Professional Documents
Culture Documents
The Cemex Way
The Cemex Way
Makhanu W. Gellus
Information Technology
Dr. Kiarie
Introduction
corporations in the world. The word became a common name in the 1980s when corporations
from developed countries made efforts to develop new markets in developing nations. However,
CEMEX is an exception as the company rose from a developing nation to become one of the
leading companies dealing in building materials. The company has had numerous successful
acquisitions that have seen it expand globally despite not have the cost advances enjoyed by
companies from developed countries. Like the United States. It is true that success in the
international market is dependent on a company’s capability to take care of the varied needs of
diverse groups of consumers from different countries. Product and process innovation is a
prerequisite in globalization as it plays a critical role in the profits from the whole process. The
first part of this paper focuses on a brief overview of CEMEX since its incorporation in 1931 and
objectives of the paper. The second part provides a more in-depth analysis of CEMEX
concerning its vision, mission, organizational objectives and strategic capabilities. The last part is
the conclusion that will summarize the all the important points of the whole paper.
headquarters in San Pedro, Mexico. CEMEX was founded in 1906 as Cementos Hidalgo and
merged with Cementos Portland in 1931 to be called Cementos Mexicanos which is now
CEMEX. The company is currently present in more than 50 countries around the world with 66
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cement plants in these countries. It deals with manufacture and distribution of cement,
aggregates and ready-mix concrete in the over fifty countries globally. It is currently the second
largest company dealing in building materials in the world. Approximately a third of the
company’s sales are made in Mexico, a quarter from its plants in the United States, around 15
percent from Spain and the rest from its other plants around the world. The company went public
on the Mexican stock exchange in 1976 after which it became the largest cement company in
Mexico after the acquisition of Cementos Guadalajara’s three plants (Vargas et al. 2015). Over
the years the company6 has continued to pursue its internationalization policies which have seen
it become the second largest cement company in the world today. Most of the acquisitions by the
In the current world, globalization happens to be one of the most critical challenges a
company can face even for large corporations from developed countries such as Europe, North
America, and Europe. It is always difficult for companies to identify the best and most efficient
internationalization strategies and even in deciding which countries to venture. The former CEO
of CEMEX says, there is a need for more advanced management techniques that when combined
with adequate capital and efforts to have common processes and culture make the whole exercise
successful. Despite CEMEX being based in a developing country that is Mexico, the company
has had very successful acquisitions one after the other over the years that have enabled it to
venture into the international market. Despite lacking cost advantages and the low value to
weight nature of cement, the company has overcome all the challenges in the global market to
emerge as one of the leading companies in the world today. This is proof that the company has
the best strategies when it comes to internationalization. The has been able to make its
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acquisitions successful since the 1990s due to its ability to introduce some of the best practices
that were once standardized in the company combined with an effort to pick and implement the
best practices from the acquired companies. This strategy is internally known as the CEMEX
structure across all, the countries it operates while at the same time ranting countries some level
of operational flexibility that enables them to respond to local environments more easily. This
paper analyzes the main competences of CEMEX relating to organizational vision, mission,
The company seeks to contribute greatly to regional development through the provision
of building solutions that generate welfare for people. Through its global expansion policy, the
company aims at the development of regions through its quality materials. Through its plant
production and technical centers, it continues to provide its customers with creative and reliable
construction materials.
CEMEX strives to serve global building needs of all its customers and build value for its
stakeholders by becoming the world’s most efficient and profitable cement company. The
company has in the past and continues to do business in markets that can only add value to
shareholders, customers, and its employees. All of these markets offer long-term profitability for
the company. The company has a global presence that apart from getting closer to customers also
Organizational objectives
The company’s objectives are divided into business and sustainability objectives. In its
business objectives, the company strives to achieve its mission that is their strategy to create
value through building and managing an international portfolio of aggregates, cement, ready-mix
concrete and other related businesses. For the company to achieve this, it attaches a lot of value
to its employees, helps customers in their success process and ensures it ventures its markets that
offer long-term profitability. Its sustainability objectives are focused on building a better future
for its stakeholders and ensure sustainability is fully embedded in its business through its four
pillars, that is, why the company exist, where it plays, how it succeeds, who benefits and how it
Strategic Capabilities
CEMEX’s strategic capabilities have long been dependent on its ability to perform at a
higher level and in a more differentiated way. It focuses on not only identifying but also
developing new capabilities that made possible to respond to the changing demands of customers
while at the same time being able to beat most of the competitive threats. Before making any
acquisitions, the company enjoyed a number of competencies among which were the strong
transparency. It later also mastered the art of acquisition as well as integration that have seen it
grow to be an international leader. One of the major steps towards internationalization was the
Mexico. This was a significant step that helped integrate all the operations of the company in
Mexico as the communication was more coordinated and the managers could easily input
manufacturing data related, to inventory, production, administration, sales and delivery (Hoyt &
Lee 2005, p. 351). This also made it possible for the then CEO Zambrano to inspect the
operations of the company in Mexico virtually. After the company laying groundwork for
internationalization, its next move was stepping out. It acquired Mexican’s Tolteca that enabled it
to be the second largest cement producer in Mexico while one of the top biggest producers of
The company made its first international expansion move in 1992 after acquiring a
majority stake in two cement production companies, Valenciana and Sanson in Spain. This was
to cater for the lost market share at home by Holcin. It also considered the fact that Spain was an
investment grade nation since it had joined the European Monetary Union. Its companies in
Spain flourished at a faster rate as it employed it Post Merger Integration (PMI) and it was able
to learn from Spain which enhanced its capabilities directly. The company after this acquisition
accelerated its internationalization process. For instance, in the mid-1990s it made acquisitions in
Colombia, Venezuela and Caribbean, and Indonesia and the Philippines in the late 1990s. The
company was also able to make changes to its PMI process since it realized it I had to make
some effort to learn some of the best practices from its acquired companies in other countries and
only implement them when appropriate. As a result, it developed the CEMEX internal
benchmarking system that was driven by five forces: efficient management of knowledge base;
This made the PMI process different acquired companies could only retain 20 percent of their
practices while the 80 percent was cataloged and stored in a central database by CEMEX teams.
The company formed teams every time it made an acquisition. These were experts in
production, finance, logistics and other major functions and were responsible teaching managers
of newly acquired firms in other countries (Whitaker & Catalano 2001). They also were
responsible for identifying the best practices to retain in those firms and the ones to get rid of.
CEMEX stepped up its game through the redefinition of its large markets into regions according
to their growth rates. The company became North America’s largest producer of cement after the
acquisition of the Texas-based Southdown. After a shift of performance measurement from the
emphasis on margins to return on investment of its products the company identified a new
opportunity as ready-mix concrete was then more attractive than cement. It led the company to
make its first diversified acquisition after acquiring a UK-based ready-mix concrete international
leader, RMC. The most phenomenal acquisitions of CEMEX happened in 2007 when it acquired
Rinker saw the company become one of the world’s largest cement suppliers.
From the growth of the company since its incorporation in 1931, it is easier to identify
CEMEX’s competitive capabilities through four stages of learning. These are laying the
groundwork for globalization, stepping up, growing up and finally stepping up. There is no doubt
that the company has strong operational capabilities based on engineering and IT as well as a
culture of transparency. Its mastery of the art of acquisition has the company grow to be a global
leader in cement production. First, for the company to beat the competition at the local level in
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Mexico, it started exploring foreign markets and made imports to the United States. This was the
first step of the Mexican company into the global market. Secondly, the company invested in
satellite communication system, CEMEXNET, that helped avoid the erratic Mexican service
which was also expensive and insufficient. This changed the operations of the company ads the
managers would enter most of the production details like such as sales, production,
administration, delivery, and inventory. It integrated the 11 factories in Mexico meaning the
company would even operate at a lower cost compared to other companies that depended on the
Mexican telephone service (Spulber 2009). CEMEX in 1989 acquired Tolteca, which was a
major step aimed at increasing its market share in Mexico. As a result, it became the largest
cement producer in the whole nation and entered the list of the top ten cement producers in the
whole world. The company could also thrive more easily in Spain due to the cultural and
linguistic ties between the two countries and it also had affordable opportunities that the
To increase its competitive capability and market power the company introduced its
Mexican based best practices to its operations in Spain which helped increase efficiency of plants
through reduced costs with increased operation margins. CEMEX entered the Spanish market as
a counter strategy to the entry of European company into its home market. Considering the size
and the fact that these companies were in a foreign country, CEMEX formalized and codified its
PMI process to enhance its leaning capabilities in this new country through direct learning. It
later discovered from two of its factories that coke was efficient as the main fuel source and as a
result the company began using coke in a vast majority of its plants (Haberberg & Rieple 2008,
p. 273). CEMEX after moving into Spain made other subsequent acquisitions in the Caribbean,
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Colombia and Venezuela in the mid-1990s and Indonesia and the Philippines in the late 1990s
Conclusion
For any company to compete at an international level, it has to employ the best of
management approaches to growth. CEMEX rose from a developing country to become a world
leader in the cement industry. It was possible through the leadership and management approaches
it had to growth and its response to the business environment. It embraced modern growth
industries that have seen it penetrate markets in over 50 countries around the world. Anytime the
company faces threats regarding competition it expands its operations to new locations through
acquisition that both work to increase its market share. It also invests in the improvement of its
competitive capabilities through acquisitions, merger, and diversification that all improve its
trade margins. CEMEX proves that with advanced management techniques, capital and the
ability to integrate culture and common processes, any company can succeed in the global
Reference List
Haberberg, A., & Rieple, A. (2008). Strategic management: Theory and application (p. 273).
Hoyt, D., & Lee, H. L. (2005). End-to-End Transformation in the Cemex Supply
doi:10.1007/978-0-387-38429-0_14
Whitaker, J., & Catalano, R. (2001). “Growth Across Borders,”. Corporate Strategy Board.