No matter how great the product was!! We invest in training new people, talking them through our practices, and helping them assimilate. (See CEMEX: An Emerging Market Multinational, by Pankaj Ghemawat, s+b, Apr. 1. These 10 steps help counter it. Urban poverty is as daunting an issue as rural poverty, which Professor C K Prahalad distinctly highlighted in his book, the fortune at the bottom of the pyramid, decades ago. Market Analysis and Insights: Global Cement and Aggregate Market A cement is a binder, a substance used for construction that sets, hardens, and adheres to other materials to bind them together. One of the most basic and primary ingredients required to build a house is Cement. This has had the effect of precipitating the revenues of companies. 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. Participants were Jaime Elizondo, Luis Farias, Luis Hernandez, Ignacio Madridejos, Juan Pablo San Agustin, Karl Watson Jr.; moderated by Thomas A. Stewart. Cemex operates within a stiff globally competitive arena full of challenges emanating from among others the current global recession and the surging energy prices as a result of escalating fuel prices. Cemex opened doors of operations in 1906 with its headquarters based at Monterrey in Mexico. With an annual savings of $120 million in annual savings, this seems a formidable strategy for the company in its future endeavors. We provided them with access to building materials such as cement, concrete blocks, and steel; we also provided access to credit through microfinance; and we offered technical and architectural guidance. The cost-cutting framework should be integrated into the process to act as a guide to minimizing cost while ensuring benefits are maximized. Why? Their growth in demand for cement has been registering a consistent high of 7% with India alone representing a demand of 600 million tones of cement in 2006. 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 major threat to the company lies in the current recession which has hurt the global aggregate demand. Currently, he is working as an Associate Professor in the area of Marketing with Alliance School of Business under Alliance University, Bangalore. BusinessEssay, 13 Dec. 2022, business-essay.com/cemex-companys-strategic-analysis/. We call it Concrete Talks.. Increased acquisitions could also trigger a wave of consolidation exercises among its competitors which could push the company out of the specific market. Portfolio of Products and Services What is it then? But in the early 1990s, when the companys leaders saw that the North American Free Trade Agreement (NAFTA) would be signed in some form (it became law in 1994), the vulnerabilities of the companys position became evident. Watson: In 2009, we launched an internal social network called Shift, like a walled-off version of Facebook. The core aim was to document the best business practices to share them across the organization globally. Each of these three members registered groups had to make a commitment of contributing 120 pesos per member per week for 70 weeks. Freedonia Group Inc. Press Esc to cancel. That took some doing. As a result of long experience of developing its own Information Technology systems, its IT experts developed competency in integrating IT platforms. Ghemawat, Pankaj. Step 5 - Sustaining Value through Post Purchase Services. stream These included the closing of the books, accounts payable, and most technology-related activities. That was making us less efficient. Porter's 5 Forces, Competitive Forces & Industry Analysis. Jaime Elizondo: I joined CEMEX in 1985, shortly before Lorenzo Zambrano became our chief executive officer. Who has decision rights over what, and how is the work done? The millennium development goals were originally developed without recognition of the role that the private sector could play. Great leaders are invariably intent listeners, but they still need to make the practice a priority. While Cemex concentrated its marketing and expansion in emerging Latin markets due to cultural proximity, these companies had established a solid base in the developed world and were making impressive roads in the emerging markets. Current expansionary strategies ought to be backed with aggressive marketing to optimize their benefits. 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. A good example is the emphasis we put on closing the books on the first or second day of every month. Many companies are already reeling under the effects of the financial crisis while others are filing for bankruptcy. Nike doesnt sell shoes. The spiraling effects of the global recession are already taking a heavy toll on the total revenue of the company owing to the sharp decline in consumer demand. It is written by Hau Lee, David W. Hoyt and shed light on critical areas in field of Strategy & Execution . This was a way for us to grow the pie and create more value for CEMEX at the same time that we were doing something beneficial for society. And we never will. Ill give you an example involving the ready-mix business. The potential of this colossal low income relatively unserved market was also accompanied by its own set of challenges. Windmills are a good example. For . Web. The company also offers asphalt, concrete blocks, concrete pipes and precast products including rail products, concrete floors, box culverts, bridges, drainage basins . Furthermore, its cultural proximity in these nations gives it higher leverage over its competitors who are still struggling to make inroads into the new markets. Another example is Fortium ICF, a concrete product that is especially useful in putting up vertical walls. If volumes pick up, how do you extract value? We changed old habits; for instance, in the past our people were not prepared to interact with our communities or with the media. It manufactures and sells cement, ready-mix concrete, aggregates, clinker and related building materials. Todays leaders can learn a crucial lesson from Theodore Roosevelts approach to building the Panama Canal. 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. 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. Consider the challenges of selling cement and concrete. If CEMEX stood still, it would be up against competitors with greater scale and more access to capital markets. We would create innovative solutions for the construction industry that improve the well-being of the people. Then we started buying up cement companies throughout Mexico. High-speed railway systems also require a lot of cement. the first was to make credit accessible for the poor before selling cement; the second was to improve brand perception of CEMEX among these customers through building trust; and the third was to change or improve distribution methods and construction practices so that they deliver more efficiency and cost-effectiveness to low-income customers. Touted as the most valuable car company in the world, Tesla firmly sticks to its zero dollar marketing. Cemex case analysis. Technical consultation pertaining to the right quantity and quality of raw materials required to build a house or a single room was provided free of cost, which optimized the utilization of raw materials and minimized wastage. Mr. Zambrano recognized NAFTA for the huge strategic threat it was. Think of it as a wedding registry, except that instead of giving silverware, for example, Cemex positioned cement as a loving gift. CEMEX: Transforming a Basic Industry Company case study (referred as "Cement Cemex" for purpose of this article) is a Harvard Business School (HBR) case study covering topics such as Strategy & Execution and strategic management. Strategic planning has a notoriously bad track record. CEMEX realized that women are the key drivers of savings in families, and particularly in Mexico, they are highly entrepreneurial. It defines itself as a provider of solutions for builders and local governments, particularly in emerging economies and for those seeking environmental sustainability. 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. CEMEX's Coherence Profile. Development status The project construction is expected to commence from 2024. Though fewer big-ticket customers could generate most of the companys revenues, the situation is just the opposite for low-income customers. Market Trends. A solution, by contrast, cannot be that easily replaced. 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. Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations. We knew from our experience with pet coke that it was only a matter of time before waste-recycling companies would start to peg the price of this energy source to the price of oil, eroding our advantage. New name, lets move on. Today, one of the major differences is all the time and effort we dedicate to change management. It allows people in different communities of interest at CEMEX to see detailed information about operations around the world. When the real problem isnt the obvious one, Why businesses need to help employees build friendships, Clocking out: Millennials and the workforce. To become a learning organization and to implement an effective learning strategy, CEMEX managers should develop . Mexico, like many other developing economies, still hadn't generated much outbound foreign . Globalization of CEMEX "referred as Cemex Superior in this analysis " is a Harvard Business Review (HBR) case study used for MBA & EMBA programs. We say, We want to learn from you. But we also teach. Competitor Analysis. Lee, Hau and Hoyt, David, W. CEMEX: Transforming a Basic Industry Company, 2005. Hernandez: In developed markets [such as France and the U.S.], our opportunities to differentiate CEMEX relied more on product innovation. CEMEX: Transforming a Basic Industry Company case study provides a strategic dilemma for the protagonist. The paper discusses the creation and implementation of the organizational learning strategy plan for CEMEX in order to contribute to the company's further progress in the industry. For most of our products, Shift shows the specifications and a video of what the product does. For all these reasons, concrete and cement are generally seen as commodities. It is produced in enormous, capital-intensive plants involving sophisticated technology. This excess inventory places a heavy premium on the firm, especially during this recession. During the pandemic, people have become more sensitive to the environmental impact of their shopping decisionsand companies are responding. To use the same example, they would sell the product for $60 but charge freight of $250 per load (this would increase based on distance from the originating plant) no matter how full the truck was. Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The German part of RMC was using refuse-derived fuel a fraction of municipal waste which is not widely understood. That is a global best practice. CEMEX is a global solutions provider, drawing on strengths in customer knowledge and innovation and on resources generated by its industry-leading efficiency. CEMEX is a global solutions provider, drawing on strengths in customer knowledge and innovation and on resources generated by its industry-leading efficiency. Capabilities System. BusinessEssay. Its strong presence in the market has also helped in boosting the product image and helped it to rise from the shadows to become the third-largest cement company in the world. Hines, Joann. Today, were at over 28 percent alternative energy use, the highest among our competitors. Thats when you have your best chance and I mean this in the most positive sense of getting into peoples heads. There was no choice but to build new capabilities both to defend its home turf and to grow abroad. We set up Construrama as a franchise, and then helped the distributors with their business practices. In the context of its CSR strategy, CEMEX builds "a better future, ensuring our society's sustainability, wellbeing, and quality of life" (CEMEX, 2019a: p.57). But that would require generating a separate internal campaign for each new product. This is because the different market is unique in terms of cultural diversity, management practices, and regulatory framework. In the developing world, more than one-third of the urban population lives in shanty towns and slums. Cement is bulky and is delivered to construction sites in giant bags. For example, within ready-mix, Shift has a track for value-added products. This prompted the company to diversify into IT by setting up Cemtec to provide in-house IT services. During 2008 and 2009, the company staved off bankruptcy through a series of major cuts and refinancing efforts. We would identify people in their field operations who had exceptionally smart approaches to doing things. Strategy or Culture: Which Is More Important? 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. //--> Naturally, we had to come up with new ways of managing the process and new coordinating mechanisms, including designating individuals as country leaders. Global cement demand to grow 4.7% annually through 2012, 2008. However the need for branding set in later with the launch of aggressive campaigns to promote the company brand in Mexico through the placement of the Cemex brand on its products and items ranging from cement bags, delivery trucks, and soccer stadiums (Cemex Cement Company, 2008 para.1). Partly its a matter of how we talk about these things with customers. Farias: In a lot of ways, capabilities development follows a natural evolution. Web. It was also necessary to take a cut in commission to serve this segment, which would be compensated by volume of business. One of the most challenging tasks for Cemex was its entry into the Philippines market due to a lack of control of distribution channels by distributors. The result is a margin gain of $4 to $9 per ton of cement, 2 which could shift a traditional plant to the top quartile of . Dominos is not a pizza delivery company. We could then transfer people without their having to learn entirely new systems. The company boasts of unrivaled expertise in branding cement for individual consumers . Elizondo: We became quite adept at that. Headquartered in Monterrey, Mexico, CEMEX is a global leader in the building materials industry. Over time, CEMEXs leaders developed a capability for promoting environmental sustainability: decreasing the companys own fuel use, removing or mitigating pollutants in materials, and looking for ways its products and services could lead to sustainable practices for all the industries CEMEX serves. Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week. "Cemex Company's Strategic Analysis." December 13, 2022. https://business-essay.com/cemex-companys-strategic-analysis/. How one step towards digital transformation completely changed the brand perception of Dominos from a pizza delivery company to a technology company? At the same time, to evolve into a more premium business, CEMEX began providing guidance in construction methods not just to individuals and private-sector customers such as building companies, but also to municipalities and national governments. This forced the company to develop its distribution channels to optimize revenue at a minimum cost rate. It is a company focused on creating sustainable value by providing industry-leading products and solutions to satisfy customers construction needs across the world. Product diversification on its part could divert the attention of the company from its core line of production thus damaging the image of the company. Finally, we wanted to move quickly to structure long-term contracts for the energy sources. 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. Is Michelin Star by the same Michelin that sells tires, yes, it is! The new system demanded distributors to have excellent delivery capabilities, the high storage capacity of raw materials and inventory, and a good understanding and appreciation for this new low-income segment. de C.V. ("Cemex") (NYSE: CX) is a global construction materials company that is building a better future through sustainable products and solutions. Due to its heavy reliance on the homebuilders for a long time, it laid very little emphasis on branding. In a cost-cutting measure to cut the cost of Information technology, the company developed a global standardization program commonly referred to as the CEMEX Way for $200 million in 2000. This was aimed at repositioning itself in the market amidst building competition as a result of new entrants in the Mexican market. This kind of efficiency has placed it ahead of its competitors. 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. Nokia is a perfect case study of a business that once invincible but failed to maintain leadership as it did not innovate as fast as its competitors did! Its critical that we retain the talent and the way they think. This could hamper the development of new products and in the process inhibit future expansions. Then what is Teslas marketing strategy? To serve them profitably, innovative and contextual business models have been developed. Cemex, S.A.B. and some important characteristics of the industry, analysis will be conducted on the. There was a real chance a larger global company would come into the market and underprice us. Cemex has been able to implement a production to distribution chain which has been supplemented by cross-border scale economies in the fields of IT, trading, and technological advancement as Ghemawat (2003 para. Founded in 1906, the company did business nearly exclusively in its home country until the early 1980s; even then, it moved past the national boundaries very tentatively. In addition, the linguistic and cultural ties between the two countries made it a sensible strategic move. Were not just selling cement or ready-mix; were helping you build a street or a home.. Luis Farias: We had been thinking about the potential of alternative energy sources since 1990 or so. The middle one, which is people, is the most difficult. Early on, for instance, we realized we should use the same team of people, from planning, accounting, IT, and operations, for each acquisition. The five stages of Marketing Strategy Process of Cemex Superior are -. You can reach us out at [emailprotected] .Disclaimer: The views and opinions expressed in any article on the website are solely those of the authors and do not necessarily reflect the official policy or position of companies in context. It delivers cement within 20 minutes of receiving an order in many locales. The greatest strength of Cemex lies in its ability to integrate information technology with the best management practices within its organizational framework. The market analysis also discusses new product developments, cost, revenue, gross margin, market size, share, and projected growth in addition to upcoming market strategies used by top competitors. Dr. Mrinmoy Bhattacharjee has nearly two decades of experience spanning across industry and academia. Incoming companies were inducted into the CEMEX Way (the company's name for its distinctive practices), and in parallel CEMEX took unusual pains to capture and make use of acquired companies knowledge. You can use the following strategy to organize the findings . It required far greater PMI resources 200 to 300 CEMEX managers were involved, about 10 times the number needed for our single-country acquisitions. This will ensure that Cemex stamps its authority and reclaims its niche in the market as a market leader. Sometimes marketing can trigger combative competition in the market-leading to the business rivalry which can seriously harm the business. There were not many companies that could use pet coke. December 13, 2022. https://business-essay.com/cemex-companys-strategic-analysis/. During these periods of biting recession and stiff completion from Lafarge and Enron among others, part of the marketing efforts should be dedicated to improving the customer care centers. Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This response to the crisis enabled us to continue to evolve. The most primary and obvious reason for cement companies to focus on the formal segment is the average revenue per customer. In this piece, we connect Apples unique and successful take on social media to its core values.
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