Derived benefits from the economic integration process in the international business expansion: CEMEX case

CEMEX is the leader cement company in Mexico and the strategic expansion through the international agreements. The secret to the Mexican IB through the multiple acquisition and standardization. How does NAFTA, MERCOSUR, EUROPEAN UNION where the main road for foreign investment with alltheir benefits and limits for the Infrastructure industry and development for emerging economies.

1. Who is CEMEX?
CEMEX is a leading global material for the construction industry providing high quality products and reliable service to customers and communities in America, Europe, Africa, Middle East and Asia. Its operations network produces, distributes and markets cement, ready-mix concrete,aggregates and related products in over 50 countries, while maintaining business relationships in over 100 countries. The company was founded in Mexico in 1906 and has since gone from having a local presence to become one of the leading global companies in the industry, with nearly 47,000 employees worldwide. CEMEX continuously looks to benefit those it serves through the constant search forinnovative solutions for industry, efficiency improvements and to promote a sustainable future. Fig. 1.- CEMEX have presence in over 50 countries around the world [pic] Source: www.cemex.com/CEMEX_AR2009

1. Strategic Expansion

Two events marked the beginning of what would be CEMEX: the import substitution policy implemented by the various Mexican leaders during most of the twentieth century,and a growth strategy based on the acquisition and integration of national competitors. But at the end of the 80s, as a condition for access to the GATT and in preparation for the establishment of free trade in North America (NAFTA), the Mexican government began opening the country to international trade and FDI. Large companies from developed countries threatened to outperform CEMEX in itsdomestic market.

1. Spain: The big door to internationalization

CEMEX began its expansion into the European continent acquiring the two largest cement companies in Spain, Valencia and Sanson, for 1.8 billion. This allowed to be less dependent on the Mexican market and provided a dominant position in one of the most important markets for its main rivals. Also, assets in Spain allowed CEMEX toaccess financial markets in developed economies. Since the cement industry is intensive in the use of capital, it would have been impossible for CEMEX to continue its international expansion if it had not succeeded in becoming a developed country firm associated with its competitive position in Europe. After the acquisition of two Spanish companies CEMEX reviewed each operational andorganizational process to capture any source that could generate savings and quickly integrated operations between Mexican Spanish.

2. UK: the main road for expansion

CEMEX realized that they have areas of excellence that could become better practices for the entire company and began to codify and standardize the multiple steps required to identify sources of savings in new purchases, establishedoperational practices and management. So, they continued to expand successfully in developing countries where they found great opportunities. In 2005 held a huge purchase that doubled its size with the acquisition of RMC in UK, adding operations in 20 additional countries, mainly in Europe. The acquisition of RMC was a turning point in CEMEX’s international expansion in several respects.

Thesecret was became a company whose sales depended on mature markets. Then CEMEX invested to produce and sell cement as well as a global competitor in ready-mix and aggregates. CEMEX had to borrow to such an extent to carry out this acquisition, that many investors seriously questioned the wisdom of the operation. Shortly after the announcement of the purchase, the value of CEMEX’s Mexican stock…