Cemex Case
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CEMEX has grown greatly in the past 20 years through aggressive expansion and geographical diversification practices. Recognition of acquisition opportunities in emerging markets has proven as successful strategy for CEMEX. From this practice the Mexican concrete company has risen to become a leader in the industry. The question now is what options CEMEX faces for moving forward. CEMEX has acquired a large sum of debt due to their expansion practice. One strategic move is for the company to hold the growth and entry into new markets, and use its cash to lower their debt. This de-leveraging would be a conservative approach and would help to satisfy the financial community. This also gives the company an opportunity to focus on the growth of its already existing assets. On the other hand, CEMEX has the option of continue to expand. With another round of mergers and acquisitions under way in the industry, CEMEX could participate and increase it company size. This aggressive strategy would allow for entry into a new emerging market and ensure that the company does not miss out on new opportunities. It would however, increase the already towering pile of debt which CEMEX as acquired. If they do decide to expand, there are more decisions to be made. CEMEX must choose what type of firms to acquire and where. They also must decide whether to penetrate a new, well established market or attempt to work into an emerging market.
To analyze the external environment factors, which will impact CEMEXs decision to pursue emerging or developed marketplaces, we will mainly focus on the following environmental factors: social, economic, technological, competitive, international and natural factors.
The characteristics of the external market factors play a key role when deciding to pursue emerging or developed markets. As far as social and natural reasons, countries have different policies towards the entrance of foreign companies. For example, CEMEX began to enter into the southern United States in 1986, but encountered a setback due to governmental regulations. This failure taught CEMEX a lot and convinced Zambrano to expand the companys geographic reach while keeping in mind that different countries have different regulations regarding foreign organizations. Consequently, Zambrano decided the next market to tap into was Spain due to the relative perfect economic factors. At that time, the demand of cement in Spain grew quickly as predicted. Due to this diversification, CEMEX was able to survive as a corporation even though there was a Peso Crisis in Mexico mainly due to their strong export capabilities and international operations. Another major opportunity CEMEX observed was happening in Asia. The Asian economic crisis caused a negative impact on the construction sector in Asian countries. CEMEX started to buy the undervalued assets in Asia. As the cement market in Asia was growing, CEMEX exploited their vulnerability