...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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...CEMEX successfully invaded the foreign marketsand continuously planning for the expansion. Due to this action of the company, the entire management recognized the benefits and expecting to gain other advantages. Globalization, although viewed as the major challenge for both developed and developing countries, still have the benefits in which CEMEX proved right action for their success. Introduction In the issue of globalization, it was identified to move within the corners of two ideas. Firstly, it has a significant impact on any type of company and affects the areas of the globalized markets, capital and investments, technologies,people, flow of information, and the products and services being offered by the company. Secondly, globalizationimpacted on the countries in which the participating globalized companies that reflect on the level of the politics, improvement of the economy, regulatory structures, and on the society. Because of the changes and challenges that are present in the globalization, businesses and countries are in various approaches in the rapid pace of changes. Benefits on Globalization CEMEX significantly reduce the cost base incurred in their operation and improve or accelerate the company’s integration of the new acquisitions, such as in technologies. Also, the company is on the track in enforcing the common culture throughout the organizations across the globe which makes the company be aligned with a common goal and aspirations. In this way, the company...
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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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...case of CEMEX case of CEMEX 1. What benefits have CEMEX and the other global competitors in cement derived from globalization? Globalization has given many benefits to CEMEX and its competitors. First of all, it reduced the tariffs of product exportation by acquiring local plants and facilities instead. By doing so, these cement companies could control the localized quarries, which give them the proximity to the raw material needed for cement production. No need to ship the goods across the border, therefore no tariffs on the delivery. On the other hand, as they acquired the local plants and built distribution terminals, these companies have gained a competitive advantage of transportation cost. If they choose to export, the cost of transportation may cost them a fortune, as the cement need to be shipped in special means. Thus, they will lose their competitiveness in price otherwise the margin. Last but not least, due to the process of globalization, CEMEX and its competitors could well spread their risks. If one market is not performing well, they could depend on the other ones. So, assuming there isn’t a world-wide recession, the revenues of theirs will be more stable because of diversification. 2. How specifically has CEMEX managed to outperform its leading global competitors (e.g., Holderbank) in the cement industry? Several elements together have made the CEMEX the largest international trader in the cement industry. The most important one, I think, is that CEMEX has always...
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...1. What made CEMEX go beyond domestic borders? CEMEX needed to go international for various reasons, the first was that when the Mexican economy opened up, it made the cement industry vulnerable to foreign threats. Due to this foreign competitors such as Holderbank and Lafarge, CEMEX needed to diversify geographically to grow and survive. Secondly, by acquiring two big cement companies at the end of 1980s, CEMEX owned already a big market share of the Mexican cement market, which made the growth in its domestic market not appealing anymore. Third, CEMEX wanted to fight against the seasonality of the cement Mexican industry and lower its dependence from the Mexican market. By going in foreign countries they were able to counter this seasonality effect especially in emerging country. This seasonality is explained for the fact that the consumption of cement during the summer is higher than during the winter (especially due to the rain). 2. On what differentiation did CEMEX sustain its competitiveness in the early days of internationalization? The CEMEX began the international business in the early 1970 when it began to export to the U.S. market. At that time, CEMEX, in order to differentiate themselves maintained a low price. CEMEX notice that the prices of cement in different counties were different. Which enabled CEMEX to make profit by diverting low-priced imports away from one’s own market. Since the cement industry is a rather mature industry, with several hundred years...
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...16th 2012 Faculté des sciences de l'administration Université Laval Sunday, December 16th 2012 Faculté des sciences de l'administration Université Laval How CEMEX Builds the Future How CEMEX Builds the Future Eullide BAH 111.043.894 Yacine JABRI 111.053.706 François MARTINEAU 905.189.147 Lore OLAERTS 111.051.409 Charlotte PELLICANO 907.182.173 Presented to M. Gahima Égide Karuranga Eullide BAH 111.043.894 Yacine JABRI 111.053.706 François MARTINEAU 905.189.147 Lore OLAERTS 111.051.409 Charlotte PELLICANO 907.182.173 Presented to M. Gahima Égide Karuranga Outline Introduction 1 Globalization process - triple bottom line approach 2 Cultural differences and business practices 2 Laws, regulations and public opinion 3 Economic, Financial and Technical considerations 4 The Retention Challenge 6 Employee retention challenge regarding a transnational/multidomestic strategy 6 Compensation and benefits 7 Training and development plans 8 Health and safety policies 8 Employee engagement 9 The Cultural Differences Challenge 11 A quick reminder about CEMEX’s HR Challenge. 11 CEMEX first solution: its internationalization method 12 The special asset: SHIFT 12 Conclusion 13 APPENDIX 1 i APPENDIX 2 ii APPENDIX 3 iii Bibliography iv Introduction CEMEX is a multinational specialized in the cement industry. It produces and distributes cement, ready-mix concrete, and aggregates and related building materials all over...
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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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...themselves in varying and new environments is greatly dependent upon the development of, and support for, their leaders and managers on global assignments to collaborate for innovation in both practices and ideas. Levy (2007) describes a ‘Global Mindset’ that is characterized by three aspects: * Openness to and awareness of multiple spheres of meaning and action; * Complex representation and articulation of cultural and strategic dynamics; and * Integration of ideas and actions oriented both to the global and local. CEMEX, a global cement company, has recognised the imperative of developing a global mindset across the organization by standardising ways of working while simultaneously recognising and assimilating best practices from its diverse operations and people. It does this by embedding its philosophy of the CEMEX Way for acquisitions, operational reviews, and its learning and development programs for leaders and managers. Company overview CEMEX, founded in Mexico in 1906, is the world’s largest building supplier and third largest cement producer. Based in Monterrey, the company started as a local player and over the past 25 years has grown to become a global leader in the construction materials...
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...Contents 1. Question 1 2 2. Question 2 3 3. Question 3 8 4. Question 4 9 5. Question 5 10 Question 1 a) Highlight and explain the main CEMEX’s globalization strategy • The company uses advanced management techniques ➢ Introducing best practices that had been standardized throughout the corporation and making a concerted effort to learn best practices from the acquired company and implement them where 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...
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...Cemex: High Tech Cement Report title page +names of team members To be done Executive Summary To be done Question A. Based on case data outline the strategy followed by Cemex to achieve its position of prominence in the cement industry. What factors and resources equipped the company to grow so successfully over the period described in the case? Also, compare Cemex with Cisco. Where are they similar and where do they differ? Cemex utilized four key strategies to achieve a position of prominence in the cement industry. First, Cemex innovated state of the art technology to outperform competitors. Cemex leaders challenged the operations groups to develop more efficient ways ways to produce concrete and bought technology through acquisitions. A telecommunications network between 11 plants was established as early as 1988. The IT consulting group, Cemtec, was spun off which utilized online surveys to manage customer relations. Second, Cemex converted the commodity business into a specialty business by helping their end users improve profitability. E.g. in Mexico City, by guaranteeing delivery times of 20 minutes or less, the contractors maximize the cost effectiveness of the crews working on the site. Third, Cemex bought out competition in markets they wanted to expand influence. In some geographies, such as Mexico, Cemex owned >70% market share through acquisitions. Lastly, Cemex embraced risk management as one of its core competencies...
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...INTERNATIONALIZATION STRATEGIES FOLLOWED BY THREE MEXICAN PIONEER COMPANIES GRUPO MODELO, GRUPO BIMBO and CEMEX ISSUES AND CHALLENGES José G. Vargas-Hernández, M.B.A;Ph.D. Profesor Investigador miembro del Sistema Nacional de Investigadores Departamento de Mercadotecnia y Negocios Internacionales Centro Universitario de Ciencias Económico Administrativas Universidad de Guadalajara. Periférico Norte 799 Edificio G-306 Zapopan, Jalisco C.P. 45100; México Tel y fax: +52(33) 3770 3343 Ext 5097 josevargas@cucea.udg.mx,jgvh0811@yahoo.com,jvargas2006@gmail.com Mohammad Reza Noruzi, EMBA, PhD Candidate Policy Making in Public Sector Islamic Azad University, Bonab Branch, Iran Young Researchers Club Member, IAU Bonab, Iran Tell: +98- 412-7238893-5 mr.noruzi@modares.ac.ir mr_norouzi@pnu.ac.ir mr.noruzi.pnu@gmail.com Abstract The opening of the Mexican economy and globalization bring new opportunities for Mexican companies to expand their markets and get their products around the world. The internationalization process requires a sound strategy for the consolidation in foreign markets. The aim of this study is to analyze the different internationalization strategies followed by three Mexican companies with a global presence: Grupo Modelo, Grupo Bimbo and Cemex. We conclude that the differences in their strategies arise from the characteristics of each of these companies. Keywords: Mexican companies, strategy, expansion, internationalization. 1 INTRODUCTION The landscape of this...
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...goal directed, with deliberately structured activity systems, and with a link to the external environment. Types of Organizations We will study both large and small organizations. We will also look at manufacturing and service organizations, for-profit and nonprofit organizations. Importance of Organizations Organizations create value for owners, customers, and employees by their activities. They bring together resources to accomplish specific goals, whether those goals are putting on the Olympics or planting new trees in the city. Organizations produce goods and services, using innovative techniques and modern manufacturing technology, for competitive pricing. Organizations adapt to and influence the environment and its globalization while accommodating the challenges of diversity, ethics, and the motivation and coordination of employees. Perspectives on Organizations Open Systems A closed system does not depend on its environment, but focuses on running things efficiently. Open systems [Exhibit 1.2] must interact with the environment to survive, and managers realize they must pay close attention to what is going on with their customers, suppliers, and competitors. A system, in general, is a set of interrelated elements that acquires inputs from the environment, transforms them, and discharges outputs to the external environment. Subsystems perform functions such as production, boundary spanning, maintenance, adaptation, and management. Organizational Configuration ...
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...Streamlined text in eleven chapters, with particular focus on global strategic positioning, entry strategies and alliances, effective cross-cultural understanding and management, and develop- ing and retaining an effective global management cadre. The seventh edition has been revised to reflect current research, current events and global developments, and includes company examples from the popular press. In Chapter 1, we introduce trends and developments facing international managers and then expand those topics in the context of the subsequent chapters. For example, we discuss developments in globalization and its growing nationalist backlash— in particular resulting from the global financial crisis. We discuss the effects on global business of the rapidly growing economies of China and India and other emerging economies such as those in Africa, and the expansion of the EU; the globalization of human capital; and the esca- lating effects of Information Technology and the global spread of e-business. We follow these trends and their effects on the role of the international manager throughout the book. For exam- ple, in Chapter 6 we focus further on strategies for emerging markets, while also dealing with changing strategies to respond to economic decline around the world and an increasing level of nationalism in some industries; we have a section on “Using E-Business for Global Expansion” as well as discussing “born global” companies. In Chapter 7, we added a section on strategies ...
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...Foreign Direct Investment Learning objectives • Be familiar with current trends regarding FDI in the world economy. • Understand the different theories of foreign direct investment. • Appreciate how political ideology shapes a government’s attitudes towards FDI. • Understand the benefits and costs of FDI to home and host countries. • Be able to discuss the range of policy instruments that governments use to influence FDI. • Articulate the implications for management practice of theory and government policies associated with FDI. The focus of this chapter is foreign direct investment (FDI). The growth of foreign direct investment in the last 25 years has been phenomenal. FDI can take the form of a foreign firm buying a firm in a different country, or deciding to invest in a different country by building operations there. With FDI, a firm has a significant ownership in a foreign operation and the potential to affect managerial decisions of the operation. The goal of our coverage of FDI is to understand the pattern of FDI that occurs between countries, and why firms undertake FDI and become multinational in their operations as well as why firms undertake FDI rather than simply exporting products or licensing their know-how. The opening case describes the international growth of Starbucks. The closing case explores Cemex’s foreign investments. OUTLINE OF CHAPTER 7: FOREIGN DIRECT INVESTMENT Opening Case: Starbucks’...
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