Cemex Case Study
Cemex Foreign Direct Investment
Cemex is one of the fastest growing cement manufacturers in the world. Starting out more than a decade ago Cemex, “has transformed itself from a primarily Mexican operation into the third-largest cement company in the world” (Hill, 2008). The success of Cemex has been attributed to its skills in customer service, marketing, information technology, and production management. Its idea to originally enter into the global market, was to acquire inefficient cement manufactures and turn them around by implementing its proven strategies. This global introduction has worked well for the most part, “not all of Cemex’s expansions have worked out as planned” (Hill, 2008). Cemex has run into local government hinderence and was forced out of the Indonesian market. These issues surrounding Cemex’s Foreign Direct Investment (FDI) has brought about some root problems. “Three costs of FDI concern host countries. They aries from possible adverse efects on competition within the host nation, adverse effects on the balance of payments, and the perceived loss of national sovereignty and autonomy” (Hill, 2008).
While Cemex has a strong preference for acquisitions over starting fresh, this poses several key root problems for both Cemex and the host nations. Cemex had to face some challenging questions; What are the primary factors in why Cemex has chosen Direct Foreign Investments versus some alternatives; What is the impact of their choice in FDI on the host-country, as well as home-country.
What are the primary factors in why Cemex has chosen Foreign Direct Investments versus some alternatives?
There are several options to consider when a company wants to move into the international global market. The biggest questions firms usually ask is, “Why do firms go to all of the trouble of establishing
References: Graham, J. P. (2005, June 18). Understanding Foreign Direct Investment (FDI). Retrieved July 24, 2009, from Going Global: http://www.going-global.com/articles/understanding_foreign_direct_investment.htm Hill, C. (2008). Global Business Today. Boston: McGraw-Hill Irwin.