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Their growth in demand for cement has been registering a consistent high of 7% with India alone representing a demand of 600 million tones of cement in 2006. New name, lets move on. Today, one of the major differences is all the time and effort we dedicate to change management. Before the early 21st Century, the perceived role of private enterprises in addressing poverty and inadequacies in deprived markets was largely nonfigurative. We needed a new kind of executive, connected with the environment, who understood the real needs of any given locality. Most, or rather, all innovative ideas were conceived to circumvent challenges when they are confronted with. CEMEX is a Mexican multinational building materials company, founded in 1906 and has a revenue of around $20 bn. You can use the following strategy to organize the findings . Want to make an impact? In a cost-cutting measure to cut the cost of Information technology, the company developed a global standardization program commonly referred to as the CEMEX Way for $200 million in 2000. For more details on Cemex Solar PV Park, buy the profile here.. About Cemex SAB de CV Cemex SAB de CV is a manufacturer of building materials.It manufactures and sells cement, ready-mix concrete, aggregates, clinker, and related building materials. In the old days, it was: This is it. Step 1 - Marketing Research & Analysis. CEMEX released its 2020 Integrated Report: "Safe. Shift allows us to make the company feel small. Analyze the Cemex Superior external competitive environment to identify opportunities and threats. That was making us less efficient. The potential of this colossal low income relatively unserved market was also accompanied by its own set of challenges. The increased level of competition in the international market has necessitated the company to embark on aggressive marketing promotions to enhance its brand name and increase brand awareness. //--> You could do all that stuff manually, with an email to a colleague. The rapid expansionary strategy could also pose a challenge to the financial position of the company and also cause bottlenecks in management. Further, the move has also created an opportunity for the company to utilize its accumulated experience and expertise in information technology innovations. Hernandez: In developed markets [such as France and the U.S.], our opportunities to differentiate CEMEX relied more on product innovation. That will not just create a requirement for CEMEX; it will also create opportunities. Where did we fail? That helped us figure out what to replicate and what not to replicate. High: Increased aggressiveness in marketing has led to an increase in the rivalry between the market players as they seek to protect their traditional domains. Distribution costs have greatly been reduced in the process boosting the earnings of the company. Its major competitors are mainly Lafarge from France and Holcim from Switzerland. An important cause is the "planning fallacy" bias, leading to underestimating time, effort and money needed. analysis of the CEMEX challenges, opportunities, and strategies with globalization and cross-cultural theories. Participants were Jaime Elizondo, Luis Farias, Luis Hernandez, Ignacio Madridejos, Juan Pablo San Agustin, Karl Watson Jr.; moderated by Thomas A. Stewart. We invest in training new people, talking them through our practices, and helping them assimilate. Johnnie Walker The legend that keeps walking! Zambranos successor as CEO, Fernando A. Gonzalez, was previously the firms executive vice president of finance and administration, and its CFO. Cemex Cement Company. Farias: In a lot of ways, capabilities development follows a natural evolution. Strategy planning process often requires five steps -. Luis Farias: We had been thinking about the potential of alternative energy sources since 1990 or so. One of its latest acquisitions was Southdown of the USA which helped it boost its image in the market. Low: The nature of cement as a key component in construction has eliminated any serious threats of substitutes. Cemex case analysis.It could be risky for any outside player to directly enter into these markets. But that would require generating a separate internal campaign for each new product. These are large multinationals with several holdings across the globe hence posing serious competition to Cemex. The five stages of Marketing Strategy Process of Cemex Superior are -. Thus, in 2005, we bought the RMC Group [a British company; RMC originally stood for ready-mix concrete]. "Cemex Company's Strategic Analysis." Lee, Hau and Hoyt, David, W. CEMEX: Transforming a Basic Industry Company, 2005. Is Michelin Star by the same Michelin that sells tires, yes, it is! Once a week, one of the members bids for the pool by deep discounting or lottery. Annual sales of 1 million NEVs by 2023 including small EVs; 40% NEVs in total sales by 2025. Step 1 - Defining relevant industry for Cement Cemex in casestudy. As a result of long experience of developing its own Information Technology systems, its IT experts developed competency in integrating IT platforms. In developing markets [such as Mexico, South America, and the Caribbean], we have a bigger opportunity. CEMEXs growing global presence allowed it to raise capital at low rates and to gain leverage through its overseas presence and relationships. What is it then? Half of its total 1 million sales target by 2025 to be NEVs; 1.5 million vehicles (mostly NEVs) sold by 2030. var today = new Date() Were not just selling cement or ready-mix; were helping you build a street. Madridejos: Cement is a global business there are standards you can apply everywhere. We needed to figure out what the best practices were in different regions, see how broadly they applied, document them, and implement them where they were appropriate. Many companies are already reeling under the effects of the financial crisis while others are filing for bankruptcy. BlackRock, the story of the worlds largest shadow bank. Admittedly, to introduce it in a market unaccustomed to it is difficult because we stand out. Madridejos: By the end of 2004, we were an $8 billion company. We acquired a Spanish cement company that had begun to use petroleum coke (or pet coke), a by-product of refining petroleum that ordinarily emits a lot of carbon dioxide. (Cemex, 2018). One such colossal challenge is helping people with extremely limited economic resources to build their homes, and mind it!! We also know that concrete pavements, compared with asphalt roads, are far more energy efficient; they reduce vehicle fuel consumption and carbon dioxide emissions. You dont need capital-intensive plants or sophisticated facilities; the plant is like a blending station, and the main production work is done away from it, in a truck with a rotating cylinder that mixes the product as it carries it to work sites. Cemex Company has grown tremendously since the early 1990s through a series of aggressive acquisitions from a local manufacturer of cement in Mexico to become the third-largest cement company in the world only behind Lafarge and Holcim. Finally, we wanted to move quickly to structure long-term contracts for the energy sources. Later in 1920, Lorenzo established another cement plant, 'Cementos Portland Monterrey'. Cemex was created in 1931 through the merger of Cementos Hidalgo, founded in 1906, and Cementos Monterrey, founded in 1920. In addition, the strong capital base of the company has served to cement the standing of the company in the market besides offering it a strong launchpad for further expansion (Freedonia Group Inc., 2008 para.4). So we have said each business must recapture transport dollars. Yahoos story or case study is full of strategic mistakes. This was not subject to negotiation. 2016 saw a modest 0.8% growth with a gradual increase in the following years (Cision, 2016). In the 2000s, to take full advantage of its emerging global nature, CEMEX entered new businesses in ready-mix concrete and aggregates materials whose supply chain and financial dynamics were very different from those of cement. "Cemex Company's Strategic Analysis." During the pandemic, people have become more sensitive to the environmental impact of their shopping decisionsand companies are responding. High: Cemex has established a very comprehensive supply chain that is proving to be quite efficient in supply. The development of sustainability initiatives that create new uses for environmentally conscious building materials and lower the costs of producing them. Apple A Unique Take on Social Media Strategy. Of worth noting is the speed at which they have been able to integrate acquired firms in its system. Left to their own devices, big companies will continue to act big. Obviously, that doesnt make a lot of business sense. In this piece, we connect Apples unique and successful take on social media to its core values. Step 2 - Identify the competitors and . Hernandez: Knowledge sharing wasnt new at CEMEX; it had been in place for years. This company is much better because of how we have integrated people and companies from Colombia, Germany, the U.S., and France, among other geographies, into the way we think. 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. Strategic Analysis Of Cemex Cemex is one of the largest commercial market in the world. (2022, December 13). And our common technology platform would make us more productive. With an annual savings of $120 million in annual savings, this seems a formidable strategy for the company in its future endeavors. CEMEX is a global solutions provider, drawing on strengths in customer knowledge and innovation and on resources generated by its industry-leading efficiency. Then what is Teslas marketing strategy? San Agustin: By 1999, having done acquisitions in Asia, Latin America, Europe, and the U.S., we had become very decentralized. Cement is bulky and is delivered to construction sites in giant bags. With its presence in 50 countries and recording a $2.11 billion profit in 2006, the company strategies seem to have largely succeeded. Mr. Zambrano recognized NAFTA for the huge strategic threat it was. A version of this article appeared in the Summer 2015 issue of strategy+business. The role of an acquisitions leader included incorporating those practices back into the CEMEX Way. The sales guys had to learn not to wait for people to come in with orders; if markets were soft, they had to go out and propose solutions to problems that had not yet been brought to public attention. The greatest strength of Cemex lies in its ability to integrate information technology with the best management practices within its organizational framework. CEMEX delivers its way to playby excelling at five differentiating capabilities: Industry-leading operational effectiveness, continuously improving its manufacturing, logistics, and financial effectiveness a critical capability in managing and moving building materials. 2.Regulatory framework is very unpredictable. You have to fight all the time to be small. In this roundtable discussion, six CEMEX leaders, all interviewed at company headquarters in Monterrey, Mexico, talk about the companys capabilities system, how it developed, and the value that it has provided. Many countries have resulted in huge cuts in infrastructural expenditure while the growth in the construction industry has drifted south. As part of this evolution, CEMEX rebounded from a near bankruptcy during the 2008 economic crisis to regain its position as a leading company in the global construction materials industry. If volumes pick up, how do you extract value? And we never will. The operational guys had to recognize that it wasnt enough to lower costs; they also had to connect with local people and address their concerns for example, about the dust generated by trucks picking up materials. CEMEX realized that women are the key drivers of savings in families, and particularly in Mexico, they are highly entrepreneurial. Nevertheless, Cementos Portland Monterrey commenced operations in 1920, and the two firms combined in 1931 to form . The success to which this was achieved has helped a model platform over which other distribution channels were built in similar environments. But we believed that having that information readily available would increase the likelihood that managers would make the right decisions. "Cemex Company's Strategic Analysis." Reviews and mentions of publications, products, or services do not constitute endorsement or recommendation for purchase. The middle one, which is people, is the most difficult. We would identify people in their field operations who had exceptionally smart approaches to doing things. Companies such as Unilever, P&G, Nestle, and ITC have been focusing and generating significant revenue and profit from this market. It takes time for people to become comfortable with the idea. Furthermore, its cultural proximity in these nations gives it higher leverage over its competitors who are still struggling to make inroads into the new markets. Karl Watson Jr.: Cement is a powder made from limestone and other ingredients, used in the production of concrete and masonry. Web. The core aim was to document the best business practices to share them across the organization globally. The cement market declined by 5.4% after experiencing a 4.3% growth in the previous three years. With other competitors coming into the country, we had to do something to strengthen our distribution channel. There was no choice but to build new capabilities both to defend its home turf and to grow abroad. But we quickly saw RMCs energy strategy as a capability we could adopt. At its debut, the Patrimonio Hoy building materials club that Cemex set up consisted of a group of roughly seventy people contributing on average 120 pesos each week for seventy weeks. The aggressive integration of information technology into the system and rapid technological inventions have ensured the company remains ahead in global competitiveness besides assuring it affirm place in standardization of quality in products and services. Our analysis shows that pursuing digitization and sustainability levers are key to significantly boosting productivity and efficiency of a typical cement plant (Exhibit 1). As it considers its a strategic alternative, Cemex will have to bear in mind its marked success in the integration of IT in its management possesses which gave it a head start in business information. Retrieved from https://business-essay.com/cemex-companys-strategic-analysis/, BusinessEssay. Were helping you build a home. We arent selling a product to you; were working with you on a solution. 13, 2015.). PMI became second nature to them. The Foundation of CEMEXs Success In Pictures. Its just what happens when you have the right people in the right positions. The threats in the SWOT Analysis of Cemex are as mentioned: 1.Cemex faces strong competition from Regional and National Brands. 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 company boasts of unrivaled expertise in branding cement for individual consumers, handling complex distribution and delivery logistics, and building efficient technological infrastructure. However, any marketing strategy ought to be informed by aggressive market research to attain the intended results. Hines, Joann. There was a real chance a larger global company would come into the market and underprice us. Watson: For now, the environmental regulations are far more advanced in the U.S. and Europe than they are in, say, South America. 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. Current expansionary strategies ought to be backed with aggressive marketing to optimize their benefits. That took some doing. The company has also demonstrated accumulated experience at the integration of acquired companies across the world in its core business. Web. 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). Vargas Hern. Cemex opened doors of operations in 1906 with its headquarters based at Monterrey in Mexico. We knew from our experience with pet coke that it was only a matter of time before waste-recycling companies would start to peg the price of this energy source to the price of oil, eroding our advantage. Thanks to our operational efficiency and to the discipline we were starting to drive with the CEMEX Way, we still had some headroom. Please see www.pwc.com/structure for further details. Luis Hernandez: The CEMEX Way, which we developed to address all this, was a collaborative effort. This was especially important because RMC was in 18 countries, and its people didnt talk to each other. << /Length 5 0 R /Filter /FlateDecode >> % 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. This will move customer satisfaction to another level and also increase flexibility in the delivery of service. We would create innovative solutions for the construction industry that improve the well-being of the people. Our pursuit of efficiency is a good example. We reasoned that we could achieve some balance by being on their home turf. Medium: The current economic crisis has crippled the buyers power of consumers to dangerous levels. Our subjective dominant logic, shaped by our own ideologies, experiences, interactions, and source of knowledge, has partially restricted our idea of poverty to the rural world. CEMEX has expanded on the basis of the ring of grey gold, seeking . 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. Despite the expansionary moves undertaken, Cemex continues to rely heavily on the Latin market with about 68% of its global sales coming from the Latin market. Three tons of concrete are poured each year for every person on earth. CEMEX, by far the most profitable of the multinationals in the cement industry, seemed like the ideal case to study to understand this anomaly. For example, within ready-mix, Shift has a track for value-added products. Were moving out of the realm of a recipe into the realm of a playbook or guide. How does Vinted make money by selling Pre-Owned clothes? As a bold cultural innovation, CEMEX modified the existing tanda system and renamed it Patrimonio Hoy, in 1998. The Mexican men mostly ended up spending such amount on anything but constructive or meaningful activities. The company would also offer consultancy services to other companies in a bid to utilize its large unutilized capacity in terms of personnel and to increase the revenue base. This threatens to cripple the companys operations while causing a huge slump in revenue. Why did Michelin, a tire company, decide to rate restaurants? Mr. Zambrano talked about going from being an elephant to being a greyhound. Market Trends. This article, through a qualitative and quantitative analysis, focuses on strategies that CEMEX has carried out to determine how they influence their dominance index or . Farias: Fifty years from now, the world will be low-carbon. Theyre the result of things that you do either consciously or unconsciously. 3.All major competitors of Cemex are increasing their operations in Mexico, so it might face tough competition in near future. Portfolio of Products and Services Why does Teslas Zero Dollar Budget Marketing Strategy work? Sophisticated knowledge sharing and tracking across a well-established, well-used information technology network. Way to Play Cemex Company's Strategic Analysis. The major threat to the company lies in the current recession which has hurt the global aggregate demand. It is a company focused on creating sustainable value by providing industry-leading products and solutions to satisfy customers construction needs across the world. The current strategy however poses a risk of inhibiting innovations as a result of the standardization of systems. It is written by Pankaj Ghemawat, Jamie L. Matthews and deals with topics in areas such as Strategy & Execution Globalization, Mergers & acquisitions. Product diversification of the firm especially with the launch of Cemtec Company and the new venture to the manufacturing of construction machinery has helped the company to spread its risks besides broadening its new revenue base. In contrast, the non-trade sales are contributed by large institutional projects, which buy directly from the company, in most cases. December 13, 2022. https://business-essay.com/cemex-companys-strategic-analysis/. Ready-mix is probably the only transport sector in the world that charges the same per-unit price whether a truck is full or half full. In most places, the business of providing these materials is capital-intensive and cyclical. . Elizondo: We became quite adept at that. Although the initial goal of Construrama was to hold on to the loyalty of our distributors, in the end it became a vehicle for providing them with solutions to their problems. December 13, 2022. https://business-essay.com/cemex-companys-strategic-analysis/. What made it unknown but a massive banker? You can see how much we sell in value-added products every month, and how much more revenue they generate versus standard products. San Agustin: RMC was one of our first acquisitions of a company with businesses in multiple countries. Strategic planning has a notoriously bad track record. A deeper investigation of cement sales during the crisis by the CEMEX analysts revealed that though cement sales plummeted as much as fifty percent in the formal market, sales in the less quintessential low-income segment that consisted of people who mostly build their own houses without employing professional masons, registered a fall only by ten to fifteen percent. Step 4 - Designing a Marketing Mix using 4Ps - Product, Price, Place & Promotion. It is present across America, Africa, Europe, Middle East, and Asia. So they have to be tailor-made for each specific market. Step 7 - Organizing & Prioritizing the Analysis into Globalization of CEMEX Case Study Solution. 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. CEMEX provides cement, aggregates, ready-mix concrete, specialty concrete products, and building and infrastructure solutions to individual customers, institutions, governments, and communities worldwide.