It defines itself as a provider of solutions for builders and local governments, particularly in emerging economies and for those seeking environmental sustainability. A truck with a capacity of 10 units, priced at $60 a unit, if full, would generate $600. An analysis of hemorrhaging revenues by the company CEMEX led to a discovery of customer segments ignored for long by cement companies wilfully. Low: The nature of cement as a key component in construction has eliminated any serious threats of substitutes. When Mr. Zambrano took office, we initiated a lot of changes to reduce cost and improve our processes and our quality. CEMEX: Transforming a Basic Industry Company case study (referred as "Cement Cemex" for purpose of this article) is a Harvard Business School (HBR) case study covering topics such as Strategy & Execution and strategic management. In the developing world, more than one-third of the urban population lives in shanty towns and slums. Despite the experience with pet coke, CEMEX was far behind. Three key areas of improvement were identified; It is a known fact that the low-income segments lack financial discipline and hence, not considered to be creditworthy. Since about 40 percent of the direct cost of cement is wrapped up in [energy use], you need to watch the expense of fuel and electricity carefully. 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. About us, 2008. Partly its a matter of how we talk about these things with customers. A solution, by contrast, cannot be that easily replaced. The resultant effect could be a stream of loss-making giving its competitors a leeway to make their inroads. Elizondo: We redefined our vision for CEMEX Mexico. With the acquisition of Tolteca Company, Cemex became the 2nd largest cement firm in Mexico. The raw materials including cement were provided at a frozen price anytime during these 70 weeks. Were helping you build a home. Like everyone else in ready-mix, RMC included transportation as part of the unit price. How is work organized? Half of its total 1 million sales target by 2025 to be NEVs; 1.5 million vehicles (mostly NEVs) sold by 2030. Obviously, that doesnt make a lot of business sense. Currently, he is working as an Associate Professor in the area of Marketing with Alliance School of Business under Alliance University, Bangalore. CEMEX Company's Learning Plan | Free Essay Example - StudyCorgi.com You can see how much we sell in value-added products every month, and how much more revenue they generate versus standard products. The conventional network of distributors is a sort of a linchpin to tap the retail demand for cement. 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. Market Trends. This was aimed at repositioning itself in the market amidst building competition as a result of new entrants in the Mexican market. We changed old habits; for instance, in the past our people were not prepared to interact with our communities or with the media. Of worth noting is the speed at which they have been able to integrate acquired firms in its system. This is to means that not all marketing techniques can be replicated in all nations. Watson: Were shifting now from global standards to global principles. The company boasts of unrivaled expertise in branding cement for individual consumers . Because in the end, thats what will make CEMEX, CEMEX. What is it then? Lee, Hau and Hoyt, David, W. CEMEX: Transforming a Basic Industry Company, 2005. Madridejos: We didnt buy RMC because of its understanding of alternative fuels and waste-to-energy systems. Press Esc to cancel. PMI became second nature to them. 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. (2022) 'Cemex Company's Strategic Analysis'. (2022, December 13). The cost-cutting framework should be integrated into the process to act as a guide to minimizing cost while ensuring benefits are maximized. Though fewer big-ticket customers could generate most of the companys revenues, the situation is just the opposite for low-income customers. Mr. Zambrano said, basically, that going forward, CEMEX would have company-wide common processes for basic activities. Essential. You just send out an email that says, Joe, you now report to Regina, and here are the new guidelines on decision rights. Likewise, incentives are relatively easy to deal with. The Blue Ribbon Commission was organized by the United Nations Development Program on the private sector and poverty, which did most of the pioneering work. (Cemex, 2018). Web. Cemex SWOT Analysis, Competitors & USP | MBA Skool 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 began to say we want a country with the kind of infrastructure that makes it competitive: highways, ports, airports, anything that reduces the costs of transport and production. CEMEX is a Mexican multinational building materials company, founded in 1906 and has a revenue of around $20 bn. Cemex Case alertservice-d.grundfos.com 2022-11-06 . You can use the following strategy to organize the findings . Cemex operates within a stiff globally competitive arena full of challenges emanating from among others the current global recession and the surging energy prices as a result of escalating fuel prices. No reproduction is permitted in whole or part without written permission of PwC. Today, CEMEX is the fifth largest cement company globally, producing 87.09 million tonnes of cement a year, with an estimated cement production capacity of 93 million tonnes across its 56 cement production plants. Our analysis shows that pursuing digitization and sustainability levers are key to significantly boosting productivity and efficiency of a typical cement plant (Exhibit 1). Here are four ways to help employees become more reflective and more productive. Situation Analysis and Strategic Plan (PDF) - Desklib In 1992, CEMEX acquired a majority stake in two Spanish cement companies, Valenciana and Sanson, for $1.8 billion, giving it a majority market share (28%) in one of Europe's largest cement markets.7 The primary motivation for entering Spain was a strategic response to Holcim's growing market share in Mexico. Many countries have resulted in huge cuts in infrastructural expenditure while the growth in the construction industry has drifted south. 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. We arent selling a product to you; were working with you on a solution. This intensive collaboration is one of the key ingredients of a successful integration. Power plant profile: Cemex Solar PV Park, Dominican Republic Watson: In 2009, we launched an internal social network called Shift, like a walled-off version of Facebook. Marketing campaigns run the risk of not being effective if not directed to the target market. For example, you might have a municipality with good tax revenue, but [leaders] dont know how to structure a project, get the permits, or make a good decision about where to put in a road, a bridge, or a public housing project. Cemex was created in 1931 through the merger of Cementos Hidalgo, founded in 1906, and Cementos Monterrey, founded in 1920. You dont see it, but offshore windmills have huge cement pilings underneath. Consider the challenges of selling cement and concrete. It is present across America, Africa, Europe, Middle East, and Asia. Yet since the early 1990s, the Mexican company CEMEX, whose primary businesses are cement and concrete, has pursued a strategy of differentiation. Step 1 - Defining relevant industry for Cement Cemex in casestudy. Nike has built one of the most powerful brands in the world through its benefit based marketing strategy. 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. environmental analysis regarding the debt acquired with each acquisition does not includes a possible economic crisis. Corporate Social Responsibility in CEMEX - 5025 Words | Essay Example We can make a difference for our customers in terms of green buildings, greener roads, and environmentally friendly housing. This help is not in the form of charity but the form of a profitable business. That led to weekly updates on issues and problems, and a steady effort to learn from them. 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. An acquisition is inherently very motivating. Madridejos: Cement is a global business there are standards you can apply everywhere. analysis of the CEMEX challenges, opportunities, and strategies with globalization and cross-cultural theories. Strategic Analysis of Cemex Harvard Case Solution & Analysis But in the long run, were headed for the same global standards. To keep growing, we needed some larger transactions. Zambranos successor as CEO, Fernando A. Gonzalez, was previously the firms executive vice president of finance and administration, and its CFO. Step 2 - Segmentation, Targeting & Positioning Decisions. Why does Teslas Zero Dollar Budget Marketing Strategy work? Cumulative sales of over 2 million EVs by the end of 2025; EV sales shares of 30% by 2025, 50% by 2030. MBA SWOT : Globalization of CEMEX SWOT Analysis & Matrix January 2014. At that time, it was estimated that sixty percent of the Mexican population earned less than $5 a day. Subsequent to that it will enter into commercial operation by 2025. Distribution costs have greatly been reduced in the process boosting the earnings of the company. Globalization: The Strategy of Differences, 2003. In addition, using refuse-derived fuel is pretty complicated technically because of variations in calorific power and other factors. The system not only created a trust-based platform to save money but also provided access to credit based on their savings and payment discipline. CEMEX realized that women are the key drivers of savings in families, an economic crisis during 1994 and 95 in Mexico, Style Theory business model: revolutionizing the clothes rental industry. In most places, the business of providing these materials is capital-intensive and cyclical. 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. Shift allows us to make the company feel small. As I said earlier, these efforts will have to be guided by cost-minimizing framework that will be ensuring that the accruing benefits are optimized. VRIO analysis of Cemex Superior is a resource oriented analysis using the details provided in the Globalization of CEMEX case study. Nike doesnt sell shoes. The bullish in these economies has seen a dramatic rise in appetite for cement in the construction industry. The company boasts of unrivaled expertise in branding cement for individual consumers, handling complex distribution and delivery logistics, and building efficient technological infrastructure. The role of an acquisitions leader included incorporating those practices back into the CEMEX Way. Certain capabilities or factors of an organization can be both a strength and weakness at the same time. And we never will. When youre running a hyperlocal business like ready-mix concrete and aggregates, you cant allow that to happen. Web. Luis Farias: We had been thinking about the potential of alternative energy sources since 1990 or so. Cemex Company's Strategic Analysis. We have become experts in using pet coke. Many companies are already reeling under the effects of the financial crisis while others are filing for bankruptcy. CEMEX was chosen for a case study, as it is an academically via ble company for . It is written by Pankaj Ghemawat, Jamie L. Matthews and deals with topics in areas such as Strategy & Execution Globalization, Mergers & acquisitions. My experience of internship with one of the largest cement companies in India twenty years back had provided me an opportunity to understand the business of cement in a closer way. 13 December. This threatens to cripple the companys operations while causing a huge slump in revenue. We had a lot of experience transporting materials over long distances in trucks, railroads, and ships, so we knew the problems of having poor infrastructure, and we had years of experience helping to build ready-mix concrete roads. One of the most basic and primary ingredients required to build a house is Cement. It is a company focused on creating sustainable value by providing industry-leading products and solutions to satisfy customers construction needs across the world. Its critical that we retain the talent and the way they think. We had become an efficient company with an inward-looking culture. We also know that concrete pavements, compared with asphalt roads, are far more energy efficient; they reduce vehicle fuel consumption and carbon dioxide emissions. Increased acquisitions could also trigger a wave of consolidation exercises among its competitors which could push the company out of the specific market. Cemex has had a huge highly skilled workforce in IT whose capacity was not fully utilized that is now being harnessed to earn additional revenue and to support the companys infrastructure. "Cemex Company's Strategic Analysis." That was the beginning of recognition on CEMEXs part of the importance of global collaboration and knowledge sharing. In addition, the linguistic and cultural ties between the two countries made it a sensible strategic move. Sophisticated knowledge sharing and tracking across a well-established, well-used information technology network.