Cemex Case Study Analysis

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Cemex Case Study Analysis

By | May 2010
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Global Competitive Strategies

EXTERNAL ANALYSIS

PESTEL ANALYSIS
Political factors:
-restriction and regulation of imports, exports and trade tariffs decide whether a company can compete globally: eg. GATT agreement in 1989, Mexico-open marketplace, enabled Cemex to expand globally.

- governments may decide to nationalize or privatize the cement production; eg. Venezuela nationalized cement production.
- political stability of a country will highly affect the performance of the industry

Economic factors
-any firm in the industry is highly dependent on the economic performance of country/countries it operates in ( changes in expandable income, performance of firms within the country are affected).

-emerging economies provide great opportunities for growth in the industry; expanding infrastructure.
- fluctuating exchange rates also impact performance
- rising costs of production and capital affect a firm’s competitiveness

Social factors
-Demographics: can affect things such as the size of the labour force, the demand for housing, etc. all of which have an impact on the cement industry.

Technological factors
-The technology used in the production of cement is constantly evolving; innovations can impact cost and quality of products. -Innovations in technology of information systems have an impact on costs of distribution and provide added value for the consumers.

Porter’s Five Forces (industry analysis)- The key determinant of a firm’s profitability is the attractiveness of the industry it operates in; 5 forces model assumes that industry attractiveness and the firm’s competitive position within the industry are influenced by 5 forces: 1.Entrance of new competitors:

Barriers to entry are relatively high:
a.High capital costs (capital requirements) +
b.Low efficiency industry: the minimum efficiency level is aprox. 1 mil. tons a year + c.High transportation costs and logistics +
- the benefits of generating economies of...

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