Introduction CEMEX is a global cement company from Mexico that dates back to 1906. It was formally established in 1931 through a merger between Cementos Hildago and Cementos Portland Monterrey. Although initially it operated on a domestic level, various factors within its operating environment forced it to expand internationally. Before venturing into other markets, the company opted to capitalize on the ideal environment created the Mexican Government. Nevertheless, the Mexico 1982 economic crisis forced the Government to liberalize the Mexican market thus attracting foreign competitors. To counter the new competition, CEMEX opted to …show more content…
By operating in its home Mexican market, CEMEX acquired the capability and the know-how needed to operate and enjoy decent return in volatile markets. This ability proved to be an important competitive advantage when it wanted to operate in Emerging market. For instance CEMEX was able to market cement as consumable good in such markets. Emerging markets, though characterized by some challenges, to a great extend, it offered greater advantages than markets in the developed countries. For starters, Markets in the developed countries were already developed. It is probably due to this that CEMEX opted to limit its presence in them. They were nevertheless more stable, with spending from government and infrastructure projects presenting favorable demand. Long-term growth potential, infrastructure development, and residential construction being experienced in emerging markets were however more appealing to CEMEX. Also important, was the fact that underperforming/undervalued asset and firms could be easily found in these markets therefore supporting CEMEX acquisition strategy. CEMEX was able to venture and operate successful in these markets by tapping into the knowledge based resource it had acquired while operating in its volatile home market. Strategically acquiring certain firms enhance its competitive advantage in
Cement industry is one of the most attractive industries now as concrete is the second most consumed product in the world. The cement industry is however characterized by their pricing system (basing point system), its cartel nature and its entry restrictions. The CEMEX case depicts the good business strategies, excellent leadership and how to be successful in the global market. The interesting aspect of the case is how CEMEX maneuvered in to the global market and was recognized as the third largest cement company. Thus, how it overcame the issues of trade sanctions, the crisis in its operating countries, its acquisition strategy etc. is astounding. CEMEX really understood the concept of globalization and International management.
The company must decide on how it wants to operate in the country of Mexico. There are a number of ways to do this. Foreign Representation, Joint Venture, Subsidiary, Licensing or Franchising are all options. The company must meet both the Mexican Tax Code along with all US Requirements, such as Tax and GAAP reporting. Consulting with experts in finance that have previously operated in a similar US/Mexico expansion would help with the decision of choosing the appropriate form of expansion. Potential disadvantages are the potential of the Mexican government to get overly involved in business within its
The collapse of the Mexico economy allowed the owners to buy land at a cheaper price, and also help run off competitors
1. What benefits have CEMEX and the other global competitors in cement derived from globalization? More broadly, how can cross-border activities add value in an industry as apparently localized as cement?
The development of the business environment has determined companies to develop innovative strategies in order to create competitive advantage. Some of them have identified the potential of developing markets in Asia, Africa, and Europe, and have expanded their business to such areas. These countries provide a large pool of cheap skilled workforce that can help these companies reduce their production costs, which leads to reduced prices intended to increase the number of customers. The economic development of these countries provides customers with increased incomes that can purchase companies' products and services.
According to the author of the article CEMEX entered foreign markets through various stages of the expansion process: opportunity identification, due diligence, and post-merger integration.
Aumentar el volumen de producción y venta, y crecimiento: Cemex tenía necesidad de expandirse globalmente, dado que su mercado doméstico en México es relativamente pequeño y que en 1989, la empresa ya dominaba 2/3 de la capacidad productiva donde le quedaba poco espacio para crecer . Además, la entrada de Holderbank en México al principio de los 90`s le generaba una fuerte presión competitiva, siendo que esa empresa ya tenía una presencia global importante.
How has CEMEX managed to outperform its leading global competitors in the cement industry? Please focus on comparing CEMEX with Holderbank, which is the other large competitor focused principally on cement. What do this comparison and the other data in Exhibits 4-8 suggest about the competitive game being played out amongthe major international competitors?
We found innovation, cost reduction and market conditions as key elements supporting a successful internal strategy and strategic alliance and diversification to be among the most widely applied strategies for a foreign market penetration and development, while fusions and licenses were the least preferred.
GM needed to find a way to protect its long sustained success in the domestic market, and build as a global player, which had everything to do with its strategy in developing foreign markets. Given the volatility of the Mexican economy, GM needed to seek international markets
There are always business risk when it comes to expanding a company, especially from an international standpoint. There are many strategic risk that needs to be evaluated in order to expand the company successfully. Examining the possible risk of foreign currency exposure, basic functions of international banking/financial market, support of long term financing of operations, and assessment of opportunities that can be implemented within the company. There are risk on three dimensions of international finance, economic trends of the country, impact of globalization and monetary system. All of these situations will be discussed in this paper.
Part of EnerMech’s strategy is to expand its global footprint into the western hemisphere, due to the location of the oil in gas in politically unstable countries for example Brazil and Colombia. Since 2010, oil production has flattened out entirely. In 2013, Brazil averaged only 2.7 million bpd of oil production, which is where it was three years ago. This is due to corruption and money laundering in the major Brazilian oil producing companies. http://oilprice.com/Energy/Energy-General/Problems-At-Petrobras-Mount-As-Brazils-Oil-Production-Stagnates.html Local content legislation is also obstructing production. With
The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,
Emerging Market Multinationals mainly emerged because domestic companies in developed countries saw a shift in growth pattern once they reached the peak of their economic curve. Growth slowed down and even became stagnant. This was primarily because the markets in the developed countries had already reached their optimum levels. On the other hand, this was the period of time when developing countries began to experience rapid economic growth. This prompted companies to look towards the potential and resources of these emerging markets as their source of salvation and develop
The indication from market intelligence studies is that the current CIMERWA Ltd company’s strategic objectives will not provide the company with opportunities for sustainable growth especially when considering the anticipated paradigm shift in the market towards 3D building models, flexible concrete and substitution products. External environmental analysis (PESTEL) indicates that globalization and technology will influence speedy development and availability substitution products for cement in an effort to build affordable houses.