CEMEX: TRANSFORMING A BASIC

INDUSTRY COMPANY

Submitted To: Dr. Rameshwar Dubey

Submitted By: Nirja Desai(036)

EXECUTIVE SUMMARY

Founded in Mexico in 1906, CEMEX today has developed a highly successful branding
program that includes over 2000 independent retailers and expanded its product line to
construction materials beyond cement. It is one of theworlds largest ready mix concrete
company with its operations spread across the globe(Thailand, Europe, Philippines,
Egypt,etc)
As CEMEX moved to more distant markets, the various stages in the expansion process
opportunity identification, due diligence, and post-merger integrationbecame more
formalized and greater attempts were made to standardize them, reflecting past experiences.
The case throws open the discussion on how far CEMEXs competitive advantage can travel.
It raises questions over changes that have been implemented over the last few years and if
more efforts need to be take to enhance the position in the bulk cement commodity sector.

CASE ENVIRONMENT AND ANALYSIS

This case begins with a
competition within it.

brief

overview

of

the cement industry and international

It then describes the globalization of CEMEX and how it was

managed.
It talks about evolution of CEMEX from a small local player in 1906 to one of the leading
building solutions company. It talks about the companys strategy to grow through
acquisitions. CEMEX was extremely successful in integrating acquired companies by using
technological and managerial processes, developed and proved in Mexico, to cut down costs,
improve operational efficiency and improve customer service. The company focussed on
establishing the companys brand in commodity markets. Strategic and selective external
collaborations are the key to CEMEX success.
CEMEX initiatives: providing added value to customers
1) Construction Solutions
CEMEX developed a method to accelerate construction for low-income housing
developments. This initiative helped the companies in tackling labour shortage, cut
their costs by about 18percent and reduced constructions time by about half.
Marketing opportunities:
Casts which could expedite construction projects could be used by self

constructors
Collaborating directly with project owner and architect by helping out in
design and build process.

2) Construcard
CEMEX introduced a credit card, Construcard, in partnership with GE Capital.
Customers who wished to build or expand homes but could not get any financing
were the potential customers.
3) Patrimoniyo Hoy
This initiative was aimed at helping the poorest segment of the population. Under this
micro lending program loans were issued to groups, which would then be used to
purchase construction material
4) Construmex
Mexicans workers in US sent money back home to families, which were later used for
purchasing construction material for building homes. This involved large transaction
costs and provided no guarantee that money would be used for building homes. To tap

this segment CEMEX introduced Construmex. Under this scheme workers were
charges minimal $1 service charge and CEMEX provided construction material to
families along with technical advice. This scheme was a success and was available to
workers in California, Texas and Illinois.
Key strengths utilized by CEMEX in enhancing its market position and profitability
1)

Culture of technology and innovation

In response to the lowering of trade barriers in Mexico, CEMEX realized the
importance of being efficient in order to compete with large foreign companies. CEO
Zambranos commitment and hands-on interest in IT led to the companys being
canonized as a master of digital business design.
Some of the action plans as listed below:
Created a satellite system to link the transferred internal voice and data

2)

communications to its own private network

Implementing Executive Information System which enabled operational

transparency
Connectivity via internet to distribution and suppliers
Changes in ERP system to handle new product lines
Logistics Technology roadmap providing tools that addressed all operational a

Improving internal operations

Introduction of continuous improvement philosophy
Dramatic changes in the way the company addressed its market and supply
chain management.
Structural change to enable delivery of the products as per the customers wish.
An internet based Logistics University was established to ensure that the employees
were well acquainted with sophisticated tools. Courses dealt with policies, logistics
processes, management and administration, inventory, transportation, systems and
organization.
CEMEX paid attention to each and every segment of the society, be it end user or
retailers. The focus was on helping the customer with any of their problems which
would lead to increased sales volume.
Following are some of the steps employed:
Offering to manage inventory for builders.
Helping the retail stores with branding and the physical change to the building
Exception handling Administrative system
Intelligent Multi Agent Transportation Optimization, Vehicle Visibility System
and Delivery Visibility System

Drivers for change: Bulk Cement

With its current positioning the company need not focus on brand marketing. Developing
countries provide great opportunities in the form of formal infrastructure development such
as roads, schools, water treatment plants or hospitals. Introducing existing initiatives and
schemes should help in winning customer support.
Greater visibility to ready-mix (bulk) is another driver. Company can take advantage of this
opportunity by portraying itself as a company with the ability to deliver products as per
customers wish (location and time).
Strong logistics hold and standardised processes are an edge which the company has over
other competitors. Implementation of changed product line in the information system would
enable smoother functioning of the supply chain and adaptability to changing demands.

Conclusion
CEMEX needs to strike a balance between the product offerings that satisfy short term
market demand and those that are of more importance in the long run. Company needs to be
aligned with the sustainable challenges such as energy efficiency and emission reductions
faced by the customers.