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Cemex
Cemex
2005
15.5 3.6 33% 26.5 19.0 97 52,741 50
CAGR
22% 21% 19% 30% 12% 11%
80 70
F r e q u e n c y
60 50 40 30 20 10 0
19601965 19651970 19701975 19751980 19801985 19851990 19901995 19952000
Todays Class
What is the global potential for these two industries? What accounts for Cemex and Hiaer s success to date? What explains the sequence in which Cemex and Haier entered foreign markets? How far can Cemex & Haier s competitive advantage travel?
1. What are the global potential of the cement and white goods industries?
Cost Drivers
Government Drivers
Existence of trade barriers Similarity of technical standards Similarity of regulations Differences in taxes
Globalization of competitors Industry concentration Differences in industry concentration across countries Feasibility of protecting intangibles
Competitive Drivers
Adapted from: G. S. Yip, Global Strategy in a World of Nations? Sloan Management Review 31(1) (Fall 1989), pp. 29-41.
Entertainment Carbonated Soft Drinks Light Bulbs Computer Software Computer Hardware
Aerospace/ Defense
Automobiles Semiconductors Cement
Source: Ghemawat and Ghadar, 2006, p. 600
55%
53% 40% 19%
Matching competitors?
Empire-building?
EBITDA margin
EBITDA/ ton sold
23.4%
23.9
23.2%
38.0
37.1%
45.8
18.7%
26.0
24.5%
22.2
19.0%
n.a.
Philippines
Indonesia Egypt
But Indonesia and Egypt were more distant And looking at countries that are more distant still
Mexico US Spain UK Rest of Europe S.Am/C.Am/Carib Egypt Rest of Af & ME Philippines Rest of Asia
-3.6%
78.2
77.7
Takeaways
Designing a global strategy is not a mechanical exercise its a creative response to the global potential of industry. Innovative global strategies, based on novel ownership and location advantages, can sometimes work in, and eventually transform, industries with apparently low global potential.
Distance matters in a variety of ways (CAGE) in the design and execution of global strategy.
Always analyze whether and why particular global strategies generate sustainable competitive advantage the fact that companies pursue such strategies does not necessarily mean they do so.