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André Da Silva

GROUP 3 . André Da Silva. Rodrigo Robles. Katerina Barka. Cemex’s Foreign Direct Investment. Agenda. Overview Success factors FDI Model CEMEX in Indonesia Recommendations Conclusions. Overview.

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André Da Silva

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  1. GROUP 3 André Da Silva Rodrigo Robles Katerina Barka Cemex’s Foreign Direct Investment

  2. Agenda • Overview • Success factors • FDI Model • CEMEX in Indonesia • Recommendations • Conclusions

  3. Overview • CEMEX S.A. de C.V. is the world's largest building materials supplier and third largest cement producer. • Founded in Mexico in 1906, based in Monterrey, Mexico , the company operates in 50 countries around the world . • Employing approximately 57000 people worldwide. • The basic competitors of CEMEX are the Holcim of Switzerland and the Lafarge Group of France. • The company has had revenues of 21.6 Billion and a net profit of 2.4 billion in 2008.

  4. Success Factors • High Technology Infrastructure • Low costs • Superior customer service • Close integration with distributors • Commodity  differentiation • Emerging markets • Strong marketing campaigns • B2B and B2C

  5. FDI Model • Preference for acquisitions • Emerging markets (Latin America, Indonesia, Egypt, Philippines…) • Acquire inefficient companies • Horizontal Foreign Direct Investment • Mature markets to gain market share (RMC of Great Britain)

  6. Foreign Investment

  7. Acquisitions vs Greenfield Ventures • High infrastructure investment (equipment, land…) • Local know-how and contacts • High speed access to resources • Transform inefficient to efficient companies • Avoid barriers to entry

  8. Cemex in Indonesia Why CEMEX left Indonesia? • PPP didn’t work out as intended • Government failed to fulfill majority agreement. • Government + FMI + CEMEX = conflict of interests • Local interests: politicians and unions

  9. Cemex in Indonesia Why majority control is so important? • Stability • Control the direction of the company • Protect business model • differentiation: customer service • Protect intellectual property rights

  10. Cemex in Indonesia • Indonesia’s best interests were served? • Absolutely NOT • Free trade is affected • No competition  monopolies • Investments dropped significantly after CEMEX left • Corruption: Government should be a regulator of national assets

  11. Recommendations • Expand The Global Centers for Technology and Innovation to Asia and Latin America) • Look up for Brownfield operations in China • Demand for cement in China is expected to advance 5.4% annually  • Cement consumed in China will amount to 44% of global demand • China will remain the world's largest national consumer of cement by a large margin • Chinese construction market is booming and will continue to be over the next decade.

  12. Conclusions • High expenditures in research and technology but help to differentiate product/service • FDI is a key element to expand operations and increase revenues • Challenges  Find the right country • Make a precise risk assessment • FDI can transform a local company into a worldwide leader in the industry

  13. Resources • htpp://www.cemex.com • http://www.marketresearch.com/search/results.asp?sid=24521652 • http://www.eluniversal.com.mx/articulo213&userid=rrobles • http://www.wsj.com/latinAmerica/cementArticle

  14. Q & A

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