By Bharathwaj Mohan LT 7A

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CEMEX is founded in 1906 with the opening of the Cementos Hidalgo plant in northern Mexico.

Annual sales US$ 5.14 billion, Production Capacity 96M tons

One of the leaders in each of our core businesses: cement, aggregates, and ready-mix concrete

Presence in more than 50 countries across the Americas, Europe, Africa, the Middle East and Asia

Trade relationships in more than 100 nations and one of the world’s top traders of cement and clinker

Product Background

Cement was made by adding crushed volcanic ash to lime and was later called a "pozzolanic" cement

Company Background

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Target Market

Formal

Informal

Revenue per customer

Formal consists of large scale customers, middle and upper income individuals. (40% of total population)

Informal consists of do it yourself homebuilders and low income individuals (60% of population)

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Strategic Group Data

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PEST Factors

Political• Government controls the price of the cement.• The consumption of cement for infrastructure projects like buildings

and roads.

Economic • Currently there is boom in the industry.• Favorable for the export segment of the industry as the number of infrastructure

projects across nations is increasing.

Social• Cement is the basic ingredient for construction of house which reflects the social

status of an individual. • Cement industry has both organized and unorganized sector.

Technological• From mining to storage, the process is highly dependant on technology.• Decrease the thermal energy consumption, electrical energy consumption, cost of

production of cement and energy cost.

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5 Forces of Industry/Strategic Group

Among existing players

Threat of New Entrants (High)

Bargaining Power of Buyer (Low)

Threat of Substitute products (Low)

Bargaining Power of

Suppliers (Low)

Conclusion: Overall, the industry is attractive.

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Strategic Maps 1

H

Delivery M

L

L M H

Brand Equity

Holcim

Lafarge

CM

Conclusion: CEMEX has a better delivery but their brand equity is medium. Market share depends more on brand equity.

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Strategic Maps 2

H

Fineness M

L

L M H

Customer Retention

Lafarge

Holcim

CM

Conclusion: Finer cement is easier for construction and hence customers prefer brands with finer cement quality.

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Strategic Maps 3

H

Packaging M

L

L M H

Strategic Acquisitions

Holcim

Lafarge

CM

Conclusion: Good packaging of cement helps reduce wastage while transportation and plays an important role.

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Key & Threshold Success Factors

Brand Equity

In the case of cement, the brand recognition is important as it influences the decision of the buyer. The quality is the same for any brand and obviously people buy the known brand.

Delivery The speed and efficiency of delivery to the customer plays a crucial role as people prefer to have quick delivery.

Packaging

The packaging material is usually paper or polyethane bags. The bag quality is very important as they are stored in the open and moisture is harmful to cement.

Customer Retention

Customers includes big real estate builders who order in bulk. Their demand for cement is constant as they keep constructing buildings.

Fineness of cement

Finer cement is preferred by the masons as it is easier to mix with water and sand to make concrete. Strategic Acquisitions

It does not directly influence the decision of the customer’s buying pattern but helps capturing new markets. Price

Price of cement is fixed by the government and companies take advantage of efficient supply chain to reduce costs.

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Competitive Matrix

Conclusion: The customers prefer a brand based on brand equity and Delivery capability and Price is a threshold as it is fixed by the government.

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Triangle Model

Vision/MissionKey Success Factors

Brand Equity

Delivery

Packaging

Customer Retention

Fineness of Cement

Strategic Acquisitions

Price

Strategic Competencies

High Production Capacity

Efficient distribution network

Lean Management

Premium service offerings Patrimonio Hoy program Timely delivery of cementMaximizing overall performance

Value Proposition

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Mission/Vision/Values of CEMEX

Mission Statement:

Our mission is to serve the global building needs of our customers and build value for our stakeholders by becoming the world's most efficient and profitable building materials company.

Vision Statement:

We at the CEMEX Shared Service Center know about ourselves, that we are a knowledge based value added services provider, delivering our product portfolio above industry level benchmark achieving customer and employee engagement.

Values

Collaboration

We work with others in a collective pursuit of excellence. Collaboration is at the core of all our relationships. We collaborate with customers, colleagues, suppliers, and other partners in order to reach common goals.

Integrity

We act with honesty, responsibility, and respect towards all the people and organizations with which we interact.

Leadership

We aim to be leaders not only in the building materials industry, but also in all of our relationships. We are a company with a sound vision for the future based on sustainability, excellence, and innovation.

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Ladder Model

Resources:- Product- People- Capital- Knowledg

e- Technolog

y- Suppliers

Incompetency

Competencies:- Strong supply

chain- Well

distributed network

- Volume Sales- Well located

shops- Technology- Cost Culture- Product Mix- Timely

delivery- Consistent

production

Strategic Competencies:

- Strong supply chain

- Well distributed network

- Volume Sales- Technology- Cost Culture- Product Mix- Consistent

production

Peripheral Competencies:

- Well located shops

- Timely delivery

Threshold Competencies:

- Volume Sales- Consistent

production

Distinctive Competencie

s- Strong

supply chain- Well

distributed network

- Technology- Cost culture- Product Mix

Competitive advantage:

- Technology- Well distributed

network

Sustainable Competitive advantage:

- Strong Supply chain

- Cost culture- Product Mix

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Long Term Objectives

Overall, CEMEX has identified close to US$500 million in recurrent annualized cost reductions.

Some of the cost reduction initiatives include budget cutbacks, capacity closures, and headcount reductions.

Continue to re-evaluate all of the processes and procedures of the business, on a global basis, with a view towards achieving significant overall cost-reduction and appropriate rightsizing of the business.

Groundwork for Internationalization

Stepping Out

Growing Up

Stepping Up

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New Triangle Model

Vision/MissionKey Success Factors

Substitute for limestone

Use of alternative fuels

Packaging

Brand Equity

Delivery

Customer Retention

Price

Strategic Competencies

High Production Capacity

Efficient distribution network

Lean & Agile Management

Premium service offerings Lessen the houseless people Timely delivery of CementMaximizing overall performance

Value Proposition

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New Matrix

Key Success Factors Weightage Cemex Holcim Ltd Lafarge S.A

Substitute for limestone 25% 8 9 8

Alternative fuels 15% 9 8 7

Packaging 15% 8 9 8

Brand Equity 15% 8 9 8

Delivery 10% 8 8 8

Customer Retention 10% 8 7 8

Price 10% 8 8 8

Total scores 100% 7.35 7.65 7.05

Market Share 100% 17% 30% 24%

Conclusion: Limestone which is the raw material and Coal which is fuel used for firing is a non renewable resource and hence there will be a need to find a vastly available substitute to meet the future demand once the deposits are exploited.

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SWOT Generation of Strategic Options

SWOT Analysis

StrengthS1 Brand Image/LoyaltyS2 Quick DeliveryS3 Dominant position local

marketS4 High R&D Investments

WeaknessW1 Lack of identifying proper partnersW2 Resource constraint in International

Division.W3 Poor International brand name.

OpportunitiesO1 GlobalizationO2 First time ConstructorsO3 Better Marketing in

Emerging Markets

Strategic OptionsS1 O2 Better BrandingS2 O3 Increased customer base.

Strategic OptionW1 O3 Choose international partners carefully.

ThreatsT1 Rivalry with small

cement producersT2 Competition from new entrantsT3 Changing Customer

Demands

Strategic OptionS4 T3 Product InnovationsS3 T2 Acquisitions

Strategic OptionsW2 T1 Alternative raw materialW3 T2 Better Service

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Options Filter

Strategic Options LTO30%

VP30%

Organizational Capability

30%

Alignment with Mission/Vision/

Values10%

Total Score

Better Branding 8 7 8 8 7.7Increased Customer base 7 8 8 9 7.8

Product Innovations 7 7 9 8 7.7Strategic acquisitions 8 7 8 8 7.7Alternate Raw Materials 6 5 7 7 6.1

Better Service 7 8 7 8 7.4

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Focus on core business of cement, aggregates and ready-mix concrete Provide customers with the best value proposition Regain financial flexibility Maximize operational efficiency Foster sustainable development

Short & Long Term Recommendations

Find an alternate source of raw material as limestone is non renewable. Use of alternate source of fuel apart from coal for firing purpose. Lean management technique to eliminate waste and improve process. Innovative way of delivering cement to the poor who are potential

customers.

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BIG- B Framework

This Model is based in 3 objectives and focuses on 7 action oriented priorities:

Enhance Value Creation• Lead in Sustainable Construction• Low Income Housing & Infrastructure

Manage Footprint• Enhance our Carbon Strategy• Excellence in Environmental &

Biodiversity Management

Engage Stakeholders• High Priority to Health & Safety• Strengthen local communities• Partnership with Key Stakeholders

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Sources

www.cemex.com

http://www.dominicantoday.com/dr/economy/2010/7/7/36244/print

http://www.managementexchange.com/story/shift-changes-way-cemex-works

http://www.crisil.com/Ratings/SectorMethodology/MethodologyDocs/CRISIL-Ratings-crieria-cement-industry_2007.pdf

Thank You