...Foreign Direct Investment In little more than a decade, Cemex, Mexico’s largest cement manufacturer has transformed itself from a primarily Mexican operation into the third largest cement company in the world behind Holcim of Switzerland and Lafarge Group of France with 2007 sales of $21.7 billion and more than $2.6 billion in cash flow. Cemex has long been a powerhouse in Mexico and currently controls more than 60 percent of the market for cement in that country. Cemex’s domestic success has been based in large part on an obsession with efficient manufacturing and a focus on customer service that is best in the industry. Cemex is a leader in using information technology to match production with consumer demand. The company sells ready-mixed cement that can survive for only about 90 minutes before solidifying, so precise delivery is important. But Cemex can never predict with total certainty what demand will be on any given day, week, or month. To better manage unpredictable demand patterns, Cemex developed a system of seamless information technology - including truck-mounted global positioning systems, radio transmitters, satellites, and computer hardware, that allows Cemex to control the production and distribution of cement like no other company can, responding quickly to unanticipated changes in demand and reducing waste. The results are lower costs and superior customer service, both differentiating factors for Cemex. The company also pays lavish attention to its distributors...
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...Management Information Systems and Concepts CASE ANALYSIS Cemex: Incorporating IT into a Cement Company’s Strategy Founded in 1906, Cemex is one of Mexico’s few truly multinational companies. It is the largest cement company in the Americas and one of the three largest cement companies in the world, with revenues of $3.7 billion and close to 51 million metric tons of production. Cemex and its subsidiaries engage in the production, distribution, marketing, and sale of cement, ready-mix concrete, and related materials. Its strategy includes focusing on cement and concrete products, diversifying globally to cushion against volatility in local markets, developing efficient production and distribution processes, using IT to increase flexibility, improve customer satisfaction, and reduce bureaucracy and excess staffing, and providing training and education for employees. Its state-of-the-art Tepeaca facility supplies one fifth of the Mexican market and may be the lowest-cost cement producer in the world, with operating costs of $25 per ton, roughly $10 lower than the industry average, and emissions far lower than legal requirements. In 1992 Cemex purchased Spain’s two largest cement companies, reviewed their operations thoroughly, invested in facilities, and reduced the workforce dramatically, such as by consolidating 19 offices into one. With continued diversification in the 1990s, Cemex has operations in 22 countries. It is also Latin America’s...
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...appropriate( Post merger Integration (PMI) process) ➢ Forward Integration ➢ In order support communication and decision making process the company has deployed satellite communication system, CEMEXNET, • The company uses its capital to acquire other companies ➢ Acquiring, building or buying terminal facilities in other markets and buy other companies in order to facilitate global expansion • This company exert effort to create common culture and common processes ➢ Standardized of business processes, technology, and organizational structure across all countries while simultaneously granting countries certain operational flexibility b) Illustrate how CEMEX has managed to attain a high level of operational efficiency throughout its distributed operations without a complex organizational structure. • Developed core competencies • Learning through the process of acquisition and integration • Innovative marketing and operations • Standardization of best practices, technology and organizational structure • Disposal of non-related businesses and non-core assets by management • Implement key information and internet based technology • Successful acquisition and short integration process(Successful Implementation of post-merger integration (PMI) process)...
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...8 años en el mercado desde hace 8 años 1998 via trading CEMEX started operations 12 years ago in El Salvador market via trading (importing cement from Mexico) from its plant in Merida, Yucatan. The El Salvador market was a potential market with only one competitor, Cementos del Salvador, which eventually was acquired by Holcim ( Second world largest cement producer). This market was worth annually 100 million dollars and only one company was supplying cement in this country. During these first years, CEMEX provided cement from Mexico by sea and train maintaining its presence in the market which represented about 6% of market. Holcim keeps the leadership with 90% of the market. In the beginning CEMEX started operations building 3 warehouses and administrative offices managed by Mexican employees having the additional responsibility of implementing the CEMEX Way. In this time CEMEX sold directly to the end customers without using dealers. This business structure made company costs higher than its competitor. By the year 2000 it analyzed the option to find dealers responsible of distributing its cement using their warehouses. CEMEX infrastructure was sold to a selected dealer (CME). At the same time given some imposed taxes to cement imports, CEMEX changed it shipment from Mexico to Nicaragua.CME started selling cement under this model unsuccessfully for the 3 following years. This was caused mainly the quality of cement produced in Nicaragua which did not fill...
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...CEO of CEMEX, 1992 CEMEX aquired the two largest Spanish cement producers Hiring “High Potential People“ In reality young and inexperienced people willing to work insane hours to achieve financial goals Cost reduction by 30% 1997 The most admired company in Spain, Actualidad Economica Case study in transforming low tech enterprise into a model of info age efficiency Streamlining Management Reducing peak hour Energy Use Introducing alternative Fuels Automation of all Plants Reduction of Inventory levels 1989 Anti Dumping Duty imposed by International Trade Commision, 58% on all Mexican cement imports Acquisition Institutionalize acquisition process, refine post-aquisition integration strategy Innovation 1988 CEMEXNet first Mexican Company to own its own satelite communications network Today Links all global operations Detailed live access to financial data, truck routs, operational data from all individual plants 2003 Wired Magazine 5th Masters of innovation, technology, and strategic vision CEMEX overcame this burden by importing cement in to the United States from third parties from other nations than Mexico CEMEX sends post-merger integration teams (PMI) to analyze and improve operations PMI Teams attend cultural awareness and teambuilding workshops Regional Managers visit the site every month, country presonally reports back to the CEO to the US West CoastCheap Chinese cement through CEMEX own network CEMEX became...
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...Key facts of the third largest Cement producer „Cemex“ worldwide Name Industry Products CEMEX Building materials Cement Ready-‐ mix concrete Construc8on aggregate 1906 San Pedro Garza Garcia, Mexico Lorenzo Zambrano 54,635 In 50 countries Founded Headquarters CEO Employees Opera8ons Revenue Mean facts of the historical development from Cemex Year AcAon Founded 1906 near Monterrey as Cementos Hidalgo Cement plant Merged with Cementos Portland Monterrey, to Cementos Mexicanos , later renamed to CEMEX 15,000,000 1 billion 65,000,000 5 billion 10 5 3 ProducAon Revenues Int. per year PosiAon 5000 1906 1931 1980s Became mexicos market leader 1987 2000 First expansion in the USA Opera8ons in more than 15 countries Decreasing transportaAons costs are the biggest advantages of the globalizaAon CompeAAve advantage= Using vola8lity in the na8onal cement industry...
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...Key facts of the third largest Cement producer „Cemex“ worldwide Name Industry Products CEMEX Building materials Cement Ready-‐ mix concrete Construc8on aggregate 1906 San Pedro Garza Garcia, Mexico Lorenzo Zambrano 54,635 In 50 countries Founded Headquarters CEO Employees Opera8ons Revenue Mean facts of the historical development from Cemex Year AcAon Founded 1906 near Monterrey as Cementos Hidalgo Cement plant Merged with Cementos Portland Monterrey, to Cementos Mexicanos , later renamed to CEMEX 15,000,000 1 billion 65,000,000 5 billion 10 5 3 ProducAon Revenues Int. per year PosiAon 5000 1906 1931 1980s Became mexicos market leader 1987 2000 First expansion in the USA Opera8ons in more than 15 countries Decreasing transportaAons costs are the biggest advantages of the globalizaAon CompeAAve advantage= Using vola8lity in the na8onal cement industry...
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...9-701-017 REV: NOVEMBER 29, 2004 PANKAJ GHEMAWAT The Globalization of CEMEX Geographic diversification enables us to operate in multiple regions with different business cycles. For the long term, we are trying to ensure that no one market accounts for more than one third of our business. Yet we do not diversify simply to balance cyclic downturns and upswings. We do not see volatility as an occasional, random element added to the cost of doing business in an interconnected global marketplace. We plan for volatility. We prepare for it. We have learned how to profit from it. Lorenzo Zambrano, CEO of CEMEX.1 In 1990, Cementos Mexicanos was a Mexican cement company that faced trade sanctions in its major export market, the United States. By the end of 1999, CEMEX operated cement plants in 15 countries, owned production or distribution facilities in a total of 30, and traded cement in more than 60. Non-Mexican operations accounted for nearly 60% of assets, slightly over 50% of revenues and 40% of EBITDA (earnings before interest, taxes, depreciation, and amortization) that year. CEMEX’s sales revenues had increased from less than $1 billion in 1989 to nearly $5 billion in 1999, and it had become the third largest cement company in the world in terms of capacity, as well as the largest international trader. Growth had been achieved without compromising profitability: in the late 1990s, its ratio of EBITDA to sales ranged between 30% and 40%—ten to fifteen percentage...
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...Moise JURCA CEMEX – “One-facing” company CEMEX is a 100-years-old multinational cement company based in Monterey Mexico. Over past 25 years CEMEX has changed its business processes from a local regional company (back in 1984) to a worldwide leader in cement industry. The company based its processes redesign and its continuous innovation on three components: Acquisition Strategy. Expansion Processes Technology and Innovation Supply and Demand Acquisition Strategy. Expansion Processes In 1987 CEMEX acquired Cementos Anahuac and in 1989 Cementos Tolteca, its biggest domestic competitor. By 1990 CEMEX had acquired 65% market share in Mexico and was one of the ten largest companies in the world. After having secured its leader position in Mexico, CEMEX began to look for opportunities beyond Mexico border. First stage of its expansion was the export of cement and by 2000 CEMEX became the largest international cement trader in the world. In 1991 CEMEX built distribution terminals in Spain to distribute cement that was produced in Mexico and also started to study European market. In 1992 CEMEX acquired Valenciana and Samson, Spain’s two largest cement companies for $ 1.84 billion. That time Spain was one of the largest cement market in Europe because of the continuous investment in that region. In 1994 CEMEX acquired 65% of Vencemos, Venezuela largest cement manufacturer at that time for $ 550 million followed by the series-acquisitions of Cementos Nationales in 1995 (Dominican...
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...Founded in 1906, Cemex is one of Mexico’s few truly multinational companies, with market-leading operations in Mexico, Spain, Venezuela, Costa Rica, Philippines, Panama, Dominican Republic, Egypt, Colombia, and a significant presence in the Caribbean, Indonesia, and the southwest United States. It is the largest cement company in America and one of the three largest cement companies in the world, with revenues of $4.8 billion and close to 65 million metric tons of production. Cemex and its subsidiaries engage in the production, distribution, marketing, and sale of cement, ready-mix concrete, and related materials. Its strategy includes focusing on cement and concrete products, diversifying globally to cushion against volatility in local markets, developing efficient production and distribution processes, using IT to help increase flexibility, improve customer satisfaction, and reduce bureaucracy and excess staffing, and providing training and education for employees. Its state-of-the-art Tepeaca facility supplies one fifth of the Mexican market and may be the lowest cost cement producer in the world, with operating costs of $25 per ton, roughly $10 lower than the industry average, and emissions far lower than legal requirements. In 1992 Cemex purchased Spain’s two largest cement companies, reviewed, their operations thoroughly, invested in facilities, and reduced the workforce dramatically, such as by consolidating 19 offices into one. Although it was a laggard IT user through...
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...Case Study: Cemex A Digital Firm in the Making Question 1: How did digital technology transform the way Cemex ran its business? Because of the vision of the grandson Lorenzo Zambrano, Cemex moved from a very manual mode of operation to one where its processes were now done with the use of technology. With this in mind we can identify how Cemex was impacted by the use of digital technology below: (a) They were better able to manage “unforecastable demand”, relative to its competitors. a. All vehicles were connected to GPS tracking system b. As a result they achieved a reduced delivery time from 3hrs to 20 minutes c. Dispatchers were better able to monitor trucks d. They were able to anticipate delivery times and redirect trucks where necessary. (b) Reduction in Costs was realized as a result a. Trucks were able to deliver in shorter time frames and 35% less trucks were necessary to deliver the same amount of cement. b. Software package was used to anticipate power consumption requirements and also to facilitate use of machines during off peak hours resulting in lower electricity costs. (c) Increased revenue was realized a. Customers were now willing to pay premium price since Cemex was able to facilitate Just in time (JIT) delivery. This meant customers no longer had to have crews waiting for long periods pending delivery. b. All production facilities were linked via the satellite communications system and this facilitated better planning/forecasting c...
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...Case Study: Cemex A Digital Firm In The Making Case Study: Cemex A Digital Firm in the Making Question 1: How did digital technology transform the way Cemex ran its business? Because of the vision of the grandson Lorenzo Zambrano, Cemex moved from a very manual mode of operation to one where its processes were now done with the use of technology. With this in mind we can identify how Cemex was impacted by the use of digital technology below: (a) They were better able to manage “unforecastable demand”, relative to its competitors. a. All vehicles were connected to GPS tracking system b. As a result they achieved a reduced delivery time from 3hrs to 20 minutes c. Dispatchers were better able to monitor trucks d. They were able to anticipate delivery times and redirect trucks where necessary. (b) Reduction in Costs was realized as a result a. Trucks were able to deliver in shorter time frames and 35% less trucks were necessary to deliver the same amount of cement. b. Software package was used to anticipate power consumption requirements and also to facilitate use of machines during off peak hours resulting in lower electricity costs. (c) Increased revenue was realized a. Customers were now willing to pay premium price since Cemex was able to facilitate Just in time (JIT) delivery. This meant customers no longer had to have crews waiting for long periods pending delivery. b. All production facilities were linked via the satellite communications system and this facilitated...
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...A Case Study – CEMEX PROBLEM STATEMENT As the third largest manufacturer of cement, CEMEX’s goal is to fully satisfy the building needs of its global customers and create value for its stakeholders by becoming the world’s most efficient and lucrative building-solution company. To achieve this goal, CEMEX should implement several strategies. First, the company should focus on a differentiation strategy by expanding the scope of its business beyond producing and selling cement and concrete. By providing distribution and logistics services CEMEX could be involved in the whole spectrum of the construction industry. Second, as a company that has become successful through implementation of merger and acquisition strategies it should take into consideration an organic growth strategy as a primary solution to distribution of construction materials around the world. As a company that has successfully served its customers in countries with different culture and political and economic systems, CEMEX has acquired deep understanding and knowledge of the local and corporate culture of its clients which it has parlay into a tremendous advantage when opening new construction supply stores in those countries (Garcia, 2011). Third, while focusing on international expansion, CEMEX has to ensure a competitive advantage in domestic operation. To achieve both global efficiency and local responsiveness the company should build a network of its customers, partners, suppliers, and stockholders through...
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...entertained. CEMEX: A Digital Firm in the Making Cemex, based Monterrey, Mexico, is a 98-year old company that sells cement and ready-mix concrete products. It has 53 plants around the globe in countries including the United States, Spain, Egypt, Colombia and the Philippines, and is the world's third largest cement and concrete manufacturer. The concrete business is an asset-intensive, low efficiency business with unpredictable demand. Cemex dispatchers used to take orders for 8,000 grades of mixed concrete and forwarded them to six regional mixing plants, each with its own fleet of trucks. Customers routinely changed half of their orders, sometimes only hours before delivery, and these orders might have to be rerouted because of weather change, traffic jams of problems with building permits. Cemex's phone lines were often jammed as customer's truckers and dispatchers tried to get orders straight. Many orders were lost. Until about 15 years ago, Cemex's Information Technology Division was viewed as a support department for the sales function. Cemex did not have an adequate computing or telecommunications infrastructure. Only a few executives had personal computers and integrated systems were a distant dream. Lorenzo Zambrano, a grandson of the founder of the company, took over the business in 1985 and decided to apply information technology to these problems. He and Cemex chief information officer Gelacio lniguez developed a series of systems that would enable Cemex to manage...
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...Question 1: How did digital technology transform the way Cemex ran its business? Because of the vision of the grandson Lorenzo Zambrano, Cemex moved from a very manual mode of operation to one where its processes were now done with the use of technology. With this in mind we can identify how Cemex was impacted by the use of digital technology below: (a) They were better able to manage “unforecastable demand”, relative to its competitors. a. All vehicles were connected to GPS tracking system b. As a result they achieved a reduced delivery time from 3hrs to 20 minutes c. Dispatchers were better able to monitor trucks d. They were able to anticipate delivery times and redirect trucks where necessary. (b) Reduction in Costs was realized as a result a. Trucks were able to deliver in shorter time frames and 35% less trucks were necessary to deliver the same amount of cement. b. Software package was used to anticipate power consumption requirements and also to facilitate use of machines during off peak hours resulting in lower electricity costs. (c) Increased revenue was realized a. Customers were now willing to pay premium price since Cemex was able to facilitate Just in time (JIT) delivery. This meant customers no longer had to have crews waiting for long periods pending delivery. b. All production facilities were linked via the satellite communications system and this facilitated better planning/forecasting c. No lost orders since orders can now be placed...
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