André Da Silva

Rodrigo

Robles

Katerina

Barka

GROUP 3

Cemex’s Foreign Direct Investment

Overview Success factors FDI Model CEMEX in Indonesia Recommendations Conclusions

Agenda

Overview CEMEX S.A. de C.V. is the world's largest building

materials supplier and third largest cement producer.

Founded in Mexico in 1906, based in Monterrey, Mexico , the company operates in 50 countries around the world .

Employing approximately 57000 people worldwide.

The basic competitors of CEMEX are the Holcim of Switzerland and the Lafarge Group of France.

The company has had revenues of 21.6 Billion and a net profit of 2.4 billion in 2008.

High Technology Infrastructure Low costs Superior customer service Close integration with distributors Commodity differentiation Emerging markets Strong marketing campaigns B2B and B2C

Success Factors

Preference for acquisitions Emerging markets (Latin America,

Indonesia, Egypt, Philippines…) Acquire inefficient companies Horizontal Foreign Direct Investment Mature markets to gain market share (RMC

of Great Britain)

FDI Model

Foreign Investment

Advantages Disadvantages

Transfer of know-how Exponential growth

New technology Complex operations

Increase competitiveness

Multicultural challenges

Increase trade Loss of ownership (Venezuela)

High infrastructure investment (equipment, land…)

Local know-how and contacts High speed access to resources Transform inefficient to efficient companies Avoid barriers to entry

Acquisitions vs Greenfield Ventures

Why CEMEX left Indonesia?

PPP didn’t work out as intended Government failed to fulfill majority

agreement. Government + FMI + CEMEX = conflict of

interests Local interests: politicians and unions

Cemex in Indonesia

Why majority control is so important?

Stability Control the direction of the company Protect business model

differentiation: customer serviceProtect intellectual property rights

Cemex in Indonesia

Indonesia’s best interests were served? Absolutely NOT Free trade is affected No competition monopolies Investments dropped significantly after CEMEX

left Corruption: Government should be a regulator

of national assets

Cemex in Indonesia

Expand The Global Centers for Technology and Innovation to Asia and Latin America)

Look up for Brownfield operations in China Demand for cement in China is expected to advance 5.4%

annually  Cement consumed in China will amount to 44% of global demand China will remain the world's largest national consumer of cement

by a large margin Chinese construction market is booming and will continue to be

over the next decade.

Recommendations

High expenditures in research and technology but help to differentiate product/service

FDI is a key element to expand operations and increase revenues

Challenges Find the right country Make a precise risk assessment FDI can transform a local company into a

worldwide leader in the industry

Conclusions

htpp://www.cemex.com http://

www.marketresearch.com/search/results.asp?sid=24521652

http://www.eluniversal.com.mx/articulo213&userid=rrobles http://www.wsj.com/latinAmerica/cementArticle

Resources

Q & A