globilization of cemexQuestion 2
Cemex is the number three in the world cement industry in terms of production capacity and has maintained the highest level of profitability from 6 leading global competitors (its EBITDA margin of between 30-40% in the late 90 ' s is 10-15% higher than the others), reflecting that the company has gained a competitive advantage in its sector. The following is an analysis of the value activities specifically related to Cemex's global strategy against Holderbank, grouping the elements of value and evaluating them by their effects, to identify the resources, skills and distinctive competencies that constitute its source of advantagecompetitive and corporate.
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To achieve differentiation and increase willingness to pay: a) segmentation and brand positioning for the informal sector construction demand bagged cement through retail channels; b) Use of GPS and IT to provide 20 minutes of guaranteed delivery, which increases the willingness to pay of customers.
Improving industry attractiveness and bargaining power: a) Cemex has been very disciplined in its acquisitions since buying local productive capacities in the countries or regions can reduce the number of competitors, get a high market share and have control of the acquired companies. Thus, the company claims to achieve their ideal local or national level by increasing the concentration of the industry where he entered and thus obtains such market power that allows you to maintain high prices and margins in these concentrated markets. In fact, the most important reason is that Cemex has an average operating margin higher than Holderbank is that Cemex charged an average of 20% higher. Thus, we have identified the cause of most Cemex operating margin (37%) versus Holderbank (24%) is due more to the price effect that the effect of operating cost, b) Management of trading: Cemex is the largest global trader cement and 60% of products are third party, which allows the company to arbitrate with the price of cement, protected by diverting imports cheaper away from its key markets with higher prices preventing it brings them down and strengthen their control over local competition. In addition, Cemex trading used to know the local market and target companies prior to acquisition.
Diversification of risk: a) Cemex achieved a reduction in the standard deviation of cash flow margin of 22% quarterly (1978-1992) to 12% (1992-1997) to locate their businesses in different markets with different economic cycles based on the prices of cement in these markets have a limited correlation, which is very important given the magnitude of the reduction, considering that the cement industry is very capital intensive. In fact it helped him weather the crisis Cemex weight in Mexico; b) Being globalized, Cemex has access and funding to acquire another company undervalued, given the local economic pressure; c) The company has taken more risks creatively to change option to grow: the ability of Spain exchanged for that of South Asia.
Knowledge generation, resources and skill: a) be comprehensive, Cemex has the opportunity to learn new skills all types of business where the company incorporates and disseminates best practices across its global organization.Knowledge transfer has been facilitated by the homogeneity of the cement industry and the standardization of technology; b) Cemex has a culture and global management style, as ranked English, using international consultants, constant investment in technology including TI and its widespread use across the enterprise, and so on., which is supported by the centralization and standardization process.
In summary, the superior...