Benefits of Globalization: Cemex Essay

1. What benefits have CEMEX and the other world-wide competitors in cementum derived from globalization? More broadly, how cannister cross-border activities add nourish in an application as apparently localized as cement? (Question for Analysis)The oligopolistic nature of the cement championship dictates the limited notion of business strategy, barely CEMEX, one of very few cement producers found that through globalization, a change of benefits can be obtained and utilized to their own. Expanding to the global market was a vision in which Zombrano (CEMEX former CEO) capitalized and was fitting to add value into the industry in a potpourri of assorted practices. CEMEX aggressively took the risk to splay their global exploits from the means of frugal dead reckoning during the 1980s-2000 period. Through globalization they were able to design an impressive portfolio and take up on benefit from each acquisition. More importantly as a homogenous product in cement, the mak e market during the 1980s and 90s was relevant and indispensable in developing countries with considerable festering 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 authority as currency rates on with risk premium were considerably low.The impose cost of capital in the merges make up further potential for funding elsewhere at affordable rates. Investments in on the whole Country apart of the MEU could have been beneficial, however, CEMEX strategically pursued developing countries with potential for economic growth. A core benefit of their globalization practices indulged with reducing cost and increase seed efficiency to a much greater extent. Inducing their very own Mexican based best practice into the Spanish operation CEMEX recorded annual savings/benefits of $120million and increase in operating margins from 7% to 24%. Interestingly enough, their benefits didnt rest only in increased revenue or market domination, but further constantly developed their repertoire by absorbing the comparative advantages in the different economies and markets. By tapping into the create industry in Spain, they goed incredible efficiency in the energy program through the call of petroleum coke as the main(prenominal) fuel source. By 1994, a great majority of CEMEX plants changed to petroleum coke in the own energy program. CEMEX was able to get laidglobalization benefits in 1989 as Lorenzo distinguishable hit the big market in US by exporting their products. dictated by profitability potentials, CEMEX originally dumped their cement products in the US market to pull through out their competitors however their products were issued a clientele 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 t raffic barriers and hefty institutionalise cost thus acquired plants and facilities in Texas through FDI. This was the conk out to their cross border activities. The NAFTA (NORTH AMERICAN trim TRADE AGREEMENT) reduced tariff be and furthermore by placing plants ideally mean to the demand of the market, they are also able save delivery time. By bleak export time customer expiation is increased, as a result, wherever CEMEX decides to operate, their stalwart company name 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 transport costs. The elimination of trade barriers and transport costs would be carried out into all firms that CEMEX acquires.CEMEXs globalization campaign highlights robust fiscal benefits and hubris within their counsel system. Through constant foreign investment, they needed to build a modest counsel system which could be self-developed and applied in all of CEMEXs facilitations. CEMEX designed a core management system to implement in their vernal acquisition of firms. They implied the PMI (Project Management International) CEMEX Way which considered existence a form of internal benchmarking, picture 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 hired any(prenominal) of the most highly skilled and good professionals.CEMEX had a separate PMI team choke of highly initiateed managers specifically to train newly 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 bring. This created cohesion, decisions were sound, quicker and easier. CEMEX was also of all time open to develop their PMI process as theywould develop new technologies or advantages throughout merges with other firms. Cement as a homogenous product posed limits in enhancing performance however CEMEX clearly constitutes the article of belief of learning and continuous benefits through the punctuated PMI process in CEMEX Way.