How did CEMEX elect to compete in a Blue Ocean?
How might the changes that they undertook be viewed from the perspective of core competencies?
CEO Zambrano realized that due to the consolidation and commoditization of the construction products industry, traditional concrete manufacturers would struggle to survive if they did not expand into uncharted markets. Until the late 1990s, CEMEX had focused almost exclusively on cement. However, customers found little use for cement unless paired with other construction products, and therefore Zambrano and CEMEX’s president in Mexico, Francisco Garza, decided to produce and/or buy and re-distribute additional complementary construction products like rebar and aggregate. The company transitioned from one with an internal focus on mainly the production process to a customer-centric business emphasizing logistical superiority and consumer finance. The resulting culture was dubbed the “continuous improvement philosophy” due to management’s innovative approach to recreating CEMEX’s operations. It enabled the company to adapt more quickly to rapidly changing consumer demand, stay close to the customer and open channels of communication to understand their needs and efficiently expand existing core competencies into new market space.
In venturing into new, uncontested markets, the company removed itself from standard “red ocean” competition and adopted a “blue ocean strategy.” This competitiveness analogy was propounded by W. Chan Kim and Renee Mauborgne in an eponymous 2005 book after having been refined by the authors in a series of articles dating to 1997. They theorize that as globalization and increasing consumer empowerment transform the marketplace, companies will flounder if traditional structuralist methods of competition are utilized. Instead, they must become innovative and customer-focused and audaciously create new markets in which their competitors will have difficulty contending. For a blue...
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