The benefits that Cemex and the other global competitors have gained from globalization
Globalization has enabled the companies to specialize in activities that are likely to be profitable for them. The cement industry is localized, but in many cases, the products have been imported to other countries. Globalization has enabled Cemex to make the products with a global perspective in mind because competition has also intensified in the market. Cement can be imported from the neighboring country into the local market to compete for the existing clients. The customers are always interested in products that are of high quality and are readily available to them. In a nutshell, globalization has enabled the companies to specialize in the products that they are producing and strive for the competitive advantage which makes them produce quality products for the benefit of the company. The competition has enabled the companies to have the desire to grow and serve a larger clientele so that they remain relevant and build their brand. Globalization has increased the emphasis on branding and having a good reputation in the market for the benefit of the company. The need to specialize that was brought about by specialization has improved research and development in the company that enables Cemex to find out the other products that they can produce in the market. It has also led to an increase in the company’s capitalization as they improve their systems to meet the international standards (“Business Strategy – CEMEX,” n.d.).
Globalization made it possible for Cemex to compete with the old incumbents in the market. The competition has played an important role in making the organizations work on the quality of their products so that they are not outcompeted. The old incumbents are veterans in the market, and they have mastered the art of manufacturing and marketing hence they always have a competitive advantage over the others. However, with the increased globalization, the methods of communication have improved immensely meaning that it is easier for the companies to communicate to both the existing and the prospective clients. The new companies, therefore, take advantage of the new communication systems to take on the incumbent companies as they fight for the market share. Cemex is therefore accessible to the new methods of communication that enable them to market their products and increase their market share. It is also important to note that the cutthroat competition has led to some companies using dubious methods that give them unfair competition (“Mexican multinationals: Insights from CEMEX,” n.d., p. 280).
Globalization has also enabled Cemex to get the best staff that will help in raising the standards of the company to the benefit of the society. Having the best staff means that the company will receive the best services that will enable them to produce high-quality products that will make them competitive in the market. One of the biggest challenges that the companies face is getting the best employees and retaining them in the company. The incumbent and well-established companies have the habit of taking the best employees from the upcoming companies since they desire to have the best services from the people. Cemex has also been able to get some of the employees from the competitors, which has enabled them to manufacture high-quality products since the staff is skilled and competent to carry out the task on behalf of the company (“Business Strategy – CEMEX,” n.d.).
The inflation rate in the countries has also been regulated as a result of the globalization, a situation that has led to the development of the economy which is beneficial to the companies that are operating in the country. The decrease in the rate of inflation has also decreased the cost of production and increased the buying power of the people in the country leading to an increase in the clients. The increased number of customers has led to an increase in revenue to the cement manufacturing companies such as Cemex. Countries that have a high inflation rate do not favor the businesses since demand goes down because people do not have money to spend. Globalization has also led to the adoption of the new designs of building houses hence the people in the country are likely to use the designs in building houses hence increasing the demand for cement. The cross border activities, therefore, have a great impact on a localized industry such as the cement industry in the market. Globalization has led to an increase in the cross-border activities that are important for business (Venkataraman, Allayannis, & Yemen, 2017, p. 27).
The recommendations for Cemex with regards to its globalization strategy moving towards an international expansion goal set for 2020.
Cemex globalization strategy involves pursuing the markets that offer long term profitability. The strategy is good because it leads to the improvement of the business and the whole brand in the world. However, there are several recommendations that the company should consider with regards to its marketing strategy. The company should train the staff in matters concerning globalization so that they know how to use the concept for the benefit of the company and the improvement of the business. Trained staff will always know what to do at the exact time when they are supposed to do it. In the case where the employees present are not hard working to ensure globalization, then the company should consider getting hard working employees that are dedicated to enabling the organization to succeed in its endeavors. The company should also focus on the long term growth of the business as opposed to the short term growth that does not profit the company. The company prefers to operate in the markets that offer long term profitability. However, it should be noted that the company should also serve even the markets with the short term profitability because apart from making profits, the company has the responsibility of serving the society. Companies that are committed to serving clients in the society are likely to succeed and become more profitable compared to the ones that are mainly profit oriented. The company has a diverse portfolio of assets that can be used in improving the market and ensure that they have organic growth from the medium to the long term in the organization. The company should also come up with several subsidiaries that will be used in the improvement of business and increase their profitability. The company should consider social investment as a way of having a good social standing that will enable them to have more clients and improve business. The company may also ask the investors on their thoughts about the ventures that re carried out by the organization as a way of pleasing them and coming up with the ideas that will build up the business. Globalization has enabled the companies to specialize in activities that are likely to be profitable for them. The company should also employ sustainable measures that will enable them to be successful even in the cases of inflation in the economy where they operate. The suggestions are aimed at making the business successful in any environment for the benefit of the clients and the people in the society (Venkataraman, Allayannis, & Yemen, 2017, p. 12).
Business Strategy – CEMEX. (n.d.). Retrieved from https://www.cemex.com/investors/key-company-data/business-strategy#navigate
Mexican multinationals: Insights from CEMEX. (n.d.). Emerging Multinationals from Emerging Markets, 280-311. doi:10.1017/cbo9780511576485.010
Venkataraman, S., Allayannis, G. (., & Yemen, G. (2017). Taking a Mexican Company Global—The CEMEX Way. Darden Business Publishing Cases, 1(1), 1-27. doi:10.1108/case.darden.2016.000288