Cemex Case Study

Mexicos largest cement manufacturer, Cemex, has become a ball-shaped ball of fire in the cement and facial expression industry. It currently controls 60 percent of the cement industry in Mexico (Hill 2009). Cemexs succeeder is a result of a combine of efficient technology such as radio transmitters, satellites, and computer hardware that set aside the confederation to anticipate changes in summate and demand and reduce waste.Cemexs victory is also a result of an seek to dominate the industry by getting and buying out competitors worldwide in order to expand. a.Which theoretical explanation, or explanations, of FDI best(p) explains Cemexs FDI? I believe that internalisation surmise best explains Cemexs FDI because Cemex has interpreted the initiative to enter into m some(prenominal) countries and sort of of licensing they bought domestic cement businesses and have grownup into a worldwide powerhouse.According to the textbook, internalization theory explains why firm s often prefer external direct investment over licensing as a strategy for entering foreign marts (Hill 2009). With the advanced technology that Cemex uses, so licensing would non be the greatest avenue for the society to take in order to value its technological know-how (Hill 2009). b.What is the value that Cemex brings to the waiter economy? Can you see any potential drawbacks of inward investment by Cemex in an economy? Cemex is the third largest cement company in the world, and a powerhouse in Mexico where it controls 60 percent of the market.Cemex is extremely focused on efficient manufacturing and guest service. Distributors are rewarded for their sales, as are users. The radical benefit Cemex brings to waiter countries involves these competitive payoffs. Cemex acquires companies and thence transfers technological, management, and marketing know-how to the new units, improving their performance. The company has brought several acquired companies back to full product ion, change magnitude employment opportunities in the host artless as well. c. Cemex has a strong orientation course for acquisitions over greenfield ventures as an entry mode. why? Cemex has successfully acquired established cement makers in many countries.By acquiring companies rather than establishing them from the fuse up, Cemex can avoid some of the delays that could pass in the start-up phase, while at the comparcapable time, capitalize on the benefits of an established market presence. Acquiring other businesses is effective because the host economyalready knows the demographics and the market. Cemex would be able to make the business better with their technology and research. A Greenfield venture would be doubtful and not cost effective. d. Why is volume control so tradeant to Cemex? absolute majority control is important to Cemex because of the ability to see its policy of transferring resources. When it does not have majority control it may not be able to transf er its own managing resources to freshly acquired companies. Also, Cemex might want to take advantage of differences in factor costs across countries, so it will be allowed to import parts from other places to reduce costs.