CORPORATE STRATEGY ASSIGNMENT SAMPLE 2024
1. CEMEX understanding of the CSF of the industry
The Mexican multinational company CEMEX distributes and manufactures cement, aggregates, and ready-mix concrete in numerous countries. As per the opinion of Beekun and Carvalho (2021), the international strategy of business that the company is following enables the authority to achieve the goal of success rapidly. The management of CEMEX believes that ethical behaviour is very important for any success.
The authority focused on the matter of customer satisfaction. Every organization has the aim to achieve the goal of success. In the strategy of their business, sustainable development is always present and that helps them for more growth (Garcia-Muñoz-Aparicio and Pérez-Sánchez, 2020).
The authority of CEMEX tried to engage their stakeholders like local communities and in their development, the authority helped them. The fact of engaging the stakeholders that are connected with this company enables the authority for more productivity. The main key to the success of this company is that the management focused on the matter of its workers.
The employees of that company can grow with the growth of the organization. The authority of this organization builds value for its shareholders with fund allocation and growth strategy. The key to the success of this organization was that the authority gave priority to the matter of supplying products with appropriate quality. The management provided proper customer services and it helped to increase the number of customers (Özcan et al. 2018).
The Mexican company CEMEX in the present day, around the world, manages approx. 50 countries like France, Brazil, Ireland, Turkey, and so on. The main competitors of CEMEX are UnIbeton Ready Mix, Votorantim Cimentos, and Heidelberg Cement. The company gave priority to the matter of product, their stakeholders, and their services. Stakeholders like customers, employees, management, shareholders are the key to success for any kind of organization.
As stated by Paul and Mas (2020), the authority of CEMEX gave the focus to their shareholders by providing a fund allocation. The management allowed its workers to grow with the growth of the organization. The company CEMEX is well known for its good quality products in building materials. There are almost 260 distribution centres of CEMEX around the world. Although the company always provides good quality products to its customers and good customer service, it enables the authority for more growth (Portales, 2019).
In 2007, the company received an award from OAS for social benefits in Mexico. The authority always works on the matter of performance for better improvement and to provide better customer service. As stated by Romero et al. (2019), for more success of the company the management develops and builds methodologies. For any organization to become successful, the management should give priority to improving.
Improvement is always important for any kind of work to deliver the result more effectively. The company CEMEX always believed in the matter of improvement from the very first. A company can grow rapidly with time if the authority gives value to its employees, shareholders, customers, product quality, and services (Rahman and Choudhury, 2019).
The main critical success factor of this organization is the authority’s financial strength and reputation. The company works in almost 50 countries around the world. The authority and its management have good management qualifications. Management qualification is always important for success in any organization. The management gave priority to the matter of customer services and the quality of their building products. Before internationalization, the authority of CEMEX had good knowledge of markets. Marketing knowledge is essential in business for productivity (Witell et al. 2017).
In a critical success for any organization, image with stakeholders is very important. The management of this organization has a good relationship with its stakeholders like customers, shareholders, and employees. For the success of this organization, there was available equipment for their productivity. Managing productivity and cost are very important for the success of any organization.
The management of this organization has a good relationship with their suppliers and it helped the company for more productivity and success. Every company should focus on the matter of controlling costs for more productivity and increasing the number of customers (Witell et al. 2017).
The management of CEMEX has a team of expertise in managing and controlling costs. That helped the organization to provide appropriate costs to its customers and proper customer service. The authority and management always gave most priority to the fact of customer satisfaction and customer services. The authority of CEMEX has the management of promotional campaigns. The company is growing rapidly with time and it achieved success after doing its work most effectively. The main key factor to their success is the employees of CEMEX (Rahman and Choudhury, 2019). The management and the workers of this organization did their work most effectively for the success of their organization (Rahman and Choudhury, 2019). The employees, management of CEMEX achieve success with the success of the company. The management of this organization gave priority to the fact of employee and customer satisfaction.
The authority of CEMEX always focused on providing proper services, quality products, and encouraging creativity. As stated by Paul and Mas (2020), the management of this organization gave priority to the facts of strategic focus, finances, marketing, operations, and people. In the fact of strategic focus, there are planning, management, and leadership that the management was focused on. Development, learning, and staff are included in the matter of people. The management of CEMEX focused on the matter of processes, work, and customer relations.
Customer relation is always important for growth and the CEMEX maintains the customer relationship effectively. As stated by Paul and Mas (2020), the management of this company gave priority to proper planning before doing any work. Although to achieve the goal of success, the authority and management of CEMEX worked effectively for the success. Since the management maintained a better relationship with their shareholders, gave priority to the matter of service quality, the organization grew rapidly with time.
2. The RBV of Cemex and its strategic position
Cemex is a company which has been existing in the industry for quite a long time. The company has its headquarters in Mexico, from where it got easy access to the required resources. As per Aydiner et al. (2019), the company got hold of various similar industries from its strategic position in the Latin American continent. The Venezuelean giant called Vencemos was acquired by Cemex which has provided it with a huge basis in the Latin American Continent. The company then decided to make a strong footing in the powerful neighbour country of the United States of America.
Figure 2: RBV Model
(Source: Grundy et al. 2016)
The organisation has been careful to acquire various strategic locations as well besides expanding to the United States of America. It has acquired several African and American countries that are very rich in resources like Nigeria and Costa Rica. This process of expansion to key resource locations has given Cemex a huge competitive advantage over most companies (Berisha Qehaja et al. 2017). The business policy of Cemex has currently led it to one of the top 10 companies in the Global scenario.
Tangible
The tangible resources that are mostly required by a cement industry is the availability of good quality rocks and sand in a nearby location. This is hugely provided by the sandy plains of Mexico and America. As per Bruijl et al.(2018), the rest of the mineral rich rocks can be easily acquired from Trinidad, Jamaica and others. This has made Cemex to easily allocate the resources on time.
The acquisition of the London based RMC group has been a major card player for financial growth of this company. This has given Cemex the opportunity to capture the lucrative European markets. Cemex has subsidiaries in various Asian countries too. The establishment of its base in Malaysia is also of key strategic importance. Malaysia is a manufacturing and commercial giant of the east (Gregory et al. 2019). So this gives an important opportunity of accessing these resources as well.
Intangible
The various business houses need to take care of their intangible assets as well to be able to stay in the industry for a very long time. As per Grundy et al. (2016), components like goodwill and Corporate Social Responsibility are some of the key assets that drive the business forward. Cemex has worked quite well to develop a good image in its hometown of Mexico. As a part of the Corporate Social Responsibility scheme it has built numerous houses for the people of the low income groups. But the image is a little tarnished in other countries, especially the USA. Time and again Cemex has been accused of harming the environment through its factories. The situation is such that cases have been filed against this organisation. In the United Kingdom the highest fine was charged because of environmental pollution. Another case happened where The government in California had charged huge amounts of fine because of the presence of cadmium deposits in the air (Hanggraeni et al. 2019). So the intangible assets of this company should be increased through more social work and environmental controls outside the USA.
Cemex makes cement and also other ready mixes for construction work. The presence in various developing as well as developed countries gives an unsurpassable strategic advantage to Cemex. Many developing countries around the world are undergoing major developmental works to enhance various public utilities. According to Haseeb et al. (2019), these developmental works require cement and its associated products.
So these countries will provide both raw materials as well as the required markets for the sale of its products. In this era of globalisation almost every day a company is expanding its ventures in the global market (Pervan et al.2018). But this is mainly in the case of software and service related industries. However this is rare in the case of companies associated with building products. Thus it can be said that being one of the major players in this field of building materials has got huge profits.
The ample resources can be easily channelized by Cemex and sell them in the required areas. The mergers and acquisitions that Cemex has done to expand its business has given some unforeseeable advantages as well for this organisation (Li et al. 2019). Some of the companies that have been acquired had already got a significant presence in their respective home markets. So these business decisions have paved the way for Cemex to become one of the global giants.
3. Challenges faced in the industry to provide a competitive battleground to Cemex
The world of almost all industries is fast changing in this era of globalisation. The constant and extreme pressure to stay relevant in the market have influenced some of the major business decisions of various corporate giants like Cemex. As per Savitri et al. (2021), each company has got to keep both its corporate image and strategic position equally balanced to stay in the business for a long run.
The cement industries are known to be some of the major industries to cause pollution. So governments keep a strict control upon the pollution control measures of this industry. Thus Cemex being a member of this industry had also gone through these tests. In California the government posed huge fines on this industry for not meeting the required pollution control norms (Vitari and Raguseo, 2020). In another event in the United Kingdom an incident happened where Cemex was charged with a record fine for violating the pollution control rules of that industry.
Figure 3: Porter’s Five Force Model
(Source: Savitri et al. 2021)
The current situation of Cemex in the industry can be analysed with the help of Porter’s five force Model
Customer Bargaining Power
The customer bargaining power has increased a lot these days with the coming up of numerous competitors in the market. The situation is however grim in the case of certain countries like Mexico where the government has placed a total ban upon the private cement industry during the time of President Hugo Chavez (Savitri et al. 2021). The customers of such countries where the product has been nationalised are hardly going to buy products at a much higher rate.
The people of such countries like Mexico are going to receive products at a lot cheaper rates because of the nationalisation. As per Zhang et al. (2020), some may desire high quality products which will make them go for Cemex, but that will be a rare case. These days many companies are even bringing up various variants of the same old product.
Threat Of Substitutes
A lot of substitutes have come up in the cement industry that is causing an alarm among the manufacturers. The uses of Fly ash and Silica fumes have eaten up some of the market of Cemex as well. The substitutes include some materials which provide quite a good quality result (Zhang et al. 2020). Moreover, there are certain projects that favour the use of carbon friendly material. So, cement which causes pollution is gradually getting replaced by various such counterparts.
Internal Competition/Rivalry
The internal competition and rivalry is there in almost all the industries including cement. One of the largest competitors of Cemex is Lafarge NYSE. The aim of Cemex to originally reach near its competitor through merger fell short which made it look for another firm for help (Bruijl et al. 2018). The Rinker deal which was made by Cemex to expand its business fell short of the plans as the government disapproved of the acquisition. The problem for the government’s side has been persistent in the case of Mexico as well. Here due to the nationalisation of the cement industry by the Chavez government, the cement industries have received a huge jolt.
Supplier Bargaining Power
The suppliers who supply the basic raw materials for the cement industry are also taking advantage of the competitive situation. Though Cemex has a hold over some of the major supplying areas, it still has to depend upon some suppliers. This happens because this company requires a huge amount of raw material to meet its needs (Li et al. 2019). The competing companies these days are keen to take over the suppliers as subsidiaries or going into an agreement. The race is thus to locate and acquire the key resource areas as soon as possible. This has resulted in a constant tussle between the corporations.
Threat of New Entrants
The cement industry is also changing at a very fast pace. New products are coming almost every day in the market. This causes a sudden uncertain situation for the old companies (Vitari and Raguseo, 2020). Companies are coming up with eco friendly products thereby posing challenge. In other words, it can be said that product diversification is a recurrent trend even in the case of the cement industries. So customers are also taking advantage of this scenario as well. This thus makes new companies to come up with newer variants from the very beginning.
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