Global Strategic Management Mini Cases Series
CEMEX Global Expansion
From a relatively modest Mexican family-owned conglomerate, CEMEX was since 1996, the 3rd largest cement company in the world measured by cement production capacity. Having completed the acquisitions of Southdown in the USA and RMC in the UK, the group was a well established three-legged player in America, Europe and Asia. However global competition was tough and CEMEX was not positioned in the two emerging giant markets of China and India. CEMEX strategy to become one of the leading players in the world of cement took place in three major steps: (1) consolidating its presence the Mexican market, (2) internationalization, (3) global management 1) Mexico In1985, when Lorenzo Zambrano was appointed to head CEMEX, the company was pretty much as any other developing country conglomerate. Founded in Mexico in 1906, CEMEX had grown from a regional cement producer to a diversified group of companies with interests in tourism, petroleum and mining projects, and was listed on the Mexican stock exchange. The signing of the GATT agreement in 1985 turned Mexico, the world’s 13th largest cement consumer, into an open marketplace and at the same time an interesting expansion terrain for cement multinational companies (MNC’s). The demographics, the attractive market characteristics and the expected infrastructure development all gave Mexico a huge growth potential. With the increased competition from more efficient international players, a consolidation movement was inevitable.
Zambrano implemented a deliberate strategy to make cement its core business. CEMEX divested most all non core cement related businesses, reinvesting the proceedings into cement assets. It acquired the two major cement manufacturers in Mexico, thus becoming the main national player and the tenth largest cement company in the world. 2) International Cement is a very cyclical industry and the presence in several countries with...