Cemex Case Study

.

Firstly, cement has high potential to perish on transportation and doesn’t have a high value in terms of income/weight. This situation makes cement’s transportation very costly, also the ocean transportation sometimes may harm products because of the cement’s biological context. To deal with this problem, Cemex choose to expand their operations and facilities across the ocean. In order to select the best geographical region, Cemex uses CAGE analysis which is one of the methodology’s while selecting the right market. The main scope of Cemex while choosing the most sustainable market is primarily, selecting emerging markets. In economical perspective, the demand for cement is positively correlated with country’s GNP growth, as a side note emerging markets has higher GNP growth than advanced markets. As a disadvantage, emerging markets are riskier because the overall economical situation of the developing countries are highly volatile. (However, in long-term this volatility risk, upgraded Cemex’s risk management skills.) With the investment to the emerging markets such as India, Indonesia increased sales even more because of the high population density, which is the second most important factor while making FDI. After these global investments Cemex had a high diversified portfolio.

Secondly, Cemex increased return on investment with their value adding strategy. This strategy was so efficient that, it developed acquisitions in multiple ways: increasing knowledge, increasing operations, cost reduction in supply chain, information availability. The first component of the strategy was PMI. PMI’s main goal was to adapt acquisition to Cemex’s management policy’s and organizational culture. The total completion of this project was one year, beside it was a costly project in short-term. However, in long-term the return was

significant, that the acquisitions supply chain and management