Strategic Management in Cemex
Strategic management is an essential aspect of any organization that wishes to stay ahead of the competition and increase its growth. This analysis gives an account of Cemex, one of the leading cement producing company in the world. The analysis demonstrates how the company's mission and vision align with its plans to penetrate the Indian and Chinese market through strategic management since the two markets have shown a high market potential despite having a high number of players in the industry. A description of the company objectives and strategic capabilities is outlined and how they can help it achieve its goals. The analysis gives an account of the implications of the strategic management embraced by the company in international markets and how it manages risk in this competitive industry as mentioned in Guillén and García-Canal (2009). An explanation of the competitive capabilities and an alternative strategy which the company can use to sustain its operations in the Oman region are discussed.
Profile of Cemex
The company is one of the leading producers, suppliers, and sellers of building materials such as cement and aggregates. Cemex prides itself in established trade relations with more than one hundred countries across the globe. Many of the company operations are in Europe, United States, Asia, Africa and the Middle East. According to Kaynak, Mockler and Dologite (2014), the company success is attributed to strategic management and risk management approaches that are embraced, which have helped keep it in business even during the tough economic times. However, despite being named as the third largest cement producers in the world, the company has not penetrated the Chinese and Indian markets where there is a high market potential despite having many players. The company has embraced a standardized business process approach. It has embraced mutual training and learning for its employees, and high levels of innovativeness are central to the company operations. This analysis gives an account of a strategy that the company can embrace to maintain sustainability in the Oman region and penetrate new markets such as China and India.
The desired future state and aspirations of the company
Company mission
The company has the mission of serving the needs of all its global customers with quality building materials. According to Ghemawat (2013), the value of stakeholders remains central to its operations, and efforts are made to increase their value from its strategic operations. With an intention of becoming a leading player in providing efficient services, the company embraces high levels of innovativeness for a competitive advantage. Cemex also seeks to become a leading company concerning profits acquired from the sale of quality building materials to its customers globally.
Company vision
The company seeks to ensure innovativeness in its operations, providing quality products which offer maximum benefits to the customers and ensuring safety in the construction industry. To ensure a sustainable, beneficial and productive construction industry, Cemex intends to partner with its stakeholders such as the customers, suppliers and the communities where it operates.
Objectives of the company
In its operations, the company management has some objectives that it intends to achieve to see the company become the best global cement providers in the world.
Providing its customers with high-quality building materials at an affordable cost remains one of the top priorities of the company.
Operating a profitable business which ensures increased shareholder and stakeholder value.
Operational excellence where the customers can get building materials anywhere in the world within the shortest time possible.
Ensuring sustainable development activities through efficient production measures that embrace high levels of innovativeness and recognize the need for environmental conservation.
Ensuring strategic leadership and management in all its conglomerates across the globe through partnership and collaboration.
Working in close contact with the community, stakeholders by embracing ethical practices and all aspects of integrity.
Taking advantage of any viable opportunities through strategic leadership and management and turning them into profitable ventures.
Strategic capabilities
Strategic capabilities are the key aspects that play a significant role in ensuring a company has a competitive edge that is sustainable over a long period. There are some strategic capabilities that place Cemex at the top of the competition in the industry. According to Payaud (2014), the resource-based approach is one of the major aspects that gives the company high chances of remaining sustainable in its operations. The company strong financial base places it in a better position to hire the best-qualified professionals. The company can adopt the more efficient and recent form of technology. Many companies have turned to lost followers or corporate due to redundant capabilities. One example is Nokia which was at one point a major player in the mobile phone industry, but later it lost a competitive advantage. The high level of innovativeness embraced by the company gives it a redundancy capability. Cemex also enjoys a dynamic capability in its strategies. This involves the ability to adapt effectively to the changing business environment. The company's ability to spot opportunities and possible challenges through its risk management strategy has been one of the highest contributors to a competitive advantage. Through dynamic capabilities, a company can seize any new opportunities that are emerging. This has enabled Cimex to buy off and merge with other companies from different regions across the globe. For many companies operating in global markets, there is a problem with the threshold capability.
According to Cullen and Parboteeah (2013), the threshold capability is the ability of a company to meet the qualifications or criteria used to evaluate possible players in a given country or region. The core competencies of the company are also a major strategic capability that places it ahead of the competition. The efficiency of the company operations is above the industry average. Customers of the company can get their building materials within the shortest time, probably within 30 minutes after placing their order for those located in urban and accessible areas. The company trucks are secured through an advanced technology tracking system. The company can offer lower prices to its customers due to the economies of scale that make production cost lower. The company also focuses on areas with poor road networks where the customers lack reliable and efficient suppliers. This is a unique competency that has made customers develop confidence in the brand. Good leadership, innovation, and business architect form the backbone of the company strategic capabilities.
Implications of Cemex strategic management in expansion and risk management
International market expansion
The pursuit of a global strategy in international market expansion by Cemex has contributed to standardization. Similar goods of the same quality are sold in different regions where the company has operations, due to the pursuit of a global strategy. This has contributed to increased integration of the company businesses. The company has pursued many cases of post merger integrations due to the global strategy. The company has bought off many players in the cement industry in the regions it has operations due to the strong financial resources. With a global strategy, economies of scale sets in, and this encourages increased levels of innovativeness. The company expansion strategy has increased competition from major players in the industry that are seeking to retain their competitive edge. According to Hamel and Zanini (2014), the success of the company in many developing economies has contributed to the adoption of the in-house management approach by many players in the industry in an effort to emulate it. There has been a growth in the production of ready mix cement in developing economies
Risk management processes
According to Peng (2013), one of the core competencies in the operations of Cimex has been the risk management approach. The company has been able to operate in areas that have poor road networks and telephone communication due to the advanced technological system. It has also been able to recover economic shocks and even buy off other companies that are not able to remain sustainable after such shocks. The diversification and penetration of new markets have been behind the ability of the company resisting major economic shocks. The move has contributed to innovativeness and development of rural areas because Cemex has been able to supply such areas with construction materials. Many global players are also embracing the strategy of investing in different economies in a bid to have exit strategies from cases of risk. According to Kim and Mauborgne (2014), risk minimization strategies such as the use of satellites have contributed to cost reduction in the operation of the company through automation. It is through risk management that the company has ensured sustainability in its operations in the competitive cement production industry. The enterprise risk management used by the company has been the basis from which the company management makes decisions to avoid any adverse conditions that are likely to impact on the business, employees, the society, and the environment.
Competitive capabilities
Cemex has been able to sail to the top of the cement production industry due to certain aspects that have granted the company a competitive advantage. As mentioned in Magretta (2013), strategic management and enterprise risk management have been central to the company success and competitive edge. Through its risk management department, the company can predict economic, social and political risks. The move has played a good role in strategic intelligence and the development of effective mitigation strategies. The company is responsive to its customers an aspect that has increased customer confidence in it. The company ability to supply cement and construction materials in areas that have poor communication and road network has been a key factor in its preference by many customers in the industry. Many companies had not had the confidence to penetrate into such areas, but Cemex has proven to be a reliable supplier.
The use of the satellite and tracking systems has ensured that there is efficient communication and security for its tracks and those using them to supply building materials to the customers. As Schneider (2013) mentions, the company is in possession of advanced technology in the cement production sector. The technology that the company has is inimitable giving it a competitive edge. New production techniques that regard the safety and health of the employees are used due to the improved technology. Measures to protect the environment are also enhanced due to the improved technology that the company possesses. Through the high levels of innovativeness, Cemex has been able to use alternative sources of energy that are environmentally friendly and help in water conservation as Carneiro and Brenes (2014) explain. Many companies in the cement production industry have been accused of high levels of water consumption and environmental degradation due to lack of alternative energy production measures. In addition to operational efficiency and innovativeness, the company enjoys a strong financial resource base. According to Rothaermel (2015), this comes from the high number of subsidiaries and merges it establishes in developing economies. The strong financial base has been the basis for the acquisition of other players at the highest bids. The company has been able to recover from financial shocks due to negative economic conditions. The advanced technology in its possession is as a result of the good financial resources. It can take advantage of any lucrative opportunity anywhere across the globe because it has the money. The other thing from which the company derives competitive advantage aspects includes the strong brand as Epstein and Buhovac (2014) mention. The company is easily acceptable in new markets due to its strong brand and its personnel identify with a similar organizational culture through training on the “Cemex way”.
Alternative strategic plan for Cemex
There is a high growth potential in the Oman cement industry. Despite the success of the global strategy by Cemex in its business approach, the strategy may not work in other regions. It is essential for the company to embrace a different strategy in some markets that recognizes the cultural aspects of the local people. Culture plays an essential role in the success of multinational companies' businesses. Oman being a Muslim country, it would be effective if the company aligns its global strategy with the local business practices of the Oman people. To ensure a sustainable business in Oman and any other markets such as China and India, the company should embrace a transnational strategy as McGrath (2010) recommends. This will enable the company to effectively align the multi-domestic strategies and the global strategy in a bid to have a sustainable business. Markets are different, and the preference of the Oman people is different from that of the Mexican, European and American customers. Proper coordination is essential to ensure that a transnational strategy works. Companies that have embraced the transnational strategy have proved to perform better as compared to the ones that use either global or multi-domestic strategy only. Examples of such companies include the BMW and Ford Motor. The local people in Oman will identify better with the company if it combines both global and multi-domestic strategies. The approach can also be used in the Indian and Chinese market combined with all aspects of corporate social responsibility.
Conclusion
Cemex is one of the major players in the cement production industry holding the third place globally in production, distribution, selling of cement and other construction materials. Strategic management has been one of the aspects that have contributed to the success of the company by aligning its mission and vision of its objectives. According to Lessard and Lucea (2009), different strategic capabilities such as the threshold, redundancy and dynamic strategies have also contributed to the company’s success. Some of the competitive strategies by the company include the risk management and the global strategy. This has contributed to some positive impacts in the industry such as innovativeness. To ensure a sustainable business in Oman, China, and India, where it has a minimal presence, the company should embrace a transnational strategy as an alternative to new markets.
References
Carneiro, J., & Brenes, E. R. 2014. Latin American firms competing in the global economy. Journal of Business Research, 67(5), 831-836.
Cullen, J., & Parboteeah, K. P. 2013.Multinational management. Cengage Learning.
Epstein, M. J., & Buhovac, A. R. 2014. Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.
Ghemawat, P. 2013. Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Press.
Guillén, M. F., & García-Canal, E. 2009. The American model of the multinational firm and the "new" multinationals from emerging economies. The Academy of Management Perspectives, 23(2), 23-35.
Hamel, G., & Zanini, M. 2014. Build a change platform, not a change program. Retrieved November 12, 2014.
Kaynak, E., Mockler, R., & Dologite, D. G. 2014. Multinational strategic management: an integrative entrepreneurial context-specific process. Routledge.
Kim, W. C., & Mauborgne, R. 2014. Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business Review Press.
Lessard, D., & Lucea, R. 2009. Embracing risk as a core competence: The case of CEMEX. Journal of International Management, 15(3), 296-305.
Magretta, J. 2013. Understanding Michael Porter: The essential guide to competition and strategy. Harvard Business Press.
McGrath, R. G. 2010. Business models: a discovery-driven approach. Long range planning, 43(2), 247-261.
Payaud, M. A. 2014. Marketing strategies at the bottom of the pyramid: Examples from Nestlé, Danone, and Procter & Gamble. Global Business and Organizational Excellence, 33(2), 51-63.
Peng, M. 2013. Global strategy. Cengage learning.
Rothaermel, F. T. 2015. Strategic management. McGraw-Hill.
Schneider, B. R. 2013. Hierarchical Capitalism in Latin America. Cambridge University Press.
