This case study is about CEMEX, a Mexican firm that emerged from being a family owned business to a multinational giant, becoming world’s third largest cement company. The case focuses on the strategy adapted by CEMEX, its globalization and how it was attained. The case also discusses about the cement industry in general and international competition within the industry.
Issues discussed in the below analysis are the following:
Motivation that drove CEMEX abroad.
Means by which it expanded across borders, and the mindsets of CEMEX executives. The Business environment in which CEMEX operated.
CEMEX’s approaches to generate competitive advantages to external forces.
CEMEX is a Mexican firm which traces its origin back to 1906 when the Cementos Hidalgo cement plan was opened with a capacity less than 5,000 tons per year in Northern Mexico. In 1931, it was merged with Cementos Portland Monterrey to form Cementos Mexicanos, later renamed to CEMEX.
Becoming a powerful global player is an imperative, not a choice, for the world's largest companies - and those that aspire to join their ranks. Aspiring to be one of the leaders in the industry, CEMEX began its globalization journey by acquiring two cement companies in Spain (culturally close to Mexico) in 1992. Through its specialized teams, it transferred its distinctive management skills to these companies, subsequently improving their operating margins from 7% in 1992 to 25% in second half of 1990s. Riding on this success and with the drive to continue the winning streak, CEMEX began a series of rapid acquisitions in Spanish-speaking countries in Latin America (Venezuela, Columbia, Chile, Panama, the Dominican Republic and Costa Rica) and also in Asia (the Philippines, Indonesia). By the year 2000, it was the world's third-largest cement company by market capitalization, and its returns left the competitors in the construction industry behind. All this...