CEMEX Expansion Strategy

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Introduction

CEMEX is a global cement company from Mexico that dates back to 1906. It was formally established in 1931 through a merger between Cementos Hildago and Cementos Portland Monterrey. Although initially it operated on a domestic level, various factors within its operating environment forced it to expand internationally. Before venturing into other markets, the company opted to capitalize on the ideal environment created the Mexican Government. Nevertheless, the Mexico 1982 economic crisis forced the Government to liberalize the Mexican market thus attracting foreign competitors. To counter the new competition, CEMEX opted to first divest its business, which was diversified across hotel management, engineering, petrochemicals, to focus on its core cement production business. It opted to avoid a hostile take over by foreign companies through consolidating its position in the domestic Market. Acquiring Cementos Anahuac and Cementos Tolteca was a strategic move that enabled it control 60% of Mexican market, becoming the world tenth biggest cement company. Probably motivated by the success of this strategy and the new acquired competitive scale, the company opted to internationalize. Acquisition was the preferred strategy of expansion. This strategy undoubtedly yielded unprecedented success over the years. By 2004, CEMEX had grown to be the 3rd largest building material company in the world, experienced an 18% annual growth rate in sales, and enjoyed a revenue of US$ 7.1 billion, just to mention a few.

Competitive Advantage Acquired by CEMEX

It is as a result of acquiring distinct competitive advantages that CEMEX was able ...

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.... It has used this strategy to overcome various challenges (such as avoiding hostile takeover by foreign companies) while at the same time developing competitive advantages. Examples of the competitive advantages CEMEX has enjoyed over the years include ability to operate in volatile markets, integrate successfully with its acquired firms, and easy acquisition of funds. However with its level of debt increasing increasing, CEMEX should know consider expanding through an organic growth strategy.

References

Hess, E. D. (2007).The road to organic growth: how great companies consistently grow from

within. New York: McGraw Hill.

Morgan, J. (2004). Financial Analysis Ratios: A guide to interpreting Key Financial Ratio.

Investor Guides Magazine, 2, 5-23.

Paul, J., & Kapoor, R. (1966). International Marketing: Text and Cases. New Delhi: McGraw

Hill.

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