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CEMEX Business Case Ana Carmen González De Luna ID: 2634116

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Page 1: Cemex case

CEMEXBusiness CaseAna Carmen González De LunaID: 2634116

Page 2: Cemex case

CEMEX Mexican company that provides building products. CEMEX has become one of the leading cement manufacturers in the

world with a presence in 50 countries. The company has gone through many challenges, but they have been

overcome thaks to its business strategy.

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“Cemex was known as an innovator since the early 1990’s when they began to globalize its market”.

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BUSINESS ENVIRONMENT Nowadays Mexican economic and political situation is in our favor Mexico is currently one of the largest and most open economies in the world.

“According to the World Bank, in the year 2013, Mexico’s economy was the 14th largest economy in the world.”

Structure of Mexico’s GDP (Gross Domestic Product)

Services: 61.8% Industry: 34.2% Agriculture 4.1%

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“Cemex is part of the industry sector, which means that the company is an important source of income for the country”

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1989: CEMEX acquired Tolteca, after this the company formed part of the top 10 list of world cement producer

1992: The company entered to Spain, then to Venezuela, Panama and the Caribbean.

SPAIN VENEZUELA PANAMA

Its primarly industrial sectors are food, textile

and electronic production industries.

Spain counts with a well-developed infrastructure

Rich country in natural resources, it has a huge

oil gas reserve but it also has a poor

business environment due to its crime rates

and corruption.

Panama’s economic situation is positive due to its pro-growth reform

and its openess to global commerce.

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Most important CLUSTERS & LOCAL ECONOMIES in mexico

Automotive cluster Aerospace Medical Device

There are other local economies that are also consider as important players for our economy such as the agriculture, livestock and textile industry.

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MEXICO’S TRADE AGREEMENTS

Since 1986, the decade when CEMEX began its globalization to 2015, Mexico has signed 10 Free Trade Agreements with 45 countries, 32 Reciprocal Investment Promotions and Protection Agreements with 33 countries, 9 trade agreements within the framework of the Latin American Integration Association (ALADI) and it is a member of the Trans-Pacific Partnership Agreement.

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How does this trade agreements have helped CEMEX?

This FTA have provide the company facilities to open up foreign markets.

Reduce export and import barriers Protection to the company’s investments in a foreign country

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ECONOMIC ACTIVITIES OF MEXICO

Primary sector: Agriculture, livestock, forestry and fishing

Secondary sector: Mining industry, electricity, gas and water supply, oil, construction and manufacturing industries

Tertiary Sector: Transportation, warehousing and financial sector

“CEMEX is an important player of the secondary and tertiary sectors due to its participation in the construction and manufacturing industries

and its services such as laboratory services, technical evaluation of existing installations, plant risk assesment, plant and equipment

relocation, between others.”

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MEXICANContext

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CULTURE & DIVERISTY Mexico is the 14th largest country in the world

Ethnic Groups: Mestizo(60%), Amerindian(30%), White(10%)

Spanish is spoken by 92.7% of mexican population

6% speaks indigenous languages

89% of the population is Catholic

Family is a very important part of mexican’s life

Mexicans are very warm, love to have close relationships

Important holidays: Independence Day, “El día de la Virgen de Guadalupe” and the day of the Death

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DEMOGRAPHICS“According to a Mexico Demographics Profile of 2014, the population of Mexico is around 120, 286, 655 people, with a median age of 27 years and a life expectancy of 75 years.”

Major cities population: Mexicto city (capital)- 20.446 million Guadalajara- 4.525 million Monterrey- 4.213 million Puebla- 2.335 million

“CEMEX is located in two of the principal cities in Mexico, the company has plants in the city of Monterrey and Puebla”.

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FINANCIAL FRAMEWORK

The Banco de México, is the one in charge of the Financial framework of the country, the bank perfom the following functions, according to the Banco de México Law

The Bank is the one that commit to introducing policy and legal reforms, and to develop financial infrastructure, in order to promote responsible financial inclusion

“One of the strategies of CEMEX company is to have a close relationship with this authority to make sure they are investing their money appropiately in and out the country”.

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POLITICS & POLICIESThe mexican political structure is divided into an executive, legislative and

judicial branch.

To own a company in Mexico, there are some requirements that every company should have in mind, you need:

Zoning Permit.

Environmental Regulations. (The Ministry of the Environmental Natural Resources and Fisheries (SERMANAP).

Health or Sanitary Licenses.

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Every country has its own context and business environment, so CEMEX had to think in the better way to get through this challenges, that is why the “CEMEX Way” was created.

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THE CEMEXWay

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“THE CEMEX WAY”The CEMEX Way was created to standardized processes, technology and organizational structure across all countries. It is a benchmarking driven by 5 main points.

Efficiently manage the global knowledge base Identify and disseminate best practices Standardize business processes Implement key information and Internet- based technologies.

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This model is based on 3 fundamental elements:

Process of post- acquisition integration.The company is able to reduce costs, to identify the best practices and to standardize business processes.

Use of the technology and global communication systems.

The leveraged buyout of the assets and a down payment financing through reinvestment of free cash flow generated in each acquired company.

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Which variables can affect the strategy?

Experience and knowledge of the directive team

Culture

Technology

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Who are the ones that help us to grow and become stronger?

SUPPLIERS

INVESTORS

GOVERNMENT

SOCIAL MEDIA

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SUSTAINABLE DEVELOPMENT STRATEGY

Provide Resilent Infrastructure and Energy- Efficient Building Solutions Enable a low-carbon and resource- efficent Industry Implement a high- impact social strategy to empower communities

The Cemex Way wasn’t the only strategy that CEMEX created to grow against the competition, they also count with Sustainable Development Strategies such as:

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“With this strategies they make sure to cover the needs of their employees, providing them attractive opportunities for a personal and profesional development, they also cover the needs of their business partners, and take care of the environment”.

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“It is important to be aware of the challenges that the companies face entering into the international market in order to create an ideal business strategy to avoid future losses and problems in its development”

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THANK YOU!

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#TogetherwecanhelpMexico

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BIBLIOGRAPHYPwC Mexico, (January 2015), “Doing business in Mexico”, Retrieved from: https://www.pwc.de/de/internationale-maerkte/assets/doing-business-mexico.pdfPassport to trade 2.0, (2014), “Spain”, Retrieved from: http://businessculture.org/southern-europe/business-culture-in-spain/Expatica, “Business Environment in Spain”, Retrieved from: http://www.expatica.com/es/employment/Business-environment-in-Spain_104045.htmlBMI Research, “Venezuela”, Retrieved from: http://www.bmiresearch.com/venezuela2016 INDEX of Economic Freedom, (2016), “Panama”, Retrieved from: http://www.heritage.org/index/country/panamaEl Universal, (April 27th, 2006), “Cemex way” la espina dorsal, Retrieved from: http://archivo.eluniversal.com.mx/finanzas/51534.htmlCemex, (2016), Cemex, Retrieved from: http://www.cemex.comDonald R. Lessard and Cate Reavis, (March 5th, 2009), “CEMEX: Globalization “The Cemex Way”, Retrieved from: https://mitsloan.mit.edu/LearningEdge/CaseDocs/09%20039%20CEMEX%20%20Lessard.pdfUHY, (June 2014), “Doing business in Mexico”, Retrieved from: http://www.uhy.com/wp-content/uploads/Doing-Business-in-Mexico.pdfJaime Sobrino, “Urban Competitiveness and Industrial Clusters in Mexico”, Retrieved from: http://www.gucp.org/SITES/Uploaded/File/2014/3/Urban%20Competitiveness%20and%20Industrial%20Clusters%20in%20Mexico.pdfPwC, (May 2015), “Aerospace Industry in Mexico”; Retrieved from: https://www.pwc.com/mx/es/knowledge-center/archivo/20150604-gx-publication-aerospace-industry.pdfJose Grajeda, (April 14, 2014), “Industry Clusters in Mexico”, Retrieved from: https://www.tecma.com/industry-clusters-in-mexico/ProMéxico, (2015), “Trade Agreements”, Retrieved from: http://www.promexico.gob.mx/en/mx/tratados-comercialesPableen Bajpai, (September 03, 2015), “Emerging markets: Analyzing Mexico’s GDP”, Retrieved from: http://www.investopedia.com/articles/investing/090315/emerging-markets-analyzing-mexicos-gdp.aspKim Ann Zimmerman, (February 10, 2015), “Mexican Culture: Customs & Traditions”, Retrieved from: http://www.livescience.com/38647-mexican-culture.htmlIndex Mundi, (2014), “Mexico Geographics Profile 2014”, Retrieved from: http://www.indexmundi.com/mexico/demographics_profile.htmlThe World Bank, (August 2012), “Financial Inclusion Strategies Reference Framework”, Retrieved from: http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/282884-1339624653091/8703882-1339624678024/8703850-1339624695396/FI-Strategies-ReferenceFramework-FINAL-Aug2012.pdfNoruega, “A guide to establish your business in Mexico”, Retrieved from: http://www.noruega.org.mx/Norsk/Business-i-Mexico/A-guide-to-establish-your-business-in-Mexico/#.Vt0OKLS7_IcDr. Gustavo Vargas, Mtro Albino Luna, “The crisis of CEMEX Transnational Mexican Firm”, Retrieved from: http://ntu.ac.uk/nbs/document_uploads/108669.pdf

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