Cemex Cement Production and Distribution: Market Analysis Farias: Fifty years from now, the world will be low-carbon. This future is not far off. 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. Consider the challenges of selling cement and concrete. There is often a not in my backyard mentality on the part of government officials. We set up Construrama as a franchise, and then helped the distributors with their business practices. In most places, the business of providing these materials is capital-intensive and cyclical. PDF Analysis of CEMEX's Strategies as Determinants for Market Power There was no choice but to build new capabilities both to defend its home turf and to grow abroad. However, the potential of growth and prosperity may remain a distant dream with impending challenges of poverty. 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. 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. Step 3 - Marketing Plan. More than one billion urban poor live in informal settlements contributing more to inefficiencies and chaos. Theyll put in more rules, procedures, and standardization. And the third one is incentives: what you measure, what you pay, and so forth. CEMEX's Strategic Mix - strategy+business It was also necessary to take a cut in commission to serve this segment, which would be compensated by volume of business. Partly its a matter of how we talk about these things with customers. With most acquisitions, we found that for at least the first two years, we needed to have 20 or 25 CEMEX people working in different parts of the acquired company, making sure the new people understood our systems. How one step towards digital transformation completely changed the brand perception of Dominos from a pizza delivery company to a technology company? Balanced Scorecard analysis of Cement Cemex is a comprehensive effort to integrate and align strategy and operations. Ready-mix concrete is a downstream product. We have become experts in using pet coke. Farias: In a lot of ways, capabilities development follows a natural evolution. We needed a new kind of executive, connected with the environment, who understood the real needs of any given locality. CEMEX, unlike its top competitors, was also an early example of a multinational from an emerging market. Strategy+business is published by certain member firms of the PwC network. 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. Cemex case analysis. Cemex Case Case Study Solution and Analysis of << /Length 5 0 R /Filter /FlateDecode >> In 1992, CEMEX acquired a majority stake in two Spanish cement companies, Valenciana and Sanson, for $1.8 billion, giving it a majority market share (28%) in one of Europe's largest cement markets.7 The primary motivation for entering Spain was a strategic response to Holcim's growing market share in Mexico. During 2008 and 2009, the company staved off bankruptcy through a series of major cuts and refinancing efforts. January 2014. As Prof. Prahalad says, the very assumption that the rural population is primarily poor and the urban population is relatively rich is a fallacy. The potential of this colossal low income relatively unserved market was also accompanied by its own set of challenges. Left to their own devices, big companies will continue to act big. We are developing new products that will help in the reduction of emissions in buildings. Currently, he is working as an Associate Professor in the area of Marketing with Alliance School of Business under Alliance University, Bangalore. Cemex Company's Strategic Analysis. Apples social media strategy is extremely unusual. Porter's 5 Forces, Competitive Forces & Industry Analysis. Our pursuit of efficiency is a good example. Having that speed and efficiency allowed us to be an acquirer as opposed to being one of the companies that got acquired. x\q~&u"}>;R,| |1A60 e)O~Zkw3$OuUU{OO4//r9Wj=j/OjL_Lrz5Wl1|z>t7t_L_=+{_z1}Wj5?r,^o_M?;V7~Dr-rXlw_M,x2~ZP\mv 5:G7r^Wr}3|q3]WlGKhovar5_bzU.\CoT@fbv ]rY.;,.gzj]JBffr>3Br|`uY +?#9EYlw9_wF!_O62]oYk=#b[ ^z(5-Arg`/6~H/7+B^lZ ,}\:jIV2V(~O|GvW`N]q=r9Kvi6Y9&lyQQ,D^Fb\u13-G\PQ,YO4b\,q9X. Distribution costs have greatly been reduced in the process boosting the earnings of the company. Hernandez: Capabilities dont exist in a vacuum. Hernandez: In developed markets [such as France and the U.S.], our opportunities to differentiate CEMEX relied more on product innovation. 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. environment and situation in which Cemex competes. In addition, the program was necessitated by the desire to leverage the companys knowledge of business processes across the diverse business locations around the world. Touted as the most valuable car company in the world, Tesla firmly sticks to its zero dollar marketing. Hernandez: Knowledge sharing wasnt new at CEMEX; it had been in place for years. Lee, Hau and Hoyt, David, W. CEMEX: Transforming a Basic Industry Company, 2005. They are ancient (dating back to at least 3,000 B.C., they form the literal foundation of civilization), energy-efficient, durable, versatile, and inexpensive. Each month, we do an hour-long presentation on the countries that have advanced this sort of product: what they did, why they did it, how much money they made, and why others might follow the example. From 1985 onwards Lorenzo Zambrano took over the family business as the CEO having joined the company in 1968. Its major competitors are mainly Lafarge from France and Holcim from Switzerland. CEMEX recovered only when the economy in its markets began to rebound. 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. Ignacio Madridejos: Patrimonio Hoy, which we started in Mexico in 1998, was one of our first moves in this direction. Step 5 - Sustaining Value through Post Purchase Services. CEMEX's Coherence Profile. CEMEX's 2020 Integrated Report CSR Europe How To Improve Your Strategic Planning Through A Premortem Analysis Competitor Analysis. Step 1 - Marketing Research & Analysis. That led to weekly updates on issues and problems, and a steady effort to learn from them. That is a global best practice. CEMEXs global expansion represented a 180-degree turn for a company whose very name is an abbreviation of Cementos Mexicanos. It sells an idea!! Internal analysis. Then what is Teslas marketing strategy? 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. Due to its heavy reliance on the homebuilders for a long time, it laid very little emphasis on branding. It is a company focused on creating sustainable value by providing industry-leading products and solutions to satisfy customers construction needs across the world. Many countries have resulted in huge cuts in infrastructural expenditure while the growth in the construction industry has drifted south. The company is yet to do enough to tap into emerging markets of Brazil, India Russia, and China which indicate higher prospects as a result of their rapid growth. It is produced in enormous, capital-intensive plants involving sophisticated technology. Zambranos successor as CEO, Fernando A. Gonzalez, was previously the firms executive vice president of finance and administration, and its CFO. Then we started buying up cement companies throughout Mexico. Digitization and the future of the cement plant | McKinsey CEMEX: Building Solutions. Save my name, email, and website in this browser for the next time I comment. Corporate strategy - Global EV Outlook 2023 - Analysis - IEA CEMEX, S.A.B. de C.V. SWOT Analysis / Matrix - Fern Fort University They can also lead to the wastefulness of resources when they fail to succeed or when the right training is not administered to sales personnel. Tomorrow were going to start using cash value added as a measure of performance, and if you achieve this level of cash value added, you get this bonus, and that will set you up to be promoted.. The company boasts of unrivaled expertise in branding cement for individual consumers, handling complex distribution and delivery logistics, and building efficient technological infrastructure. Shift allows us to make the company feel small. Theyre the result of things that you do either consciously or unconsciously. CEMEX Strategy: To serve the Impoverished - The Strategy Story This forced the company to develop its distribution channels to optimize revenue at a minimum cost rate. Johnnie Walker The legend that keeps walking! Global cement demand to grow 4.7% annually through 2012, 2008. Mr. Zambrano said, basically, that going forward, CEMEX would have company-wide common processes for basic activities. Great leaders are invariably intent listeners, but they still need to make the practice a priority. 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. Low: The nature of cement as a key component in construction has eliminated any serious threats of substitutes. If volumes decrease, how do you maintain your price? Luis Hernandez: The CEMEX Way, which we developed to address all this, was a collaborative effort. stream 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. These are large multinationals with several holdings across the globe hence posing serious competition to Cemex. Although culture is much more than an enabler of strategy, its no substitute for it. Due to declining expansion in China and low oil prices, the construction industry has experienced stagnation in 2015. Headquartered in Monterrey, Mexico, CEMEX is a global leader in the building materialsindustry. One of its latest acquisitions was Southdown of the USA which helped it boost its image in the market. From wrong to missed acquisitions, wrong CEOs, the list is endless. CEMEX B de C : files annual report on form 20-F for fiscal year 2022 Step 4 - Designing a Marketing Mix using 4Ps - Product, Price, Place & Promotion. We dont just mend holes in your street we can prevent those holes from recurring for the next 30 years.. After successfully rolling out Patrimonio Hoy in Mexico, CEMEX launched another initiative called Construmex, a platform for remittances, which would help many Mexican Diasporas residing in the United States to send money directly to CEMEX distributors and reserve construction materials for building their houses in Mexico. . However, an economic crisis during 1994 and 95 in Mexico, made a cement company, CEMEX, think differently to circumvent the crisis, which later became the core part of its business strategy. "Cemex Company's Strategic Analysis." 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. Who has decision rights over what, and how is the work done? When we introduced it in 2001, about 70 percent of CEMEXs bagged cement sales in Mexico went through individual distributors. That will not just create a requirement for CEMEX; it will also create opportunities. With an annual savings of $120 million in annual savings, this seems a formidable strategy for the company in its future endeavors. According to a recent World Bank report, fifty-five percent of the worlds population, which is approximately 4.2 billion inhabitants, live in cities, and by 2050 nearly seven out of ten individuals in the world would live in cities. Ghemawat, Pankaj. 1. Commercial Strategy Analyst - jobs.cemex.com You have to train them. You can see how much we sell in value-added products every month, and how much more revenue they generate versus standard products. It allows people in different communities of interest at CEMEX to see detailed information about operations around the world. 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. The development of sustainability initiatives that create new uses for environmentally conscious building materials and lower the costs of producing them. Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations. Cemex case analysis. How do you interact with customers? https://business-essay.com/cemex-companys-strategic-analysis/. We would identify people in their field operations who had exceptionally smart approaches to doing things. Obviously, that doesnt make a lot of business sense. 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. When the real problem isnt the obvious one, Why businesses need to help employees build friendships, Clocking out: Millennials and the workforce. It is written by Pankaj Ghemawat, Jamie L. Matthews and deals with topics in areas such as Strategy & Execution Globalization, Mergers & acquisitions. It lends itself to recipes like the CEMEX Way, which can be disseminated by a corporate center. Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week. A truck with a capacity of 10 units, priced at $60 a unit, if full, would generate $600. Under Lorenzo Zambrano who took the helm as CEO in 1985 and remained in office until his death in May 2014 at age 70 CEMEX embraced information technology and inorganic growth. Watson: For now, the environmental regulations are far more advanced in the U.S. and Europe than they are in, say, South America. It manufactures and sells cement, ready-mix concrete, aggregates, clinker and related building materials. Web. 3.All major competitors of Cemex are increasing their operations in Mexico, so it might face tough competition in near future. Step 2 - Identify the competitors and . Cemex and the Mexican market for cement. We would create innovative solutions for the construction industry that improve the well-being of the people. Naturally, we had to come up with new ways of managing the process and new coordinating mechanisms, including designating individuals as country leaders. CEMEX HOLDINGS PHILIPPINES, INC. : Trading strategies, financial analysis, commentaries and investment guidance for CEMEX HOLDINGS PHILIPPINES, INC. Stock | Philippines Stock Exchange: CHP | Philippines Stock Exchange 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.