Cemex Case Essay

535 Words3 Pages
Question 1: 1. How has CEMEX benefited from globalization? More broadly, how can a localized industry like cement benefit from cross-border activities? Cemex has realized many benefits from globalization. To begin, they have added volume to their business which was not available locally. According to Gupta, Govindarajan, & Wang (2008), they have exploited economies of global scale. The only way to increase their business volume was to go global, and increase profitability. Localized plants can help reduce the time it takes to deliver cement to a customer, which will help increase their customer satisfaction, and gain them additional business. In addition, when CEMEX began expanding abroad, they used PMI teams to streamline a new firm, identify and retain talent, and adopt the key standards of CEMEX's business model. This ensures that their subsidiaries are working in the same fashion as the home plant. CEMEX ws also able to reduce their costs by incorporating new technology, which allowed them to maximize knowledge to everyone in the company, and allow operations to flow more smoothly. In addition, concentrating their focus on other countries can help ensure stable revenues, such that if their home country is experiencing a downturn in GDP, they can stabilize their sales in other countries experiencing GDP growth. Further, there has been a reduction on tariffs due to exporting their product. Having a local facility means that Cemex does not have to pay export tariffs for delivery of cement. Transportation costs that may have decreased profitability have also been reduced. Cement is extremely heavy, so they are most likely paying large transportation costs. If they are able to reduce these costs, they will be able to increase their profit margins. They will also be able to lower their prices slightly from the competition, and capture a greater market
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