Here are three no-regrets moves that will help bridge the skills gap. ... CEMEX, a Mexico-based cement and building materials company founded in 1906, pursued an international business strategy that led to its growth and position as one of the top building materials companies in the world today. One company from Mexico, however, offers lessons about how to grow in a coherent, effective way: the cement producer CEMEX. Cemex has an enviable past, a struggling present and an uncertain future. strategy+business is published by certain member firms of the PwC network. CEMEX has taken every None of these was an obvious customer need waiting to be fulfilled. It developed a distinctive bagged cement business, for example, offered time-based delivery guarantees, and established Construrama, a network of construction materials outlets that is now the largest such network in the world. Cement is generally considered a commodity business, but Cemex has focused hard on differentiating itself. But CEMEX bucked this pattern: By the 2000s, it derived more of its sales from its foreign operations than (the few) other Mexican multinationals, and it had also expanded into other Latin American countries and into Europe. Equally, there are times when an acquired company has management or production techniques of its own that can be … Using this website means you are okay with this. (Fernando Gonzalez, the former executive vice president of finance and administration, is now the CEO.). This strategy of deliberate global expansion was closely overseen by Lorenzo Zambrano, the company’s CEO from 1985 until he passed away, at age 70, in May 2014. Get. The minimum efficient scale in the cement industry is approximated around 1 … A CEO guide to today’s value creation ecosystem, Top shelf picks: Best Business Books 2020, COVID-19 is reversing progress on the road to equality for women in work, A plan for saving democratic capitalism from itself, How India can live up to its full potential. One remarkable illustration of this work ethic is CEMEX’s noteworthy success with postmerger integration (PMI). You can transform your company by strengthening the links among all three types of activity. Strategy& asked me to comment on the roundtable because of my ongoing study of the company. Economic/Cost Drivers Nature of the industry – The fragmented nature of this industry explains the inherent appeal to globalize. It had succeeded in adding volume, decreasing costs, differentiating itself from competitors, improving industry attractiveness, normalizing risk, and generating knowledge. Those competitive and financial capabilities, along with a major program of asset sales and cost management, helped it withstand the immense pressures of the Great Recession. var today = new Date() Cement is generally considered a commodity business that is supposed to afford little scope for engaging with customers in a distinctive way, but CEMEX has focused hard on differentiating itself. CEMEX had accomplished all of this while fending off hostile takeover attempts (from one of its global competitors, Lafarge) and maintaining consistently high profitability levels. By building economies of scale so that it can lower the fixed cost per unit. Perhaps most crucial to its international expansion success was foreseeing the shifts in distribution technologies that would … To access this feature, please SIGN IN or REGISTER. The company imposes standardization and centralization at every stage of the process to wring maximum savings by reaping economies of scale and tightening controls. When Lorenzo Zambrano took over as CEO, it was a relatively diversified group of companies. As cement is a commodity there is little variation from market to market. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. It also explains the ways in which the leaders of CEMEX are planning to use its distinctive capabilities to build an increasingly distinctive company. It is a special distinction for suppliers with outstanding participation in supporting the CEMEX's objectives, in different areas of the company. energy Forcing open, but barriers remain ... Cemex Market similarity Scale economies Regulation Comparative Advantage Cemex way, trading “Bag” customers, Chaotic mega cities ©Donald Lessard 2008 For Wednesday This type of direct engagement at the top translated into an intensive, highly motivated, extremely competitive work ethic for the entire company. CEMEX Case Solution,CEMEX Case Analysis, CEMEX Case Study Solution, CEMEX Case Study Solution Alternative: 1- Cemex should diversify into new markets by entering into different sectors.E: g Cement Service Sector. At the same time, we capture economies of scale from our negotiations and manage our strategic supplier relationships to achieve the best cost/benefit from our sources of supply by certifying suppliers and contractors in key areas. CEMEX is the subject of a new roundtable story, “CEMEX’s Strategic Mix,” a discussion among several of its senior executives that was instigated by a Strategy& research project on coherent companies. As CEO, Lorenzo Zambrano used to check kiln statistics and sales data on a daily basis. Helping the industry to improve the construction processes supported by better building materials complying with sustainable credentials. var year = today.getYear() Over the years, CEMEX’s management has demonstrated continuous commitment to its identity as a high-value, knowledge-intensive solutions provider, even as it shifted to meet changing market demands and conditions. When a company moves from a national to a global role, success is not guaranteed. At CEMEX, we are always looking ahead and constantly innovating. It set up complete, uniform production-to-distribution chains in most of its major markets, reinforced by cross-border scale economies in such areas as trading, logistics, information technology, and innovation (in the broadest sense of the term). 1 CASE STUDY CEMEX (A):BUILDING A GLOBAL LATINA AN OVERVIEW OF THE CASE STUDY ABOUT CEMEX CEMEX … CEMEX is fostering innovation by changing the way employees work. Zambrano deliberately sought to have the entire enterprise create value. Michael Pennisi, the chief executive of QSuper, one of Australia’s largest pension funds, describes how to change direction at scale. For more about Strategy&, see www.strategyand.pwc.com. The main strategy of companies, especially CEMEX is the merger and acquisition of companies and plants as expansion mechanism and in turn as a means to strengthen its presence which generated economies of scale. He narrowed the horizontal scope of business (the lines of products and services) to focus on broadening geographic scope. At the same time, we capture economies of scale from our negotiations and manage our strategic supplier relationships to achieve the best cost/benefit from our sources of supply by certifying suppliers and contractors in key areas. Please don’t hesitate to contact us for more information or if you should need other specific services. When studying companies from a relative basis, it would make sense to compare companies that have a similar market capitalization because factors like market share, economies of scale, and business models would also be similar. The ���Supplier of the Year��� program aims to recognize suppliers for their contribution to our businesses, by delivering profitable and innovative solutions and services to CEMEX and our customers. Pankaj Ghemawat is a professor at New York University’s Stern School of Business, and director of its Center for the Globalization of Education and Management. And although that continues to be true, further analysis and observation have revealed a range of other levers that CEMEX has pulled, over the years, to achieve the returns that it does. Low efficiency industry: the minimum efficiency level is aprox. I have continued to track the company and its progress ever since. Outstanding performance in the introduction of new products or services to meet CEMEX's current and future business needs. Strong commitment to safety, with a zero4life mindset, investing in and implementing a formal, measurable safety program. CEMEX continues to generate a large portion of its profits from its operations in Mexico. There definitely is a “CEMEX Way.” The senior leaders of the company dedicate themselves to fostering and maintaining the CEMEX culture. Use a replicable set of standard policies, processes and tools for our supply planning, negotiation, purchasing and inventory management functions. The company’s prowess is closely tied to the capabilities that it has built over time: industry-leading operational effectiveness, sophisticated sharing of knowledge throughout the enterprise, long-term customer and community relationship development, construction-oriented innovation, and the development of sustainability initiatives. Comments on scope of the CC’s ... economies of carrying return loads. Cross border activities will add value to an industry like Cement on following grounds:- Economies of Scale: - Given the access to local supplies, local markets and increased MES as a result of global expansion CEMEX and its competitors have been able to … Please check our, Resilient and Efficient Building Solutions, Environmental Excellence for Responsible Growth, New Types of Clinker & Clinker Substitutes, Code of Conduct when doing business with us. Comprehend the importance of economies of scale and economies of scope in corporate strategy. New entrants are less likely to enter a dynamic industry where the established players such as CEMEX, S.A.B. Helping builder to be more efficient at their jobsites. Provided a competitive advantage by exceeding expectations on the product or services provided. The foundation of my case was that CEMEX generated a significant portion of its superior profitability from its position in Mexico. I first came to know CEMEX in 2000, when I wrote a Harvard Business School case study on it. It defines itself as a provider of solutions for builders and local governments, particularly in emerging economies and for those seeking environmental sustainability. Scope economies diversification, pooling, Transfer of best practice, e.g.