Benefits of Globalization: Cemex Essay

1. What benefits have CEMEX and the other globose competitors in cement derived from globalization? More broadly, how can cross- coast activities add value in an industry as apparently localized as cement? (Question for Analysis)The oligopolistic personality of the cement business dictates the limited notion of business strategy, save CEMEX, whiz of precise few cement producers found that through globalization, a manakin of benefits can be obtained and utilized to their own. Expanding to the global market was a slew in which Zombrano (CEMEX former CEO) capitalized and was able to add value into the industry in a variety of different practices. CEMEX aggressively took the risk to expand their global exploits from the means of stinting speculation during the mid-eighties-2000 period. Through globalization they were able to clear an impressive portfolio and further benefit from each acquisition. More importantly as a homogenous product in cement, the building market during the 1980s and 90s was relevant and needed in developing countries with considerable growth opportunities. This is highlighted in their endeavors with the takeover of Valanciana and Sanson in Spain (1992). Spain, a part of the MEU (Monetary European Union) highlighted investment authorisation as currency rates along with risk premium were easily low.The lower cost of capital in the merges posed further say-so for funding elsewhere at affordable rates. Investments in any province apart of the MEU could have been beneficial, however, CEMEX strategic all in ally pursued developing countries with potential for economic growth. A center field benefit of their globalization practices indulged with reducing costs and make up plant efficiency to a much greater extent. Inducing their very own Mexican based best practice into the Spanish operating theater CEMEX recorded annual savings/benefits of $120million and increase in operating margins from 7% to 24%. Interestingly enough, their bene fits didnt reside only in change magnitude revenue or market domination, but further constantly create their repertoire by absorbing the comparative advantages in the different economies and markets. By tapping into the building industry in Spain, they discovered incredible efficiency in the energy program through the use of fossil oil coke as the main fuel source. By 1994, a vast majority of CEMEX plants changed to petroleum coke in the own energy program. CEMEX was able to recognizeglobalization benefits in 1989 as Lorenzo decided hit the big market in US by exporting their products.Driven by profitability potentials, CEMEX sooner dumped their cement products in the US market to win out their competitors however their products were issued a trade barrier formalized in countervailing duties of up to 51%. (Harvard excerpt). The next strategic move was to directly invest in the US market through FDI. CEMEX focused on avoiding traffic barriers and hefty rape costs thus acquired p lants and facilities in Texas through FDI. This was the start to their cross border activities. The NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT) lessen tariff costs and furthermore by placing plants ideally close to the demand of the market, they are also able save delivery time. By cutting export time node satisfaction is increased, as a result, wherever CEMEX decides to operate, their robust company image and reputation becomes a valuable asset in building plants in ideal locations (next to limestone fields). As a result, through FDIs, subsidies, Mergers and Acquisitions, CEMEX were able to benefit from reduced tariffs when it came to exporting their products, and furthermore eliminated hefty charge costs. The elimination of trade barriers and transport costs would be carried out into all firms that CEMEX acquires.CEMEXs globalization ladder highlights robust financial benefits and hubris within their management system. Through constant immaterial investment, they needed to build a modest management system which could be self-developed and applied in all of CEMEXs facilitations. CEMEX designed a core management system to implement in their new acquisition of firms. They implied the PMI (Project forethought International) CEMEX Way which considered being a form of internal benchmarking, setting a core business practices which would be conducted throughout the locations CEMEX did business. By centralizing their management system, firm stations were able to discover talent across the borders and hire some of the most highly skilled and efficient professionals.CEMEX had a start PMI team congested of highly trained managers specifically to train impertinently acquired firm managers. Managers, employees were granted a voice of opinion. Hierarchy issues diminished and all ideas were considered valuable. Employee efficiency, coherence, accessibility, collaboration, were the key behaviors of the PMI help. This created cohesion, decisions were sound, quick er and easier. CEMEX was also always open to develop their PMI address as theywould develop new technologies or advantages throughout merges with other firms. cementum as a homogenous product posed limits in enhancing execution of instrument however CEMEX clearly constitutes the principle of learning and continuous benefits through the punctuated PMI process in CEMEX Way.