Case 7: The Globalization of CEMEX
Questions: 1. What benefits have CEMEX and the other global competitors in cement derived from globalization? More broadly, how can cross-border activities add value in an industry as apparently localized as cement?
The globalization has significantly boosted profitability growth of companies in the cement industry through international trade and cross border investment flows. Possibility to operate in different foreign markets helps companies to diversify its business. It is highly beneficial strategy for cement companies because of the cyclical and economic downturns and upswings of the industry in different regions of the world. Also because of the localized specifics of cement production
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The first important factor was population, it had to be large at the same time there should be relatively low level of current consumption. Also CEMEX wanted to lead the market or at least control 25% of it. It addition external environment was analyzed, like for example political risk. While identifying acquisition company CEMEX looked at possibility of organization restructuring which is efficiency increase and capacity optimization. 2. Due diligence. Next stage included due diligence, which is a thorough assessment of the acquisition company by a group of experienced people using standardized CEMEX methodology. In addition meetings with the government were organized during due diligence process, and meetings with local competitors and industry associations were often held. 3. Post-Merger integration. Once the Supervisory Board approved the acquisition target starts PMI process. The main goal of the process is to improve the efficiency of the newly bought company and adjust it to CEMEX’s standards. The PMI process consisted from three levels: improvement of situation at the plant, sharing of basic management principles, and the harmonization of cultural beliefs.
The geographical expansion of the CEMEX has shifted from the US, Europe and other developed countries to the emerging high growth market. Company’s management saw a great potential in a developing markets in Southeast Asia and Middle East because