Site Loader
Rock Street, San Francisco

CEMEX and other competitors like Holderbank have greatly benefited from globalization in many ways. Some examples of those benefits include the ability of cement companies to acquire or buy existing capacities at low prices, mostly because the value these firms would produce in the long term is more than the cost of the facility. This would mean that as an already leading competitor in the cement industry, having such a facility will not only create an avenue for distribution and entry into a new market, but it would also make it possible for the competing firms to overtake each other to become the leader in the industry.Another benefit of cross-border activities is, increasing proximity to the markets to which the cement companies wish to sell their products. This will not only increase proximity to the markets but will also lower the costs of transportation to their clients. The case mentions that the “high transportation costs in relation to production costs meant that there was only a limited distance within which a plant could deliver cement at competitive prices” (Ghemawat, pg.2). Being close to the target market of these companies means that they can sell their products quicker and at lower prices because of the lower costs of transportation and it could even foster a mutually beneficial relationship between the two parties which will mean guaranteed continuous business for the cement company and continued availability of cement for the buyer. CEMEX had five significant competitors, Holderbank, being the most notable competitor. To outperform Holderbank, the CEO of CEMEX, Lorenzo Zambrano, decided to expand the cement business with the diversification of cement goods rather than a horizontal diversification outside of it. Focusing on the strengths of the company, which in this case is cement and other cement goods production, is what will take the business to the next level. CEMEX quickly took off internationalizing and by 2000 was the largest international cement trader in the world which gave them the opportunity to study local market closely and at minimal costs before deciding to acquire capacity locally or not. In obtaining capacity in Spain, CEMEX lowered its dependency on the Mexican market and began to show itself as a major competitor in a market dominated mainly by Holderbank. In addition to taking over this market, CEMEX used the proceeds from the sale of one of their older Spanish plants to invest in plants in the South Asian market where Holderbank and CEMEX all bought stake and capacity. According to Exhibit 8 (Cement Majors’ Asian Deals after the Asian Crisis, pg. 18) CEMEX beat Holderbank by buying up more stake and more capacity; Holderbank and CEMEX buying in total 183% stake and 23.1 million tons and 196% stake and 25.9 million tons respectively.

Post Author: admin

x

Hi!
I'm Glenda!

Would you like to get a custom essay? How about receiving a customized one?

Check it out