Comprehensive Analysis of Cemex: Market Position and Strategies

This report provides a comprehensive analysis of Cemex, a leading building materials company, examining both its external and internal environments. The analysis includes a PESTLE analysis, identifying political, economic, social, technological, legal, and environmental factors impacting Cemex. Porter's Five Forces model is used to assess the competitive landscape, focusing on supplier and buyer power, the threat of substitutes and new entrants, and industry rivalry. Internal resources and capabilities are evaluated using VRIO analysis, and the value chain analysis identifies key activities that contribute to Cemex's competitive advantage. A SWOT analysis summarizes the company's strengths, weaknesses, opportunities, and threats. The report concludes with recommendations for Cemex to enhance its market position and operational efficiency. This document is available on Desklib, where students can find similar solved assignments and study resources.

MANAGEMENT

Contents
Introduction...........................................................................................................................................2
Company`s introduction........................................................................................................................2
PESTLE analysis......................................................................................................................................3
Porter`s five forces-...............................................................................................................................4
Resources, capabilities, and VRIO analysis............................................................................................5
Value-chain analysis..............................................................................................................................7
SWOT analysis.......................................................................................................................................8
Recommendation-.................................................................................................................................9
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

Introduction
The report brings out an analytical discussion on a building construction company named as
“Cemex.” The company is among the largest companies in the world that is related to
manufacturing of construction material. Further, this report discusses about the external
environment of the company that affects the performance of the company. Apart from this,
the report also analyses the internal environment that undertakes how dynamic conditions of
both internal and external environment affects the operations of the organisation.
Company`s introduction
Cemex is one of the largest building solution organisations in the globe, which manufactures,
distributes, sells readymade concrete, and deals in other related construction materials. The
organisation is the leading cement-manufacturing company in Mexico and stands on third
position. Moreover, it has became largest in North America after acquiring US based
Southdown. The company operates in Central America, Southeast and middle Asia, UK, and
Australia. Cemex operates 220 ready-mix facilities, 15 cement plants, 8 marine terminal, and
sixty-seven land distribution centres. Headquarter of the company is in Nuevo Leon and
employs 41,000 people (Cemex, 2018). The revenue of the company in last five years are
given below-
Year Revenue (in $ billions)
2014 15.79
2015 14.27
2016 13.45
2017 13.68
2018 14.37
(Source: Cemex, 2018)

PESTLE analysis
Political factors- CEMEX exposed to several political risks due to dynamic political system.
In order to achieve success in the dynamic industry among different countries, the
organisation must diversify its systematic risks of the political system. Some of the factors
that has to be considered before entering in any specific market such as stability and
significance of cement industry in nation`s economy, level of corruption and interferences in
the cement industry.
Economic factors- economic factors are influenced by several factors such as inflation,
interest rate, and GDP, personal disposable income, foreign exchange rate and also the
economic cycle of the country in which it operates, so as it determine the demand and
combine the investment in the economy. Company uses the above factors to estimate the
growth possibility. While looking at the inflation rate of Mexico, it is seen that the inflation
rate in 2016, 2017, and 2018 was 2.82, 6.04, and 4.77% Interest rate in Mexico is
approximately 7.5% Apart from its host country, the company has to consider the economic
factors where it is interested in investing (Cemex, 2018).
Social factors- It has a direct relation with the society in which the company operates and
involves culture, attitudes, values and believes which the majority of the population holds.
Cement is one of those ingredients that reflect social status of a person when constructing a
house. This factor not only considers operational aspect of the organisation but also the
marketing aspect of the organisation. The house construction is affected by the demographics
of the total population in regards to genders and ages (Cemex, 2018).
Technological factors- current technological developments made by the competitors as new
technology. It is important to consider from mining to storage in which the process is highly
dependent on technology advancement. For example- CEMEX uses C3 (cement control
centre) that operates in 24 hours in a day that helps in tracking the live data for operating 14

cement plants, 86 grinding mills, and 25 kilns that have coupled with some checking
activities in the cement plant in US and Colombia. CEMEX develops C3 to effectively
leverage the technological innovation that is available in the entire global operational
network.
Legal factors- These factors consider intellectual property and data protection law so that it
can protect the patents. Different countries have different policies for FDI and trade policies.
As people working in the cement industry are closely vulnerable to health risks. It is
important to implement proper regulation (Elbeblawi, 2016).
Environmental factors- while manufacturing the construction products such as bricks,
cement, and grinding other stones that are used for constructing the buildings. This process
involves chemicals usage that further affects the health of the employees and pollutes the
environment. In order to maintain the environment, the company has to undertake some
crucial steps that can assist in purifying the environment and these harmful chemical realising
should not affect the environment.
Porter`s five forces-
Bargaining power of suppliers- As the number of suppliers is low. Therefore, suppliers
have less control over the prices and this weakens the bargaining power of the suppliers.
Apart from the global initiatives, Cemex undertakes to create several programs in order to
interact to the suppliers. It held responsibility to each nation to construct its own program for
the full range of activities for effective regional negotiating of goods and services (Mindtools,
2019).
Bargaining power of buyers- As there are number of suppliers is much more than lot more
as compared to number of organisations manufacturing it. This insists that the buyers have to

choose among few organisations. Therefore, they do not much control over the prices. It is
important to know the switching cost for the buyers is not low (Caner, 2015).
Threat of substitution-There are very less number of substitutes who produces within the
industry. These substitutes are developed by producing the low profit earning industries.
Moreover, there is no limit to the maximum profit, which the existing organisations already
earn (Caner, 2015).
Threat of new entrants- threat of new entry is low as capital necessity of the industry is
high. It is difficult to get easy access to certain distribution channels. Capital necessity also
signifies huge research and development cost. The government policies in the cement
industry require strict licensing and other legal requirement has to be fulfilled as soon as the
company starts.
Rivalry among the competitors- Heidelberg Cement, Holcim and ACC are the top
competitors of CEMEX. Heidelberg mainly competes in material of construction industry and
Holcim nearly operates in fitting and construction supplies. ACC undertakes to operate in
industrial suppliers industry. As compared to Cemex, it is seen that Heidelberg generates
more revenue of approx. $4.5 billion; Holcim generates 187 percent of total revenue of
CEMEX (Caner 2015).
Resources, capabilities, and VRIO analysis
The capabilities and resources are arranged through key components of strategy and approach
towards to business in order to achieve the operational efficiency. The company operates
nearly 67 cement plants, 362 aggregate quarries, 63 marine terminals, 1784 ready-mix
facilities, and 222-land distribution centres in all over the world. All these sources of the
company produces 93.7 million metric tons of the cement production. While evaluating the
assets and resources that the company has, it is seen that company operates its plants in all-

over 50 nations all through six different regions such as Northern Europe, US, south, Central
America, Mexico, and Asia. The geographical diversified company`s operation that reduces
the dependency on any particular region. While looking into the capabilities of the company,
it is seen that in 2013, the company modified several changes in its strategy to continue and
maximise the operational efficiency. In order to improve the margin and the operational
efficiency, which further helps the company to drag the profits, the company decided to
acquire Holcim assets by divesting from the German assets and invest in joint venture.
Additionally, two companies when working together in Spain with Cemex who holds 75
percent controlling interest. While evaluating the optimisation, it can be seen that asset
optimisation agreement and the outsourcing IBM projects that ultimately have significant
impact on financial line and increasing the operational efficiency at the global level. Other
more platform of Cemex operation is a form of commitment to operate the business in a
responsible manner. The goal is to provide and build solution in order to meet the
requirements of the resource-constrained world and minimise the ecological footprint of their
operations. Moreover, this strategy will use certain alternative fuels in order to replace the
fossil fuel and reduce the clinker that has serious ramification of the environment and greater
use of renewable sources of the electricity. Apart from these steps, the company additionally
optimises the quality of air, manages the waste, and recycle it.
VRIO analysis of Cemex is a resource-oriented analysis that assumes that strategic resources
can lead to development and building sustainable competitive advantage above its rivals in
the same industry. This sustainable competitive advantage will help the organisation to enjoy
profits that are above the average of the industry.
Resources- Accessibility to the critical raw material will lead to successful execution. The
company also has a tracked record of leadership team. It is important to know that the
company requires more resources to enter those potential industries. The company enjoys a

brand image among its competitors. The company comply with the successful
implementation of digital strategy. While evaluating the value, it is seen that the company is
capable enough to create new revenue generation streams. It can be said that without digital
strategy, the company will not be able to compete. Cemex`s rare qualities are valuable
enough and provide sustainable competitive advantage. One of the most rare resource of the
company is to imitate which cannot be imitated by other competitors the track.
Value-chain analysis
In order to identify the competitive advantage and conduct value chain in the planning
process as the organisation is a collection of different activities that share the relatedness to a
great extent. Cemex cannot engage in all the external activities but with the help of internal
linkages between the activities and the value chain lens, the organisation can take the benefit
of coordination and optimisation. Identification of interdependencies and the
interrelationships will help the organisation to have better relationships with the stakeholders
(Venkataraman, Allayannis, Yemen, Venkataraman, Allayannis, Weiss, and Yemen, 2017).
The company can identify various internal and external linkages in the business activities
with the help of value chain lens. These internal linkages are interrelationships that show an
internal connection between the same organisational units whereas external linkages between
different organisations will help the organisation to take the advantage of both optimisation
and coordination (Venkataraman, Allayannis, Yemen, Venkataraman, Allayannis, Weiss, and
Yemen, 2017).
The modified value chain will help the organisation to optimise different departments such as
finance, information flow, and products. Improvement in the information flow will help the
organisation to find and exploit several new opportunities to reduce the threats. Effective
implementation of value chain analysis will improve the product flow and material flow by
forecasting the sales. The company will have to improve the inventory management that

ultimately reduces the delay by tracking the activities in the supply chain (Venkataraman et
al., 2017).
Value chain analysis can be competitive enough in making strategic processes. The aim of
the analysing the value chain is to select the kind of policy that involves cost leadership,
focus, and differentiation.
The company also faces numerous challenges in relation to losing its market share and its
vision by dividing the operations in different parts one is primary activities and separate
different activities that are dynamic to the nature of working .
SWOT analysis
Strength
 Strong distribution network
 Affordable prices for the customers
 Strong financial position
 Better solvency with large asset base
 Diversified workforce
Weakness
 Lack of proper financial
planning
 Liquidity issues near future
 Spends more in research and
development activities
 High day sales inventory
 Failure of various mergers that
aims at vertical integration
Opportunities
 E-commerce has paced the growth to
expand by interacting with the
customers
 Increase in personal disposable
income has increased the target
market
Threat
 Piercing competition from Lafarge,
Holcim, and Heidelberg Cement
pose a great threat for the
organisation
 Changing preferences of the
customer puts pressure on the

 Expansion projects can be financed
with low interest rate
 Tourism can benefit the
organisation, as it will enable new
potential customers, which could
target people in order to gain the
market share.
company.
 Regular technological development
needs the workforce to be trained as
per the inability to carry out the
changes.
 Increase in the prices of fuel can
hamper the transportation cost due to
increasing input costs
(Source: Cemex, 2018a)
Recommendation-
From the above problems and weaknesses identified, it can be seen that environment
dynamics interrupts the success of the organisation. The company should widen its range of
products and services that can help the organisation to overcome the piercing competition.
The company should establish a team in the organisation who can give access to recent
researches regarding the changing preferences of the customers. The company should also
engage efficient technology that can give them different graphics in relation to designs with a
strong grip in the stone material.
Conclusion
The above discussion is reflected on a building manufacturing company that states that the
company should utilise the opportunities to overcome the weaknesses and also the strengths
to have a competitive advantage over the competitors. The tendency of innovation can lead
any company to top level and give several options to the audience.

References
Caner B. (2015). ‘Bargaining with Multinationals: Why State Capacity Matters’, New
Political Economy, 20:1, 63-84
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https://www.cemex.com/media/press-releases/-/asset_publisher/nnqyAoJ3dM7x/content/
cemex-files-annual-report-on-form-20-f-for-fiscal-year-2017 [Accessed on 6/03/19]
Cemex, (2018a) Sustainability Reports. Available on:
https://www.cemex.com/sustainability/reports/global-reports [Accessed on 6/03/19]
CEMEX, (2019) Reports. Available on: https://www.cemex.com/investors/reports/home
[Accessed on 6/03/19]
Elbeblawi, M.M., Sayed, M.A., Mohamed, M.T. and Abdelrasoul, M.E., 2016. SAFETY
EVALUATION OF GROUND VIBRATIONS INDUCED BY BENCH BLASTING AT
CEMEX LIMESTONE QUARRY, ASSIUT, EGYPT. Revista Minelor/Mining Revue, 22(4).
Mindtools, (2019) Porter’s five forces model. Available on:
https://www.mindtools.com/pages/article/newTMC_08.htm [Accessed on 06/03/19]
Moon, H. C., Wesnyan, Y., Hur, Y. K., and Helm, C. (2014) Extending Porter's generic
strategies: from three to eight. European Journal of International Management, 8(2), 205 –
225.
O’Neal, D. and Sonnenberg, S., 2017. Chemostratigraphic and depositional characterization
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Venkataraman, S., Allayannis, G., Yemen, G., Venkataraman, S., Allayannis, G., Weiss, E.N.
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