The company charged 15 pesos per member per week as a membership fee and in return, provided benefits that were unprecedented. Please see www.pwc.com/structure for further details. 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. Global cement demand to grow 4.7% annually through 2012, 2008. This was aimed at repositioning itself in the market amidst building competition as a result of new entrants in the Mexican market. We needed a new kind of executive, connected with the environment, who understood the real needs of any given locality. Today, were at over 28 percent alternative energy use, the highest among our competitors. CEMEX was chosen for a case study, as it is an academically via ble company for . BusinessEssay. San Agustin: When we acquire a company, we listen. BusinessEssay. Cemex case analysis.It could be risky for any outside player to directly enter into these markets. 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. Our pursuit of efficiency is a good example. This report applies key concepts in strategy and strategy analysis to evaluate and. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. That will not just create a requirement for CEMEX; it will also create opportunities. The company boasts of unrivaled expertise in branding cement for individual consumers, handling complex distribution and delivery logistics, and building efficient technological infrastructure. Cemex opened doors of operations in 1906 with its headquarters based at Monterrey in Mexico. Most, or rather, all innovative ideas were conceived to circumvent challenges when they are confronted with. During 2008 and 2009, the company staved off bankruptcy through a series of major cuts and refinancing efforts. What made it unknown but a massive banker? December 13, 2022. https://business-essay.com/cemex-companys-strategic-analysis/. But when the financial crisis struck, and our expenses proved too high, it forced us to become much more focused on knowledge sharing to remain effective. This capability gives CEMEX the information it needs to bring acquired companies on board rapidly and continueincreasing its knowledge base. custom Cemex Companys Strategic Analysis, ExxonMobil Singapore's Strategic Analysis, Wal-Mart Companys Impact on Stakeholders, Costco Wholesale Corporation: Company Analysis, Marketing Audit of the Peppers Restaurant, Abbott Laboratories: Company History and Performance, Googles Business Strategy and Will Show a Thorough Analysis of It, Nike Company and the Ethical Production Issues, Smart Motors Ltd: SWOT Analysis for a Second Hand Motor Vehicle Selling Company, Costco Wholesale: Full Analysis of the Company. Think of it as a wedding registry, except that instead of giving silverware, for example, Cemex positioned cement as a loving gift. The company has also demonstrated accumulated experience at the integration of acquired companies across the world in its core business. However, any marketing strategy ought to be informed by aggressive market research to attain the intended results. During these periods of biting recession and stiff completion from Lafarge and Enron among others, part of the marketing efforts should be dedicated to improving the customer care centers. Participants were Jaime Elizondo, Luis Farias, Luis Hernandez, Ignacio Madridejos, Juan Pablo San Agustin, Karl Watson Jr.; moderated by Thomas A. Stewart. You have to fight all the time to be small. Retrieved from https://business-essay.com/cemex-companys-strategic-analysis/, BusinessEssay. Were not just selling cement or ready-mix; were helping you build a street. Worth mentioning is that the gap in cultural proximity which Cemex has heavily relied on for a long time could pose a huge challenge in penetration into these markets. The current strategy however poses a risk of inhibiting innovations as a result of the standardization of systems. Buy-offs at this state might result in the takeover of companies already deep in debts thus increasing the company debts which would place a huge liability on the company. CEMEX is a world leader in the cement industry. Marketing campaigns run the risk of not being effective if not directed to the target market. In the light of the current economic recession, Cemex Company ought to consider the likely impact of the recession on its expansionary strategy and the possible mitigation measures available to contain the effects. This could hamper the development of new products and in the process inhibit future expansions. Once you have developed multipronged approach and work out various suggestions based on the strategic tools. Later in 1920, Lorenzo established another cement plant, 'Cementos Portland Monterrey'. The next step is organizing the solution based on the requirement of the case. The current operations strategy seems to have worked perfectly to the advantage of the company. The segment was relatively virgin and could become an engine for growth in the future. Theyll put in more rules, procedures, and standardization. So, it is obvious for impoverished with very little money to not get considered a customer ever, for something like cement. To keep growing, we needed some larger transactions. Web. Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations. Cemex Company's Strategic Analysis. Currently, he is working as an Associate Professor in the area of Marketing with Alliance School of Business under Alliance University, Bangalore. The raw materials including cement were provided at a frozen price anytime during these 70 weeks. One such colossal challenge is helping people with extremely limited economic resources to build their homes, and mind it!! If volumes level off, how do you gain share? Strategy or Culture: Which Is More Important? How a tire company evaluations became most coveted in the culinary industry? Nevertheless, Cementos Portland Monterrey commenced operations in 1920, and the two firms combined in 1931 to form . The best form of savings that a low-income Mexican family does take the form of tandas a local neighborhood, family, and network of friends who pool money if and when they have to create an informal mini-corpus. Nike doesnt sell shoes. On the same note, undercapitalized companies the world over are either closing shop or being taken over by industrial giants to save them from imminent bankruptcy. CEMEX participated in the 2006 restoration of Centennial Hall in Wroclaw, Poland. Elizondo: Until the 1990s, we offered a single product: cement. In addition, using refuse-derived fuel is pretty complicated technically because of variations in calorific power and other factors. 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. 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. 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. Its critical that we retain the talent and the way they think. There were many cement manufacturing players which were dominantly captured different regions.. Cemex had acquired 15 companies internationally in different regions. San Agustin: To get good at postmerger integration [PMI], we did a lot of postmortems. Due to its heavy reliance on the homebuilders for a long time, it laid very little emphasis on branding. At the time, the biggest cement companies were concentrated in Europe. << /Length 5 0 R /Filter /FlateDecode >> The emerging markets of India, Russia, Brazil, and China present a renewed opportunity for the company to expand. Elizondo: We became quite adept at that. This will move customer satisfaction to another level and also increase flexibility in the delivery of service. Questions from the media and fans alike on social media wondered about the strategy of selecting a running back in Tulane's Tyjae Spears when the team still needs help at receiver. Then what is Teslas marketing strategy? 2016 saw a modest 0.8% growth with a gradual increase in the following years (Cision, 2016). This intensive collaboration is one of the key ingredients of a successful integration. This was especially important because RMC was in 18 countries, and its people didnt talk to each other. We provided them with access to building materials such as cement, concrete blocks, and steel; we also provided access to credit through microfinance; and we offered technical and architectural guidance. environmental analysis regarding the debt acquired with each acquisition does not includes a possible economic crisis. This forced the company to develop its distribution channels to optimize revenue at a minimum cost rate. This kind of efficiency has placed it ahead of its competitors. Customer care is one of the most powerful tools of customer retention and also attracting new ones, Cemex ought to embark on enhancing customer service to ensure quick response to customers requests and inquiries. This means that the company is yet to fully shed its cultural proximity orientation to system proximity which casts doubt on the effectiveness of the implementation of the system proximity approach. We would identify people in their field operations who had exceptionally smart approaches to doing things. https://business-essay.com/cemex-companys-strategic-analysis/. An acquisition is inherently very motivating. Current expansionary strategies ought to be backed with aggressive marketing to optimize their benefits. CEMEX is a Mexican multinational building materials company, founded in 1906 and has a revenue of around $20 bn. The paper discusses the creation and implementation of the organizational learning strategy plan for CEMEX in order to contribute to the company's further progress in the industry. After each transaction, we would ask ourselves, What was successful? Peer coaching nurtures connections that make employees want to stay with the company. The bullish in these economies has seen a dramatic rise in appetite for cement in the construction industry. In other words, we are building the capability of sharing knowledge. The development of sustainability initiatives that create new uses for environmentally conscious building materials and lower the costs of producing them. Today, CEMEX is one of the leaders in this technology. We dont just mend holes in your street we can prevent those holes from recurring for the next 30 years.. One of the most challenging tasks for Cemex was its entry into the Philippines market due to a lack of control of distribution channels by distributors. CEMEX was hit hard during the financial crisis. Madridejos: Cement is a global business there are standards you can apply everywhere. When we introduced it in 2001, about 70 percent of CEMEXs bagged cement sales in Mexico went through individual distributors. 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 is written by Hau Lee, David W. Hoyt and shed light on critical areas in field of Strategy & Execution . Ignacio Madridejos: Patrimonio Hoy, which we started in Mexico in 1998, was one of our first moves in this direction. Distribution costs have greatly been reduced in the process boosting the earnings of the company. var year = today.getYear() 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. There was a real chance a larger global company would come into the market and underprice us. document.write(year) Jaime Elizondo: I joined CEMEX in 1985, shortly before Lorenzo Zambrano became our chief executive officer. It is all evident in its integration of information technology in its ready mix and cement business. CEMEX is a global solutions provider, drawing on strengths in customer knowledge and innovation and on resources generated by its industry-leading efficiency. Huge market expansions also come with an increase in administration costs which dilutes the profit margins of the firm by increasing the operation cost. The firm may have to cut down production to reduce the piling inventory in its warehouses thus reducing the cost of storage. The global business environment in the cement industry today is full of competition arising from emerging companies and established multinationals that have waged a take over the campaign. the first was to make credit accessible for the poor before selling cement; the second was to improve brand perception of CEMEX among these customers through building trust; and the third was to change or improve distribution methods and construction practices so that they deliver more efficiency and cost-effectiveness to low-income customers. PMI became second nature to them. Massive opportunities still lie ahead in the largely untapped markets of South America. Johnnie Walker The legend that keeps walking! Apple A Unique Take on Social Media Strategy. Johnnie Walker is a 200 years old brand but it is still going strong with its marketing strategies and bold attitude to challenge the conventional norms. On the other hand, the management might be forced to go back to the drawing board and assess the viability of any further expansions. Here are four ways to help employees become more reflective and more productive. It is also responsible for driving process-oriented frameworks for multiple business cases . BusinessEssay. Competitor Analysis. No matter how great the product was!! Ghemawat, Pankaj. Dr. Mrinmoy Bhattacharjee has nearly two decades of experience spanning across industry and academia. 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. Part of this stemmed from legal barriers that broke down, paving the way for international competition. Want to make an impact? How? 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. Step 2 - Segmentation, Targeting & Positioning Decisions. Obviously, that doesnt make a lot of business sense. Watson: Were shifting now from global standards to global principles. Nike has built one of the most powerful brands in the world through its benefit based marketing strategy. These are large multinationals with several holdings across the globe hence posing serious competition to Cemex. Why did Michelin, a tire company, decide to rate restaurants? 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. This threatens to cripple the companys operations while causing a huge slump in revenue. That was the beginning of recognition on CEMEXs part of the importance of global collaboration and knowledge sharing. The middle one, which is people, is the most difficult. Vargas Hern. 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. With a wealth of accumulated experience from long years of service in various positions in the company, he has steered on the business to become a global cement manufacturing giant to reckon with. As a result of long experience of developing its own Information Technology systems, its IT experts developed competency in integrating IT platforms. 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. In addition, it has enabled the company to achieve a high integration rate of its acquired units along with standardization of managing practices and quality across its holdings. 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. An analysis of hemorrhaging revenues by the company CEMEX led to a discovery of customer segments ignored for long by cement companies wilfully. Joann (2009 para.1, 2), points out that innovation in packaging can transform a product from a commodity-driven product to a premium product category. de C.V. Like everyone else in ready-mix, RMC included transportation as part of the unit price. Resilient." The report presents a comprehensive analysis of CEMEX's strategic vision, operational performance, corporate governance, and value creation at a global level.The document also highlights the company's response to the COVID-19 pandemic, the essential value of its industrial activity, its Climate Action strategy . "Cemex Company's Strategic Analysis." In the early 1990s, Mexico had very high inflation. In addition to bagged cement, we sold them rebar [steel reinforcing bars used to frame concrete structures] and other products. 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. 2.Regulatory framework is very unpredictable. This will require a lot of cement. The Foundation of CEMEXs Success In Pictures. if(year<1000) year+=1900 Standardization has a counterproductive effect of discouraging innovations by acting as a disincentive to new initiatives especially in the realm of management. The leadership team of CEMEX understood that the over-dependency on the formal segment actually made it vulnerable and decided to reevaluate its strategy. Essential. analysis of the CEMEX challenges, opportunities, and strategies with globalization and cross-cultural theories. 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. 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. With a large demand for infrastructure relative to the population in these nations, there can never be better news. 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.