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Laying Grounds For Internationalization

Cemex began expanding internationally in the late 1980s through exports and acquiring local cement companies in Mexico, becoming the largest cement producer in Mexico. It then pursued rapid global expansion in the 1990s through strategic acquisitions, entering the European and US markets as well as Asia, Central America, and Africa. This period also saw Cemex consolidate its business culture and processes, applying its Post-Merger Integration process to newly acquired markets to drive efficiencies and establish a learning culture.

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56 views

Laying Grounds For Internationalization

Cemex began expanding internationally in the late 1980s through exports and acquiring local cement companies in Mexico, becoming the largest cement producer in Mexico. It then pursued rapid global expansion in the 1990s through strategic acquisitions, entering the European and US markets as well as Asia, Central America, and Africa. This period also saw Cemex consolidate its business culture and processes, applying its Post-Merger Integration process to newly acquired markets to drive efficiencies and establish a learning culture.

Uploaded by

kristine contreras
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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B.

LAYING THE GROUND FOR INTERNATIONALIZATION THRU EXPORTS,


MERGERS AND ACQUISITIONS
CEMEX began exploring opportunities in foreign markets through exports, which
required a fairly aggressive program of building or buying terminal facilities in
other markets.
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
As the result of the tragic death in 1996 of CEMEX’s CFO Gustavo Caballero, the CEMEX Way was
consolidated. Hector Medina, who at the time was the general manager of Mexican operations, took
over the CFO role, and Francisco Garza, who had been general manager of Venezuela, was named to
head Mexican operations. Garza decided to apply the PMI process to Mexico as if it had just been
acquired. Savings of $85 million were identified. More importantly, it clearly established the principle of
learning and continuous improvement through the punctuated PMI process and the continuous CEMEX
Way. CEMEX also developed a branded cement strategy in Mexico that addressed the specific needs of
customers for bag cement.

Finally, with a growing number of plants and markets on the Caribbean rim, CEMEX began to actively
exploit the capacity for cement trading to smooth/pool demand, economizing on capacity and raising
average utilization rates in an industry notorious for large swings in output in line with macroeconomic
fluctuations

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.

Toward the end of the 1990s, CEMEX began to consider diversification into other activities. It made a
series of changes in the way it explored potential acquisitions, including asking the Boston Consulting
Group, its long-time strategic advisor, to assign a new set of partners. It redefined large markets, such as
the United States, into regions. This set the foundation for the acquisition of Texas-based Southdown,
making CEMEX North America’s largest cement producer. Another change was to shift the way
performance was measured, from an emphasis on margins, which had made cement appear much more
attractive than concrete or aggregates, to return on investment, which in many cases reversed the
apparent attractiveness of different businesses. Other targets were also identified, most importantly
RMC, a UK-based, ready-mix concrete global leader whose acquisition was finalized on March 1, 2005.
This acquisition was CEMEX’s first acquisition of a diversified multinational and gave it a much wider
geographic presence in developed and developing countries alike. Financially, RMC was suffering.
Culturally, RMC was the polar opposite of CEMEX since it was a highly decentralized company while
CEMEX brought the CEMEX Way and a single operating culture that connected more readily at the plant
and operation level than RMC.

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