case of CEMEX
1. What benefits have CEMEX and the other global competitors in cement derived from globalization?
Globalization has given many benefits to CEMEX and its competitors. First of all, it reduced the tariffs of product exportation by acquiring local plants and facilities instead. By doing so, these cement companies could control the localized quarries, which give them the proximity to the raw material needed for cement production. No need to ship the goods across the border, therefore no tariffs on the delivery.
On the other hand, as they acquired the local plants and built distribution terminals, these companies have gained a competitive advantage of transportation cost. If they choose to export, the cost of transportation may cost them a fortune, as the cement need to be shipped in special means. Thus, they will lose their competitiveness in price otherwise the margin.
Last but not least, due to the process of globalization, CEMEX and its competitors could well spread their risks. If one market is not performing well, they could depend on the other ones. So, assuming there isn’t a world-wide recession, the revenues of theirs will be more stable because of diversification.
2. How specifically has CEMEX managed to outperform its leading global competitors (e.g., Holderbank) in the cement industry?
Several elements together have made the CEMEX the largest international trader in the cement industry. The most important one, I think, is that CEMEX has always been distinguishing itself by the intent of its focus on emerging markets. The weighted average growth rate in cement demand in the countries it was doing business with was nearly 4%, whereas a growth rate of 3% for Holderbank and Lafarge, 2% for the other three international majors.
And because of the peso crisis in Mexico, CEMEX has discovered a distinct customer segment. It has decided to open up the business with informal construction which demanded bagged cement through retail channels. The demand was
Globalization has given many benefits to CEMEX and its competitors. First of all, it reduced the tariffs of product exportation by acquiring local plants and facilities instead. By doing so, these cement companies could control the localized quarries, which give them the proximity to the raw material needed for cement production. No need to ship the goods across the border, therefore no tariffs on the delivery.
On the other hand, as they acquired the local plants and built distribution terminals, these companies have gained a competitive advantage of transportation cost. If they choose to export, the cost of transportation may cost them a fortune, as the cement need to be shipped in special means. Thus, they will lose their competitiveness in price otherwise the margin.
Last but not least, due to the process of globalization, CEMEX and its competitors could well spread their risks. If one market is not performing well, they could depend on the other ones. So, assuming there isn’t a world-wide recession, the revenues of theirs will be more stable because of diversification.
2. How specifically has CEMEX managed to outperform its leading global competitors (e.g., Holderbank) in the cement industry?
Several elements together have made the CEMEX the largest international trader in the cement industry. The most important one, I think, is that CEMEX has always been distinguishing itself by the intent of its focus on emerging markets. The weighted average growth rate in cement demand in the countries it was doing business with was nearly 4%, whereas a growth rate of 3% for Holderbank and Lafarge, 2% for the other three international majors.
And because of the peso crisis in Mexico, CEMEX has discovered a distinct customer segment. It has decided to open up the business with informal construction which demanded bagged cement through retail channels. The demand was