This all happened right before NAFTA, which opened up Mexico [to global competition]. As Prof. Prahalad says, the very assumption that the rural population is primarily poor and the urban population is relatively rich is a fallacy. To use the same example, they would sell the product for $60 but charge freight of $250 per load (this would increase based on distance from the originating plant) no matter how full the truck was. Solved VRIO / VRIN : Globalization of CEMEX Analysis Thus, in 2005, we bought the RMC Group [a British company; RMC originally stood for ready-mix concrete]. The leadership team of CEMEX understood that the over-dependency on the formal segment actually made it vulnerable and decided to reevaluate its strategy. The emerging markets of Venezuela, Panama, the Dominican Republic, and Colombia present an opportunity for the company to dig deeper into the markets and earn more revenues. CEMEX realized that women are the key drivers of savings in families, and particularly in Mexico, they are highly entrepreneurial. The company began with the establishment of Cementos Hidalgo in 1906. Step 3 - Marketing Plan. It was a program we set up to help low-income families overcome the obstacles that made it difficult for them to build their homes. Solved Balanced Scorecard Analysis: CEMEX: Transforming a Basic Strategic Analysis Of Cemex The conventional distribution system in which the distributors primarily cared about prices and discounts and the industry was driven by a price war, seemed to be a misfit. Ready-mix and aggregates might seem like they are natural extensions of cement, but there are some significant differences. Playing Global Monopoly in Cement: The Globalization of CEMEX % For most of our products, Shift shows the specifications and a video of what the product does. var year = today.getYear() For example, we introduced Insularis in 2012: It is a ready-mix brand that improves the energy efficiency of buildings. de C.V. ("Cemex") (NYSE: CX) is a global construction materials company that is building a better future through sustainable products and solutions. Apples social media strategy is extremely unusual. I remember that trucks used to line up outside our plants to get cement, and it wasnt unusual for them to wait for several days to pick up an order. In addition, using refuse-derived fuel is pretty complicated technically because of variations in calorific power and other factors. PDF CEMEX: Globalization "The CEMEX Way" - MIT Sloan School of Management These companies not only had to work diligently on their marketing mix elements, i.e., product, price, place, and promotion but on their entire business model as well. After successfully rolling out Patrimonio Hoy in Mexico, CEMEX launched another initiative called Construmex, a platform for remittances, which would help many Mexican Diasporas residing in the United States to send money directly to CEMEX distributors and reserve construction materials for building their houses in Mexico. Dominos is not a pizza delivery company. As it moved more aggressively into mergers and acquisitions first in Mexico, then Spain, then Latin America, and then more broadly its leaders discovered the leverage of postmerger integration. What is it then? CEMEX is a global solutions provider, drawing on strengths in customer knowledge and innovation and on resources generated by its industry-leading efficiency. Early on, for instance, we realized we should use the same team of people, from planning, accounting, IT, and operations, for each acquisition. It delivers cement within 20 minutes of receiving an order in many locales. Please see www.pwc.com/structure for further details. Cemex has been able to implement a production to distribution chain which has been supplemented by cross-border scale economies in the fields of IT, trading, and technological advancement as Ghemawat (2003 para. Although competition is stiff in these markets Cemex could use its financial clout in the market to launch an attack in these markets as a result of its higher leverage. Cost-cutting measures must be integrated into the business operations to avert further loss in revenues. MBA PESTEL : CEMEX: Transforming a Basic Industry Company PESTEL / PEST The spiraling fuel prices combined with escalating global demand have conspired to push the prices upwards increasing the operation cost of companies. Certain capabilities or factors of an organization can be both a strength and weakness at the same time. We say, We want to learn from you. But we also teach. With more than eighty percent of global GDP generated in cities, urbanization can contribute to sustainable growth if managed well by increasing productivity, allowing innovation and new ideas to emerge (source: Worldbank.org). The market analysis also discusses new product developments, cost, revenue, gross margin, market size, share, and projected growth in addition to upcoming market strategies used by top competitors. You can see how much we sell in value-added products every month, and how much more revenue they generate versus standard products. Leveraging our expertise, we strive to foster transformational change and contribute directly to our company's purpose of building a better future through sustainable initiatives. It did this while maintaining, as New York University and IESE professor Pankaj Ghemawat has noted, consistently high profitability levels. We began to say we want a country with the kind of infrastructure that makes it competitive: highways, ports, airports, anything that reduces the costs of transport and production. For more about Strategy&, see www.strategyand.pwc.com. That gave us some big advantages. Web. A good example is the emphasis we put on closing the books on the first or second day of every month. But we believed that having that information readily available would increase the likelihood that managers would make the right decisions. Cemex Cement Company. CEMEX: Transforming a Basic Industry Company case study provides a strategic dilemma for the protagonist. Each month, we do an hour-long presentation on the countries that have advanced this sort of product: what they did, why they did it, how much money they made, and why others might follow the example. The ability to build and finance a quality home has been beyond the means of most of the Worlds impoverished. Who has decision rights over what, and how is the work done? But Why? You just send out an email that says, Joe, you now report to Regina, and here are the new guidelines on decision rights. Likewise, incentives are relatively easy to deal with. How To Improve Your Strategic Planning Through A Premortem Analysis For example, within ready-mix, Shift has a track for value-added products. Urban poverty is as daunting an issue as rural poverty, which Professor C K Prahalad distinctly highlighted in his book, the fortune at the bottom of the pyramid, decades ago. Cemex operates within a stiff globally competitive arena full of challenges emanating from among others the current global recession and the surging energy prices as a result of escalating fuel prices. This roundtable with CEMEX senior executives recounts how the company used its distinctive capabilities and developed some new ones to bring an international business strategy to life. Thats when you have your best chance and I mean this in the most positive sense of getting into peoples heads. Corporate Social Responsibility in CEMEX - 5025 Words | Essay Example Having that speed and efficiency allowed us to be an acquirer as opposed to being one of the companies that got acquired. Huge market expansions also come with an increase in administration costs which dilutes the profit margins of the firm by increasing the operation cost. Press Esc to cancel. Headquartered in Monterrey, Mexico, CEMEX is a global leader in the building materials industry. CEMEXs global expansion represented a 180-degree turn for a company whose very name is an abbreviation of Cementos Mexicanos. (Cemex, 2018). In 1992, CEMEX acquired a majority stake in two Spanish cement companies, Valenciana and Sanson, for $1.8 billion, giving it a majority market share (28%) in one of Europe's largest cement markets.7 The primary motivation for entering Spain was a strategic response to Holcim's growing market share in Mexico. Elizondo: Until the 1990s, we offered a single product: cement. The system not only created a trust-based platform to save money but also provided access to credit based on their savings and payment discipline. The peso crisis had hit, and Mexican companies had a hard time accessing the financial markets. For all these reasons, concrete and cement are generally seen as commodities. As I said earlier, these efforts will have to be guided by cost-minimizing framework that will be ensuring that the accruing benefits are optimized. At the time, we were burning fuel oil and natural gas two of the most volatile commodities in terms of price. The rapid expansionary strategy could also pose a challenge to the financial position of the company and also cause bottlenecks in management. BusinessEssay. The five stages of Marketing Strategy Process of Cemex Superior are -. (In 2014, the company reported US$2.7 billion EBITDA on revenues of $15.7 billion.) How do you interact with customers? If we can help orchestrate all this, then we can also provide value beyond supplying any of the main products. Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week. However, an economic crisis during 1994 and 95 in Mexico, made a cement company, CEMEX, think differently to circumvent the crisis, which later became the core part of its business strategy. And ironically, the people who need it the most, have never been the target customers for cement companies. PMI became second nature to them. The IT group has played a huge role in integrating the best management practices with the organizational framework across the globe. The potential of this colossal low income relatively unserved market was also accompanied by its own set of challenges. Cemex case analysis. On the other hand, the management might be forced to go back to the drawing board and assess the viability of any further expansions. analysis of the CEMEX challenges, opportunities, and strategies with globalization and cross-cultural theories. Its international business strategy enabled CEMEX to grow rapidly during the 1990s and early 2000s, when it became one of the biggest cement companies in the world. Strategy+business is published by certain member firms of the PwC network. It sells an idea!! Ill give you an example involving the ready-mix business. Cemex is committed to achieving carbon neutrality through relentless innovation and industry-leading research and development. We wont dictate how you do it, but we require that you recapture all your freight somehow. Theres this feeling of lets prove it to ourselves, our competitors, and the whole world that we can really extract more value out of those assets than the former owners. But you typically need the people of the acquired company to behave differently, and they dont do that automatically the day an acquisition goes through. Cemex Corporate Strategy 3 Cemex's Situational, Competitive, and Strategic Plan Analysis Cemex is a transnational construction materials company based in San Pedro, Mexico, near Monterrey. This was not subject to negotiation. Today, CEMEX is the fifth largest cement company globally, producing 87.09 million tonnes of cement a year, with an estimated cement production capacity of 93 million tonnes across its 56 cement production plants. The conventional network of distributors is a sort of a linchpin to tap the retail demand for cement. The company has almost 200 employees with an international presence. CEMEX was chosen for a case study, as it is an academically via ble company for . Cemex SWOT Analysis, Competitors & USP | MBA Skool At the same time, to evolve into a more premium business, CEMEX began providing guidance in construction methods not just to individuals and private-sector customers such as building companies, but also to municipalities and national governments.