cemex rewarding the egyptian retailers
CEMEX: Rewarding the Egyptian Retailers
-
R.Sathyanarayanan
S Santhosh Kumar
Shriram V
Mohan Prasanth Subramaniam
Goutham Raju
To extend its global presence, CEMEX entered the Egypt market through acquisition of Assiut Cement Company
CEMEX – Company background
• CEMEX was founded in 1906 under the name Cementos Hidalgo
• Purchased Mexican Cement producers and expanded into petrochemicals and tourism
• Initially it was a domestic firm with 90% of revenues from Mexico
• In 1992, it began international expansion and by 2003 more than
65% of its sales came from outside Mexico
CEMEX’s global presence
Acquisition of Assiut Cement
• Following this globalization strategy, in 1999, CEMEX acquired 77% majority stake in Assiut Cement company
Investment in Assiut factory
•
Product quality improved
• The company suffered from lack of systematic maintenance, inefficiency •
Plant capacity improved from 3.4 to 5 MT
•
Kiln efficiency rose from 75% to 90%
• New hirings, continuous training was done to incorporate ‘CEMEX way’ of doing business
•
Headcount shrank from 3,774 to 1,161
•
Dust emissions fell more than 75%
The cement market in Egypt was highly commoditized and suffered from price wars
Cement Market – Present scenario
Consumption Vs Capacity (MMT)
40
40
30
30
20
20
10
10
0
0
1999
2000
2001
Capacity
2002
2003
• Overcapacity and country’s economic deceleration led to downward pressure on prices
• Global recession and failure of government urban projects led to demand contraction
2004
Consumption
Future of the cement market
• Projected economy growth was not expected to close the excess capacity gap
• Exports were facilitated by favorable exchange rate situation
To become the market leader, CEMEX decided to ‘decommoditize’ the market through a two pronged approach
CEMEX Strategy in Egypt
Commercial Strategy
The decommoditization
-
R.Sathyanarayanan
S Santhosh Kumar
Shriram V
Mohan Prasanth Subramaniam
Goutham Raju
To extend its global presence, CEMEX entered the Egypt market through acquisition of Assiut Cement Company
CEMEX – Company background
• CEMEX was founded in 1906 under the name Cementos Hidalgo
• Purchased Mexican Cement producers and expanded into petrochemicals and tourism
• Initially it was a domestic firm with 90% of revenues from Mexico
• In 1992, it began international expansion and by 2003 more than
65% of its sales came from outside Mexico
CEMEX’s global presence
Acquisition of Assiut Cement
• Following this globalization strategy, in 1999, CEMEX acquired 77% majority stake in Assiut Cement company
Investment in Assiut factory
•
Product quality improved
• The company suffered from lack of systematic maintenance, inefficiency •
Plant capacity improved from 3.4 to 5 MT
•
Kiln efficiency rose from 75% to 90%
• New hirings, continuous training was done to incorporate ‘CEMEX way’ of doing business
•
Headcount shrank from 3,774 to 1,161
•
Dust emissions fell more than 75%
The cement market in Egypt was highly commoditized and suffered from price wars
Cement Market – Present scenario
Consumption Vs Capacity (MMT)
40
40
30
30
20
20
10
10
0
0
1999
2000
2001
Capacity
2002
2003
• Overcapacity and country’s economic deceleration led to downward pressure on prices
• Global recession and failure of government urban projects led to demand contraction
2004
Consumption
Future of the cement market
• Projected economy growth was not expected to close the excess capacity gap
• Exports were facilitated by favorable exchange rate situation
To become the market leader, CEMEX decided to ‘decommoditize’ the market through a two pronged approach
CEMEX Strategy in Egypt
Commercial Strategy
The decommoditization