By: Ryan Topp

The Globalization of CEMEX 2

1. What benefits have CEMEX and the other global companies in cement derived from
globalization? More broadly, how can cross-border activities add value in an industry as
apparently localized as cement?
The rare way of the cement business directs the restricted thought of a business
system, however CEMEX, one of not very many concrete makers discovered that through
globalization, an assortment of different advantages can be received and used to their
own advantage. Growing to the worldwide market was a dream in which the previous
CEMEX CEO, Zombrano promoted and could include an incentive into the business in
an assortment of various practices. As a result, CEMEX forcefully went out on a limb to
extend their worldwide endeavors from the method for economic presumption amid the
1980's to 2000 period. Through globalization they could develop a great portfolio and
receive further improvement from each possession. All the more imperatively as basic of
a product like cement, the building market amid the 1980's and 1990's was significant and
cement was required in creating nations with impressive development and business
opportunities. (Pankaj, G., & Matthews, J., 2000).
The lower cost of capital in the consolidations posed additional capability for
financing somewhere else at reasonable rates. Investments in any nation apart of the
MEU (Monetary European Union) could have been helpful, in any case, CEMEX
deliberately sought after creating nations with potential for financial development. A
center advantage of their globalization hones reveled with decreasing expenses and rise
plant productivity to a much more noteworthy degree. Initiating their own special
Mexican based performance into the Spanish operation, CEMEX recorded a yearly
reserve funds of $120 million and expanded their operating margins from 7% to 24%.
Strangely however, their advantages didn't live just in expanded income or market power,
they always built up their collection by gripping the comparative advantages in the
diverse economies and markets. By taking advantage of the building business in Spain,
they found unbelievable proficiency in the energy program using petroleum coke as the
fundamental fuel source. By 1994, a greater part of CEMEX plants changed to petroleum
coke in the energy program. CEMEX could distinguish globalization benefits in 1989 as
Lorenzo chose to hit the huge market in the United States by sending out their products.
(Pankaj, G., & Matthews, J., 2000).
Driven by gainfulness possibilities, CEMEX initially dumped their cement
products in the US market to win out their rivals, however their items were issued a trade
barrier formalized in countervailing commitments of up to 51%. The following key move
was to straightforwardly put resources into the US market through FDI. CEMEX
concentrated on maintaining a strategic distance from activity obstructions and powerful
transport costs, in this way they obtained plants and offices in Texas through FDI. This
was the beginning to CEMEXs cross-border activities. The NAFTA (North American
Free Trade Agreement) lessened duty costs and moreover, by putting plants in a perfect
location near the market hotspots, they are additionally ready to spare transportation time.
By cutting transportation time, consumer loyalty expanded, accordingly, wherever
CEMEX chooses to work, their powerful organization name and notoriety turns into a
profitable resource in building plants in perfect areas. Therefore, through FDI's, subsides,
mergers and acquisitions, CEMEX could profit by tariffs when it came to trading their
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items, and more to the point, disposed of weighty transport costs. The disposal of trade
boundaries and transportation expenses would be completed into every one of the
organizations that CEMEX gets and receives. (Pankaj, G., & Matthews, J., 2000).
CEMEX's globalization highlights vigorous financial advantages inside their
administration system. Through steady foreign venture opportunities, they were expected
to modify an administration system, which could be self created and could be connected
in all of CEMEX's daily duties. CEMEX planned a center administration system to put
into action in their new securing of firms. They suggested the PMI (Project Management
International) "CEMEX Way," which considered being a type of inner benchmarking,
setting many center business practices, which would be directed all through the areas in
which CEMEX worked together and did business in. By unifying their administration
system, firm stations could find ability over the borders and employ some of the most
exceedingly gifted and productive experts. (Pankaj, G., & Matthews, J., 2000).
CEMEX has a different PMI group overcrowded with highly skilled and qualified
supervisors predominantly to prepare recently obtained firm supervisors. Both
supervisors and workers were allowed a voice of supposition. Pecking order issues
decreased and all thoughts were viewed as important. Worker productivity, intelligence,
availability, coordinated effort, was the key practices of the PMI procedure. As a result,
this created unity, choices were sound, faster, and simpler. CEMEX was likewise
constantly open to build up their PMI procedure, as they would grow new advancements
or preferences all through mergers with different firms. As basic of a product like cement,
it postured restrains in improving performance; be that as it may, CEMEX obviously
constitutes the guideline of learning and consistent advantages through the punctuated
PMI procedure in CEMEX Way. (Pankaj, G., & Matthews, J., 2000).
2. What accounts for the sequence in which CEMEX entered foreign markets? How do
the markets it has entered recently compare with the markets that it entered early on?
The underlying outside market CEMEX entered was the neighbor of Mexicothe
United States. In late 1980s, CEMEX first assembled distribution offices in the southern
United States, which is best market choice for their organization in terms of geography.
In any case, when the U.S. actualized the countervailing requirement on their export to
safeguard the neighborhood concrete makers, CEMEX began to concentrate more on
foreign direct investment, rather than trade. Furthermore, in 1992, it gained two extensive
cement organizations in Spain to concentrate the European market and lessen the reliance
on its home market. (Pankaj, G., & Matthews, J., 2000). From that point onward,
CEMEX started to institutionalize their procedure of acquirement, which helped it to gain
plants and offices in the nations of Latin America, similar to Venezuela, Columbia and
chili, and of other regions, similar to the Philippines and Indonesia. Furthermore,
CEMEX additionally had its focus on the business sectors like China, India and Brazil.
Reviewing the arrangement, CEMEX entered foreign markets, the prior business sectors
CEMEX entered has either topographical (near the U.S.) or national (previously part of
Spain) likeness with its original home market, and the current ones are more expanded
and not the same as the market of Mexico. This expansion has empowered the
organization to be less subject to the market of their own. (Pankaj, G., & Matthews, J.,
2000).
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Reference:
Pankaj, G., & Matthews, J. (2000). The Globalization of CEMEX. Boston, MA: Harvard
Business School.