The APP stand for Atactic Polypropylene which is considerable as a common type of

modified bitumen, it’s called APP modifier when the asphalt mixed with approximately

%30 of APP. As a result the asphalt will be more to stretch up to %50 of its normal range

(Prestige Contracting).

Phoenix Bitumen factory received different types of APP and different quality in each

time so that’s lead to unstable quality of APP modified bitumen and that will affect the

quality of final product. (S. A. Jaff, personal communication, March 12, 2018).

Phoenix Bitumen plant uses different kinds of tests for the quality and quality inspection

of the final products. They found that because of the problems that mentioned above will

cause changes in the product quality and different softening point and thermal stability

with same recipe during production. This will leads to preference for the other types of

waterproofing membrane which is available in the market, especially the Iranian species

that are available with lower price. (S. A. Jaff, personal communication, March 12,

2018).

It is possible that the quality of the product greatly affect the productivity and

profitability as well as customer satisfaction and feedback. If quality is not good enough

compare to market product, then it will cost money and increase final product cost

because it will cause productivity problems. Using low quality materials will affect the

systems and cause disruptions in the plant's machinery, and do not forget the cost of

retrieving the product by the buyer who is not satisfied with the product. All of them will

cause a slowdown in the workflow and sometimes stopping it. (Chron, 2018)

14

Quality increases profitability, when employees participate in a work environment, the

main objective being product quality, the work will be more flexible than a working

environment that does not care about the quality of their products. (Chron, 2018)

In order to make a profit you must know the demands of customers, by satisfying

customers and providing the quality required by customers will help you stay in business

and achieve profitability. Product quality means customer satisfaction, this helps the good

rating of the company by the customer in surveys that are done to see the quality of the

product, unlike the companies that fail to provide the good qualities of the product. In

addition, unsatisfied customers are more vocal in their criticism of the companies they

deal with and cause them financial problems due to the quality of the product (Chron,

2018).

The business quality has a direct impact on cost. With the use of low-cost materials and

equipment in the business or in production may help reduce costs in the short term, the

long-term effects are much more expensive. For example, if certain low-cost programs

are used, this will help to save money in the short run, but it may be more complex than

high-cost programs and may be very difficult to handle by customers, also employees

need more time to learn and how to use it. When the program faces a problem and there

is no support for the program by the customers it means a longer time to accomplish the

task and also cost the company more money than if he had used the good quality and high

cost from the beginning (Chron, 2018).

Having a good business plan helps you avoid the problem before it occurs or find

solutions to the problem. If Phoenix refinery made a good business plan about, or study

the waterproofing membrane product properly, if they have all the necessary information

about the raw materials of the product, raw material prices, the place where the raw

materials are available, As well as study the existing types of competition for the product

in the market with its prices and study the cost of operations ،they avoided the problem

of financial exposure to them, which was spending a lot of money on the transfer of raw

15

materials from Iraq because of lack of availability, which caused a problem in the sale in

addition to the availability of competitors in the market at low prices because they were

coming from outside Iraq and quality is not good but at a lower price.

Because of the lack of a business plan Phoenix has faced many problems when producing

waterproofing membrane product. Because 80% of the raw materials necessary for the

installation of a product they receive from Iran, it means more costs for the costs of

purchase ،transport ،and packaging, resulting in increased production costs. While Iran

can prudence the waterproofing membrane, sent it to Iraq, and sold at a lower price,

because they have the raw materials with cheaper prices. Also, add to the customs, where

Phoenix refinery pays 5% for the customs on every item imported from abroad, while for

the Iranian product pay only 5% to customs ،this leads to encouraging the Iranian product

to enter the market and compete with the product at lower prices. However, if the

Phoenix refinery worked on a plan and study of material resources in a precise manner,

they knew about these problems before starting the project and producing the product.

The business planning could help them with to study all aspects, for example, helped

them take into account the costs of the total Fuel Oil (Mazut) consumption that necessary

for boilers, polymer unit, mixing lines, and roofing lines warming up because as they said

it’s costly too due to the high cost of fuel, or if they had a plan for it from beginning they

could use in the factory the machine that work with electricity or gas because the prices

of gas and electricity cost less. Because the business planning helps to identify the target

and helps to temper the direction of work towards one goal and determine the ways to

reach the target consistently, also it helps to install the stages of work, installation of

steps, tasks, and helps to stabilize work.

The presence of planning before starting work and during work is essential for successful

work. The Phoenix refinery did not undertake any study or planning for the

waterproofing membrane product before starting production. And the lack of a plan or

study of the product has shown negative results in terms of profit and sales. Because they

did not think of a short-term and long-term plan ،they did not plan for the organization

16

where they would be two or five years later, did not set specific targets, the product is not

carefully planned to identify the necessary raw materials in its composition, and where it

can be obtained in less time and at a lower price.

Phoenix refinery now has a big problem with the price of the raw materials that involved

in the installation of the waterproofing membrane that obtained from outside Iraq. They

were supposed to think about material resources, because without an analysis of these

resources it would be difficult to obtain them in a timely manner, in the appropriate

quantity, at a reasonable price, and in the same quality. As a result organizations will not

prosper if its resources are not monitored and managed properly (Azcentral).

Due to the lack of a consistent pattern of work for the waterproofing membrane product

in phoenix refinery, they deal with different providers for the raw materials each time;

they do not have a static provider which leads to many problems in product quality.

These problems are dealing with various sources of crude oils, so they produce a product

whose specifications are different, and difficult to deal with raw materials that are

different each time in its composition.

All this is due to not using a strategic planning for waterproofing membrane product

before they start to produce it. The existence of a strategic plan helps to identify the

problems that can occur, and identify ways to avoid or find solutions before starting. It

should not be forgotten in addition to the lack of a plan, the economic reasons that have

occurred because of the current conditions had a clear role in the failure of the product.

Also, opened the way for external products to be sold at a lower price and led to the

marginalization of local production. (S. A. Jaff, personal communication, March 15,

2018).

5.2 Successful product (Oxidized Bitumen)

The success of oxidized bitumen is due to the existence of a plan and a good study on the

subject before it started, they have all the necessary information that helped to work this

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product well, they studied the raw materials that were available in Iraq, which helped to

reduce production costs and to develop a good planning for the management of

production operations and strengthening of the bulldozers that were sending them abroad

to provide them with the necessary information, Which greatly contributed to the success

of the product in Iraq and abroad.

It is clear that the Phoenix refinery has collected information and studied external factors

distinctly. They have discovered all the external points that could negatively affect the

product, including collecting information about whether there is another refinery in Iraq

working in this quality and effectiveness, knowing the countries that want this kind of

products, studying if the product needs raw materials from foreign countries, they also

thought about the economic conditions that can control everything related to the success

of the product.(S. A. Jaff, personal communication, March 22, 2018).

Because of the studies and research conducted on the Oxidized Bitumen product prior to

production, to know the required details in terms of manufacturing and the necessary raw

materials that are essential in manufacturing. It has a good role as one of the basic steps

in the strategy planning, which helped the Phoenix Refinery to control the materials that

are necessary for productions. For example, the almost raw materials and packing system

are provided from Iraqi market and the finial price of our bitumen including feed cost,

packing charge, production, energy cost and manpower fees are decreasing in 2017 due

to decreasing oil price internationally and cost decreasing attempts in our factory because

they are studied everything things in details about the product. (S. A. Jaff, personal

communication, March 22, 2018).

The Phoenix refinery ensures the production of types of oxidized bitumen according to

the criteria EN 13304:2009 to obtain the types desired and required by the customers.

This means they have set clear goals both in terms of management or services, such as

knowing how to deal with customers. From the outset, their aim was to provide a quality

product to serve the consumer and to obtain a good reputation. Phoenix Refinery has

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improved or developed its strategy when they started in project of Oxidized Bitumen. .

(S. A. Jaff, personal communication, March 22, 2018)

When thinking about a new project you have to think about risk management. The

Phoenix refinery is constantly aware of the risks and problems that may occur in the

future. They investigated the risk of lack of raw materials due to a condition, the risk of

obtaining poor quality due to the receipt of materials from different suppliers, Countries

outside Iraq. Risk management is very important as it not only helps to create risk, but

also helps to find efficient solutions. (S. A. Jaff, personal communication, March 22,

2018)

Each company in order to ensure its success must have a distinctive strategy. During the

planning you need to know what factors or points make you distinguished from others, as

well as a comprehensive study of markets and know the level you want to access the

market, and a careful assessment of the capabilities that help you to reach the goal

quickly and efficiently (Strategy and Business, 2010).

The Phoenix refinery has developed a good layout for the Oxidized Bitumen product and

this planning has helped it to be cohesive. The cohesion of the plan and the work leads to

added value to the product. It is clear that there is careful attention and dedication in the

operations of this product, so it has achieved great success and profits for the refinery.

Because of the summit in the planning and performance of this product led to increase the

profits of the company during the export of the out of Iraq, and because of the current

economic conditions, the profits of selling the product out of Iraq more than the sale of

the product inside Iraq (Strategy and Business, 2010).

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6. Conclusion

By comparing and researching these products, we discovered that the plan has an

essential and effective role to stay and gain profits from the product. Where a strategic

plan must be put in place before starting the project and the plan should be suitable for

work and consistent with its future plans and helps to achieve the desired goals. The

appropriate plan helps to avoid problems as well as finding solutions to them if any. The

effects of having a plan before starting the oxidized bitumen product were obvious, as it

was one of the most profitable products in the Phoenix refinery, and vice versa where the

lack of the precision in work of Waterproofing membrane resulting from the lack of

business planning, led to the product becoming one of the lowest-selling products.

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7. References

1- Azcentral.The effects of lack of planning in an organization.

https://yourbusiness.azcentral.com/effects-lack-planning-organization-11394.html.

2- Frederick W. Gluck, Stephen P. Kaufman, A. Steven Walleck. (1980). Strategic

Management for Competitive Advantage.

https://hbr.org/1980/07/strategic-management-for-competitive-advantage.

3- Investopedia. (2018). Ex works. https://www.investopedia.com/terms/e/exw.asp

4- Introduction to business planning. (2011, June).

https://businessfirst.com.mt/en/planning/documents/business_planning_guidelines.pd

f

5- Karen Johnson Lassner. From the Management Sciences for Health Virtual

Strategic Planning Program. Country Strategic Planning of Human Resources for

Health. Mandaluyong, Philippines, 5-9 May 2008.

http://www.classtoolkit.org/sites/default/files/documents/ITECH_Intro_to_Strategic_

Planning.pdf

6- Machinery Lubrication. (2017). the importance of an oils viscosity.

http://www.machinerylubrication.com/Read/29185/oil's-viscosity-importance.

7- Oxigil. http://www.oxigil.com/eng/oxidized-bitumen/what-is-oxidized-bitumen/

8- Phoenix International A/S. http://www.phoenixint.dk/History.188.aspx.

9- RAHA Bitumen Co. 2016. http://rahabitumen.com/oxidized-bitumen.

10- Strategy & business. (2010, December). Successful Strategic Planning.

https://www.strategy-business.com/article/00058?gko=3536d.

11- United Nations. Strategic planning guide for managers.

https://hr.un.org/sites/hr.un.org/files/4.5.1.6_Strategic%20Planning%20Guide_0.pdf.

12- Understand Building Construction. (2017). Waterproofing Membrane.

http://www.understandconstruction.com/waterproofing-membranes.html.

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13- Prestige Contracting. Modified Bitumen. http://myprestigeroofing.com/modified-

bitumen.