Introduction
Strategic management is defined as the process of implementing and stating certain strategies for the company to achieve desired objectives of the organization. The managers at leading organizations lay out the strategic objectives and make sure that strategies are being implemented to achieve the desired goals. The strategic management is a successful way to set the directional path for an organization to achieve the desired state. The risk management and market expansion globally can pave the smooth path for an organization to achieve the strategic goals. The objective of the research paper is to develop an understanding of the strategic capabilities and steps taken by companies to set out a clear strategic path to achieve strategic goals.
Vision and Mission
A clear vision and mission play a vital role in determining the success of an organization. CEMEX's vision is to aim at achieving the highest place in the cement industry and mission of CEMEX is to serve the global building needs of consumers and build its value by becoming efficient and proficient cement producing company.
Organizational Objectives
The objectives of CEMEX are clearly defined as strengthening the trade relationships in more than 100 nations, becoming the sole provider of the cement, and becoming number one cement producing company in the world. It revolves around the strategies implemented by the 3rd largest cement company in the world. CEMEX is world’s leading cement producing company owned by a Mexican family since 1906 (Gibbons, Scott, and Fhionnlaoich).
Strategic Capabilities
CEMEX became the 3rd largest cement producing company in 1996. CEMEX faced a lot of global competition because of not being placed in emerging massive markets of China and India and decided to revise the strategies required to make the company number one. The company planned out a strategy to become one of the leading cement companies and deployed expansion and risk management within the strategic goals. The case study refers to the strategies and other steps taken by the CEMEX to win the race of becoming the world’s number one cement producing company.
Critical evaluation of strategic implications
International Market Expansion and Risk Management
It highlights the important steps implemented by the managers to make the company known worldwide and steps taken by the company to deploy strategies to regulate the international market expansion and risk management in a competitive market. CEMEX has a certain set of values where it states it is more than just a cement brand, and they believe in making their customers the top most priority. Other values such as ensuring safety, working with integrity, pursuing excellence, and working as one CEMEX are deployed. The company has been involved in enhancing the strategic capabilities of the company by carefully incorporating strategic plans such as expansion and internationalization. It also highlights the three important steps taken by the company to make sure that they are the world’s number one cement producing company. CEMEX has deployed three main steps that are consolidating its presence in the Mexican market, internationalization, and global management (Cemex).
The aim of the paper is to focus on the analysis of strategic capabilities of the company and implications of strategic management. It also focuses on an alternative strategic plan proposed for the company to achieve the desired stated goal that is becoming number one cement producing company. The vision of the company states that CEMEX seeks to contribute to the development by providing solutions that generate welfare for the consumers. CEMEX is clear about its vision, and the company is working on the agendas to improve the globalization of the company. They believe in flexibility, sustainability, full dedication, and promotion of innovative ideas. The mission of the company is to serve the building needs of consumers and strive for becoming the most profitable and efficient cement producing company. Referring to the case study by Donald R. Lessard and Cate Reavis, when CEMEX decided to enhance the strategic capabilities to become world’s leading cement producing company, the managers at the headquarters deployed some strategies to achieve the goal. In 1985, when Lorenzo was working as head of the department, the company was in its developing stage and was doing well. It was involved in other entities like petroleum and mining projects and was also listed in Mexican stock exchange. CEMEX by signing the GATT agreement in 1985 became interested in globalization and internationalization to make a mark in the world. With the promising growth potential, managers started deploying strategies involved in the globalization of the company. Risk management in the competitive market gave more opportunities to the company to work on the strategic capabilities.
Risk management is defined as an iterative process of carefully examining and applying the management policies and practices to achieve the strategic goals. With the increased competition from the international market, Lorenzo proposed the strategy to declare the cement as core business and divested all non-core cement related businesses into cement assets. Lorenzo had a vision of transforming the Mexican conglomerate into a distinctive cement player with global coverage. Lorenzo focused on making CEMEX which is known worldwide by providing best cement across the globe.
Lorenzo devised strategies accordingly to make CEMEX one of the leading cement producing companies. He carefully deployed two steps in becoming global, initially, the company was made regional cement producer (expansion locally) and finally, became global. CEMEX with the capability of expanding itself globally and implementing strategies to ensure internationalization ended up in becoming the world’s leading cement producer company. Initially, CEMEX was involved in exporting the cement to the USA and Latin America and later on expanded to the Europe’s attractive Spanish market. However, with structural economic characteristics and international trading limitations made it difficult for CEMEX to acquire the desired goal. The company’s encounter with global competitors such as French Lafarge and Swiss Holcim proved to be more productive for the company and CEMEX became a fifth largest cement producing company with 36 million tons of capacity. The success made it more accepted by the international market across the globe, and CEMEX expanded its business in South and North America. The expansion strategy proved to be successful for the company, and it saved CEMEX when Mexico entered crisis in 1996. It was believed that globalization and internationalization can be the factor of success for the company, but this strategy did not help the company in Asia. The strategies were backfired due to the crisis and reduction in demand for cement. The Asian market, before the entrance of CEMEX in it, represented more than 60% of the world’s 1.4 tons cement capacity.
CEMEX is an independent global cement producing company with its operations in different parts of the world including America, Europe, Mediterranean region, and Asia to some extent. It believes in completely integrating international operations into CEMEX network. The company deploys common processes such as technological platform, organizational structure, and corporate culture throughout the system to make sure the uniformity of the system is achieved. The implementation of such strategies has paved the way for CEMEX to become one of the leading cement producing companies. It has developed a “CEMEX way” to ensure that it communicates the same message to entire CEMEX community to achieve the strategic goals. Managers at the organization are instructed to use the same language while discussing business issues. CEMEX promotes extensive leverage on technology which has allowed CEMEX to assure that they care about consumers. CEMEX has a competitive advantage over other companies because of the low cost and advanced technology.
CEMEX has successfully implemented all the strategies to become world’s leading cement producing company. But still CEMEX is missing from the two giant markets of the world namely China and India that represent more than 50% of world’s market. However, with the radical change in the trends, there is need to revise the strategic plan to enhance the strategic capabilities of CEMEX by deploying risk management processes carefully and globalization of CEMEX in Asia. The company needs to work on the vision and mission accordingly to achieve the desired future state which becomes a sole provider of cement in China and India. The company has to undergo an entire process of risk management where it has to pay attention to the risks involved while setting foot in markets of China and India knowing that the Chinese market is fragmented with 1000 local cement producers. The company has to follow eight simple steps while making the strategy of implementing the risk management concept. Identify the risks, causes, controls, establish likelihood and consequences descriptors, risk rating descriptors, add other controls, make a decision, and monitor/review are steps of implementing risk management process to achieve the strategic goals. The strategies of the company for globalization and internationalization have so far proved to be successful in making it the world’s leading cement producing company. Providing the low-cost cement with low trade margin and advanced usage of technology as the strategic capabilities of CEMEX can grant them access to the Asian market.
Competitive capabilities
Strategic capabilities of CEMEX such as low trade margin and deploying other economic factors to ensure the export of cement in the Asian market can give CEMEX a competitive advantage over other cement producing companies. The implications of strategic capabilities such as globalization and risk management strategy have given CEMEX a great advantage over other producers in the market. Still the loopholes cost it to face a crisis in Asia, and the main flaw of CEMEX is not a part of giant markets such as China and India. It calls for an alternative plan to make the company acceptable in the Asian market. The company needs to revise the entire strategic plan to introduce itself in the Asian market. Since China and India are involved in massive projects of construction, CEMEX is required to provide tons of cement to the consumers and timely delivery of cement is required. The increased capacity of CEMEX and deployment of appropriate strategies can end up in the success of the organization.
Alternate Strategic Plan
A sustainable strategic development plan is required by keeping in mind all the factors such as climate protection, emission reduction, local impacts on land and individuals, fuels and raw material used, and employee’s preferences. CEMEX while stepping in Oman, which is an Arabian country need to make sure the climatic conditions are examined carefully. While constructing a plant, there is a need to control the incidents occurring at the sight by carefully keeping the employees safety unharmed (Morden). The SWOT (strengths, weaknesses, opportunities and threats) analysis can provide the company a better understanding while devising a strategic plan. The strengths of cement producing companies in the market and the extent to which new venture/foreign companies are accepted in the market. The weaknesses such as climatic conditions and raw materials used in the market have to be considered by the CEMEX, whether it can come up to the expectations of the market or not. The company should acquire the opportunities such as consumers interested in investing in a foreign company. The threats posed by competitors such as local cement providers and other world leading cement companies have to be addressed by CEMEX (Ghemawat).
Adoption of global technology would help CEMEX in becoming the top cement providing company. Through the achievement of such alternate strategic plan, CEMEX can increase its need in the Asian market and become number one cement producing company instead of third. The future desired state of the company requires it to become an essential part of the market giants China and India. Strategic management plays an important role in providing guidelines to a company. Therefore, CEMEX can carefully examine the strategies and lay out a solid plan for an organization to achieve its strategic goals. CEMEX is a prominent supplier of cement in Europe and America, with the careful examination of demographics it can set foot in Oman market and beat the competitors such as French Larfage and Swiss Holcim. The strategies of globalization and internalization implemented by the company, have earned them a prominent place in the market. With a little revision on existing strategies or alternate strategies can prove to be more successful. The managers at the time of making strategies must always aim at SMART, which is an acronym for specific, measurable, attainable, realistic, and timeline while setting up strategic plan (Leinwand and Mainardi).
Conclusion
Hence, CEMEX has tried to achieve the desired state by employing smart strategic goals and the revision further adds the smart goals to achieve the success. It is concluded through careful planning and thorough research that the company has outdone the competitors by achieving the strategic goals which make it the world’s leading cement producing company (Pupo and Armando). It is concluded that through globalization, internationalization, and risk management processes, the companies can achieve their desired goals.
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