CASE06_CEMEX - CEMEX Building a Global Latina INTRODUCTION...

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CEMEX: Building a Global Latina INTRODUCTION CEMEX Inc. is the third largest cement company in the world. This distinctive Mexican company has successfully executed an international diversification strategy, emerging as a powerful multinational firm through the aggressive use of acquisitions to achieve its goals. Now at a crossroads, the company is faced with some critical choices in deciding amongst its strategic options. This case analysis is about formulating a strategy which (a) aligns the company's unique bundle of resources and capabilities with current industry conditions and (b) pursues the most promising opportunities to maximize the value of the company. The best conclusions can be reached by using the strategic management process to answer the following questions. Based on the information provided, what are CEMEX's strategic options for moving forward? Which external environmental factors will impact CEMEX's decision to pursue emerging or developed marketplaces? What competitive advantages has the company developed during its years of expansion? What criteria should be used during the process of selecting amongst strategic alternatives? Should CEMEX continue to use an acquisition strategy to pursue international expansion opportunities or should it focus on debt reduction and internally- driven efficiencies and growth? ANALYSIS For CEMEX to establish a clearly defined strategy and provide direction for future organizational activity, the company must determine the attractiveness of markets to enter and/or grow, the appropriate balance between financial and operational performance measures, and the desired approach for reaching the firm's objectives. An evaluation of existing external and internal environmental conditions will enable CEMEX to decide whether to concentrate on: emerging or developed markets, debt reduction or capital investments, and organic or acquisition growth. Industry Environment Cement is a high-margin, commodity product. Globally, CEMEX is competing with very large international companies. Although few independent producers remain, the company is observing the initial stages of another a merger and acquisition surge in CEMEX: Building a Global Latina - 1
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CEMEX: Building a Global Latina the world cement industry. Specific conditions in domestic, emerging, developed, and natural markets are highlighted below. Home Market - difficult and volatile - initially, government policies favored domestic producers, but economic crisis in Mexico opened the market to foreign competition - without government protection, lucrative domestic market was invaded by foreign rivals (many major European competitors) - consolidation and vertical integration - branded consumer sales, protected distribution channels, and loyal customers yield fairly high entry barriers Emerging Markets - low urbanization - infrastructure investments and residential construction driving strong growth rates - greater presence of under-
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CASE06_CEMEX - CEMEX Building a Global Latina INTRODUCTION...

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