Cemex Case Study

Topics: Discounted cash flow, Strategic management, Free cash flow Pages: 2 (364 words) Published: May 12, 2012
Pontificia Universidad Católica de Chile
Escuela de Adminstración
Leadership and Business Strategy I
EAA 305 a – Section 2
Profesor: Matko Koljatic
Written assignment: CEMEX
CEMEX business model will be defined with WHO-WHAT-HOW. WHO: CEMEX concentrates on customers in developing countries and emerging markets. WHAT: They sell cement directly in the country or through imports. HOW: CEMEX follows a well structured and planned geographical diversification in emerging markets with control, low hierarchy and the experience of lesson learnt from other penetrations of a market. With their business model CEMEX pursues a low cost strategy. The following data will show a competitive advantage for CEMEX: Table1 Calculated selected indexes on the basis of Exhibit 4 | CEMEX| HOLDERBANK| LAFARGE|

(A)EBITDA / ton cement| 46| 26| 38|
(B)CAPEX / ton cement| 7| 11| 18|
(C)Free Cash Flow / ton cement| 22| 8| 8|
(D)TEV adjusted / ton cement| 172| 160| 130|
(A) shows a cost advantage to CEMEX due to a good global positioning satellites systems which decreases the costs for fuel, maintenance and payroll. Furthermore, CEMEX has a competitive advantage through its low hierarchy and their high standardized reports. This can be seen as a differentiation strategy as well, caused by better service for the customers and the increasing willingness to pay of the customer. (B) CEMEX did not invest high capital on their existing plants. They focused on a quick increasing efficiency in the plants. (C) This ensures them a high Free Cash Flow to react flexible on macro economical developments in emerging markets. (D) The TEV includes the total enterprise value and is coupled with the stock price. Therefore, it includes all existing information on the market. There are different resources and capabilities that allow CEMEX to build this competitive advantage. CEMEX developed a system to identify the opportunity of entering a market/country with...
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