CEMEX case

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CEMEX

What benefits have CEMEX and the other global competitors in cement derived from globalization? More broadly, how can cross-border activities add value in an industry as apparently localized as cement?

There have been several benefits for CEMEX and its global competitors derived from globalization: (strategic group, part of the big six competitiors)

International trade offered opportunities to arbitrage price differentials. Import from low cost countries and sell to 3rd parties to profit on arbitrage.
FDI: After been exposed to the countervailing duty, CEMEX acquired a 1 million ton cement plant in Texas to reinforce its ready mix of cement and distribution facilities in US. Firewall protection from US import/export taxes. Imported from chinese companies led to doubling of profits of its activities in the US. A localized facility avoids export tariffs on cement.
Reduction on transportation cost as well. Less transport cost means higher margins, and a more competitive price.
Long run demand for cement was directly related to GDP. As CEMEX went global there should be a certain diversification of fluctuation risk concerning its revenue, and thus its profit. Operation in several countries could mean that its revenues can be balanced out as countries perform differently at a given time.
Timely aspect: Localized plants mean shorter transport to customer
Knowledge transfer
Exploit different tax/legal differences. Eg. Spain.
Point basis pricing. Price collaboration? Cartel?

Create Economic value→Volume or →margin→competitive advantage→cost/differentiation ↘Industry attractiveness
Through acquisitions you get higher volume without compromising capacity.

After the countervailing tax CEMEX focus on FDI:

Lower cost due to shorter transport distance. higher margins
Higher visibility of the company when operating internationally
GDP/income perspective
Exploit economic downturns in

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