Cemex Case Study

Cemex Case Study

Running head: CEMEX FDI: THE RISE OF AN INTERNATIONAL POWERHOUSE

Cemex FDI: The Rise of an International Powerhouse


Cemex FDI: The Rise of an International Powerhouse
When a company like Cemex, who is the largest supplier of cement in the country of Mexico, has turned production, marketing, technological efficiency and customer service into an art form in their own country and is at the top of their game, where should they go from there? The answer, of course, is to go global. Within the last decade, Cemex has expanded its operations from northern Mexico, to operations in over fifty countries, including the United States (Cemex). The key to their success: their operations efficiency and aggressive expansion through foreign direct investment, primarily acquisitions.
The company has acquired several large corporations in the global market including RMC of Great Britain and Southland of Houston, Texas. By utilizing acquisitions, as opposed to greenfield investments, Cemex is able to use the acquired companies assets, relationships and established customer base to expand its share in the global market. The acquired companies then benefit from Cemex efficiency, technology, management, and outstanding marketing strategies.
Indonesia
The decision to enter the markets of developing nations, involves a level of risk separate from the risks undertaken in developed countries. Other factors such as political or economic instability occur in these markets at significantly higher rates than those of developed nations.
When Cemex chose to enter the Indonesian market in 1998, the decision was based on the promise of majority stake in a government owned country. Cemex began its investment by purchasing a 25 percent stake in the company, but never saw its majority stake materialize due to the lobbying of unions and politicians within the country. Cemex could certainly add value to the company it purchased stake in, and this increase in output efficiency would...