I.

COMPANY PROFILE

 Cemex is a multinational company specialized in the cement industry. It produces

and distributes cement, ready-mix concrete, and aggregates related building
materials all over the world.
KEY FIGURES

 Annual sales of US$13.1 billion and EBITDA of US$2.4 billion in 2019

 One of the leaders in each of our core businesses: cement, ready-mix concrete, and
aggregates
 Strategically positioned across the Americas, the Caribbean, Europe, Africa, the
Middle East and Asia
 Trade relationships in 102 nations and one of the world’s top traders of cement
and clinker
 More than 40,000 employees worldwide
Data as of December 31, 2019

 65 plants cement plants and cement mills

 93 million tons, annual cement production capacity
 1,427 ready-mix concrete facilities
 50 million cubic meters, ready-mix concrete annual production level
 262 aggregates quarries
 135 million tons, aggregates annual production
 279 land distribution centers
 56 marine terminals

MILESTONES

 Cemex was founded in 1906 with the opening of the Cementos Hidalgo plant in
Northern Mexico.
 In between 1930 – 1970, Cementos Hidalgo and Cementos Portland Monterrey
merge to form Cementos Mexicanos S.A., acquired Cementos Maya’s Plant in
Merida and continues to satisfy demand in southern Mexico through the
 Cemento Portland Maya Brand. Also, its production capacity has increased from
250 tons to 1,250 tons/day
 Cemex was listed on the Mexican Stock Exchange and became Mexico’s market
leader with the acquisition of Cementos Guadalajara in 1976.
 In 1985, Cemex decided to divest non-core assets and started to export 574,000
tons of cement and clinker a year.
 Through co-investments with North American cement companies, Cemex
consolidated its export programs. It was able to acquire Cementos Anahuacand
Cementos Tolteca, Mexico’s second-largest cement producer. Cemex also started
the deployment of a company-wide satellite communications system,
CEMEXNet. All these happened between 1986 – 1989.
 In 1992, with the acquisition of Valenciana and Sanson, Spain’s two largest cement
companies, Cemex initiates its international expansion into the European Market.
In the same year, Cemex establishes Neoris to serve as its in-house supplier of
information-technology services.
 Cemex then acquired more international cement companies, namely, Vencemos in
Venezuela, Cemento Bayano in Panama, Balcones in the USA, and Cementos
Nacionales in Dominican Republic, which enabled the company to begin its
operations in South America, Central America and in the Caribbean.
 In 1996, Cemex became the world’s third largest cement company with the
acquisition of Columbia’s Cementos Diamante and Samper.
 In the late 90’s, Cemex started its operations in Asia, particularly in the Philippines
by acquiring Rizal Cement and Apo Cement. Also, it began operating in Africa
and Central America.

II. STRATEGIES

 MAKING CEMENT ITS CORE BUSINESS TO SURVIVE MARKET

COMPETITION
When Mexico signed the GATT (General Agreement on Trade and Tariffs) in
1985, the process began opening up its economy, forcing companies like Cemex
to compete in global markets. The opening of Mexico’s economy enabled foreign
companies to enter the Mexican cement market. Cemex immediately
implemented a deliberate strategy to make cement its core business. Cemex
adapted to the new situation by divesting from all non-core businesses (tourism,
petroleum and mining projects), reinvesting the proceeds into cement assets and
in a complete overhaul of its operations.

GATT - The Mexican Government made the decision in light of a weakening of

its foreign economic relations and a trade deficit that has contributed to the
country's indebtedness
 EXPANSION THRU MERGERS AND ACQUISITIONS OF COMPANIES IN THE
CEMENT INDUSTRY
Cemex started its growth strategy by acquiring local cement companies. It
acquired the two major cement manufacturers in Mexico (Cementos Anahuac in
1987 and Cementos Tolteca in 1989), thus becoming the main national player
with 70% of Mexico’s cement production capacity and the tenth largest cement
company in the world.

Having enough assets and funds, Cemex took the risk of entering the Foreign
markets. They went into a rapid global expansion through acquisitions. First,
they entered the European Market then USA, Asia, Central America and Africa.
Cemex’s acquisitions were aimed at acquiring physical production assets and
access to markets outside Mexico.

 SELECTING THE RIGHT TECHNOLOGY STRATEGY

Cemex innovated state of the art technology to outperform competitors. Cemex
leaders challenged the operations groups to develop more efficient ways to
produce concrete and bought technology through acquisitions. A
telecommunications network between 11 plants was established as early as 1988.
The IT consulting group, Neoris, was spun off which utilized online surveys to
manage customer relations.

Cemex utilized their IT department to connect the plants and allow senior
management the ability to monitor each facility in real time. Fiber optics link the
system, and satellite communications are used to connect remote outposts.
Whether at the Monterrey headquarters or on the road, the chief executive officer
can tap into his computer to check kiln temperatures in Bali or cement truck
deliveries in Cairo.

By using the right technology, Cemex satisfied their customers by promising lead
times allowing projects to be completed as quickly as possible anywhere in the
world.

Because he believes many companies use technology ineffectively, Zambrano

spun off Cemex’s technology arm to sell its services. Organized under the
CxNetworks Miami subsidiary, which is devoted to creating growth by building
innovative businesses around Cemex’s strengths, Zambrano formed a consulting
service called Neoris. With more than half of its customers coming from outside
Cemex, the operation has already become hugely profitable. It has been grouped
 with another start-up—Arkio, a distributor of building material products to
construction companies in developing nations. “We’re selling logistics,” says the
president of CxNetworks. “We can assure our customers that they can have the
materials from our warehouse to their construction site within 48 hours.”

 ADVANTAGE ON INTERNALIZATION

 CREATION OF THE CEMEX WAY PROGRAM IN 2000 – A CORPORATE

SOCIAL RESPONSIBILITY
The creation of the Cemex Way program in 2000 was the answer to the need to
accelerate integration through highly standardized processes and information
exchange.

Patrimonio Hoy is the Cemex program (and an internationally recognized

model) for developing housing solutions for the base of the pyramid. It provides:
a. Low-income families living in urban and semi-urban areas with access to
building materials such as cement, concrete blocks, and steel;
b. Products at average market prices as well as micro financing, technical
advice, and logistical support to assist participants in building their own
homes.

The program accomplishes this through a collaborative network of local Cemex

distributors: community-based promoters, mainly women trained and
empowered through the program who build trust and secure participation of
community members, and the families themselves.

Its suitability and efficacy rely on the fact of sales to the informal, low-income,
self-construction market as these customers are no longer dependent on formal
consumer credit and can still continue building. In other words, there was a
stable market that was not being served, due to the lack of comprehension of the
needs of low-income families. Serving this new market segment requires a
combination of factors of small-unit packaging, low-unit margins and large
volume of sales. By the end of 2007, a total of 185,000 Mexican families have
benefited through the Patrimonio Hoy program, building the equivalent of
95,000 ten-square meter rooms. To this end, credits for 83 million USD have been
granted, with an on- time payment rate of more than 99 percent. During 2012,
42,989 families benefited from Patrimonio Hoy, bringing the accumulated total to
nearly 400,000 families in 5 countries in Latin America.
According to Cemex, this program results in three times faster building at one
third of average cost, in higher quality buildings, in local job creation (e.g.
masons, promotors) and in generation of new home-based small enterprises. This
impressive out-of-the-box innovation has enlarged its market, built customer
loyalty and strengthened its ties with municipalities. It enlarged Cemex’s
reputation of a socially responsible company. It is considered that the Patrimonio
Hoy program is suitable as well as effective for Cemex’s strategy. This program
has received a lot of international recognition, a.o. the United Nations Habitat
Business Award (2009).

SYNTHESIS AND CONCLUSION

It can be said that cement industry is highly global, all the large players in the
industry have presence in many countries. The demand of cement is very high in
almost all parts of the world because of the fact that it is one of the main material
used in the manufacturing industry except for the developed countries which
also increased the extent of globalization of the cement industry. The profitability
of the industry is also very high along with the demand which makes this
industry attractive for many large companies which are currently not operating
in this industry. On the other hand the high profitability and demand also forces
companies which are currently operating in this sector to increase and expand
their operations.
Cemex strategy to become one of the leading players in the world of cement can
be divided into four major stages:
1. Laying the Groundwork for Internationalization, The first step involves
divestitures from non-related businesses and the disposal of non-core assets.
This gave the company the ability to focus on their specialization. Cemex also
began “exploring” opportunities in foreign markets through exports, which
required a fairly aggressive program of building or buying terminal facilities
in other markets.
2. Stepping Out, Cemex’s move into Spain was followed soon after with
acquisitions in Venezuela, Panama and the Dominican Republic. The
management acquired various companies operating in the same sector in
order to sustain the competitive advantage for long-term. Access to capital
markets and strategic response capacity. Formalization of PMI process;
The management exploited the international cement market and acquire
many companies in the cement sector in various countries. This strategy also
enabled the CEMEX to successfully face the economic recession in the
Mexican market, CEMEX was one of those companies in the Mexico which
were profitable during that financial crises.

The local and international cement industry both are affected by the intense
competition, although the number of players in both the market are high but
 the rivalry among the competitors can be regarded as low. The biggest player
in the market sets the prices of cement and all the remaining players adjust
the prices set by the biggest company to make product profitable.
Furthermore, the demand of the cement appears to be low in the developed
countries while the demand is forecasted to grow at a good rate in the
developing countries. The demand of cement in the international market is
also affected due to the increased production levels of domestic producers.
The supply of the raw materials is also affected due to the policies of the
government which also results in lower demand for the cements from the
international suppliers.
3. Growing Up, Accelerating Internationalization and Consolidating the Cemex
Way (see below) as a learning culture.
4. Stepping Up, Market redefinition, countries as regions . Reframing the way
that performance was measured to identify new targets.

Their embrace of technology is central to Cemex’s efficiency.