The globalization of CEMEX. Harvard Case

The globalization of CEMEX. Harvard Case

Case abstract and introduction

CEMEX is a major Mexican company, and not only in Mexico, but in the World cement industry. Since its beginnings it has always shown a great desire to climb to the top, to expand and to evolve for achieving perfection. Its expansion shows the importance on business to make strategies in order not to depend on an investment or market, and that success comes from a proper interaction between finance planning, economic analysis, and engineering efficiency.

In this case, it is possible to visualize how a company of an emerging country uses technological and cultural strategies to get a higher position within the big players’ cement market. It is important to see how a proper balance between investments in different developing countries can be a viable option to expand instead of the traditional way to search for stable developed economies. Also it is remarkable how a proper use of communications to make a flexible, adaptable organization can be a key to control even a huge industrial monster as CEMEX and make it go in a same way.

CEMEX has grown amazingly, since its first plant was opened in 1906 with a capacity of 5 million tons to a 65 millions tons capacity in the year 2000, with operations in many countries in America, Europe and Asia. With all this, CEMEX projects for the latest 2000 as the third largest cement producer in the world, struggling hand to hand with European Giants as Lafarge. Its international success is also in a great manner thanks to CEMEX’s way to integrate foreign countries culture, and manage it to make efficiency out of every plant purchased, a prove of this is how the margins in Venezuela raised from originally 9% to 41%. With this, CEMEX’s policy to acquire local producers and use them to expand, worked very well, giving them the chance to search not only for very specific selected countries, but to look for the leading position in the market or at least having 25% share of it.

A good way to see how Lorenzo Zambrano’s (CEMEX CEO)work has being producing good results, may be the fact that the average, weighted growth in the cement demand of the countries CEMEX is present is bigger than the one of his global greater competitor, 4% for CEMEX, 3% for Holderbank and Lafarge, and 2% for the rest of the big six players.

CEMEX organizational structure is a very important point of consideration to understand its growth and success, and it is because it is a bit different from common multinationals, specially cement ones. At the top, there is Lorenzo Zambrano, the CEO, and he promotes a more central decision taking for all the company, that usually is opposite to the more independent regional managing used by the competence. There are regional directors that are constantly monitoring the country presidents of the company and the plant vice-presidents. Country presidents and regional directors have a monthly meeting with Zambrano in Monterrey or sometime sin other city in Spain or maybe in New York. With this , we see that the head of the structure is constantly concerned of all the organization, and helped with communications technologies as satellites, aloud to the organization to make quick changes in hard times.

Since its beginning, CEMEX showed a fast expansion policy, first, by acquiring local competitors in the country and using those brands to make a position in the market. Afterwards, they bought two Spanish large companies, having then a big entrance for Europe, and helping them to finance during the 1994 Mexican crisis. Then, they entered to Latin America, starting with Venezuela, Colombia and Chile and having great plans for Caribbean countries.They continued to expand then to Asia, starting with Filipinas, and Indonesia, and continued with Egypt. After all this conquers, CEMEX has new challenges in other markets in Asia and Africa, such as China.

Cement industry is one of the most competed, it requires great amounts of investment and to be aware of every advance in science and economy, through the time, cement companies have searched to find an ideal model to operate, following leaders and teir base prices etc, but each time, with the economies opening each time more, they need to find new ways to maintain in the top, the most competitive firms in the world are six, Holderbank, Lafarge, CEMEX, Heidelberger, Italcementi and Bluecircle. Some of them, as Holderbank, operate in five continents and are globalized companies several decades ago, and all of them are millionaire budget firms. With this it is easy to see, how hostile the environment can be, with huge opponents that are capable of almost everything they mean to do. With all this CEMEX has been capable to get into the top three in the giants group, and with the time it may search to struggle for the first place.

Description of Characters

Lorenzo Zambrano CEO of CEMEX, He is a Mexican businessman, leader of CEMEX, one of the major companies in cement of the world.

Holderbank It is one of the world's leading suppliers of cement and aggregates (crushed stone, sand and gravel) as well as further activities such as ready-mix concrete and asphalt including services. The Group holds majority and minority interests in more than 70 countries on all continents, and employs some 90,000 people.

Heidelberger It is the global market leader in aggregates and a prominent player in the fields of cement, concrete and other downstream activities, making it one of the world’s largest manufacturers of building materials. The company employs some 68,000 people at 2,800 locations in around 50 countries.

Italcementi It is the world’s fifth largest cement producer. The Parent Company, Italcementi S.p.A., is one of Italy’s 10 largest industrial companies and is included in S&P/MIB Index of the Italian Stock Exchange and in the Dow Jones Sustainability Index, the World Index related the Corporate Social Responsibility that includes the best performers companies.

Blue Circle This company is a leading Australian producer of cement with manufacturing operations in the most populated eastern states.

CEMEX It is a global company of solutions for the industry of the construction, which offers products and service to clients and communities in more than 50 countries in the world.

Description of the problematic situation

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