Cement Industry - CEMEX

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Information about Cement Industry - CEMEX
Business & Mgmt

Published on March 19, 2014

Author: bharathwajmohan

Source: slideshare.net


CEMEX is baed out of Mexico and is one of the top ten producers of cement in world. This presentation is study of cement industry illustrating some frameworks used in Strategy Management.

By Bharathwaj Mohan LT 7A

2www.cemex.com  CEMEX is founded in 1906 with the opening of the Cementos Hidalgo plant in northern Mexico.  Annual sales US$ 5.14 billion, Production Capacity 96M tons  One of the leaders in each of our core businesses: cement, aggregates, and ready-mix concrete  Presence in more than 50 countries across the Americas, Europe, Africa, the Middle East and Asia  Trade relationships in more than 100 nations and one of the world’s top traders of cement and clinker Product Background  Cement was made by adding crushed volcanic ash to lime and was later called a "pozzolanic" cement Company Background

3www.cemex.com Target Market Formal Informal Revenue per customer Formal consists of large scale customers, middle and upper income individuals. (40% of total population) Informal consists of do it yourself homebuilders and low income individuals (60% of population)

4www.cemex.com Strategic Group Data

5www.cemex.com PEST Factors Political •Government controls the price of the cement. • The consumption of cement for infrastructure projects like buildings and roads. Economic • Currently there is boom in the industry. • Favorable for the export segment of the industry as the number of infrastructure projects across nations is increasing. Social • Cement is the basic ingredient for construction of house which reflects the social status of an individual. • Cement industry has both organized and unorganized sector. Technological • From mining to storage, the process is highly dependant on technology. • Decrease the thermal energy consumption, electrical energy consumption, cost of production of cement and energy cost.

6www.cemex.com 5 Forces of Industry/Strategic Group Among existing players Threat of New Entrants (High) Bargaining Power of Buyer (Low) Threat of Substitute products (Low) Bargaining Power of Suppliers (Low) Conclusion: Overall, the industry is attractive.

7www.cemex.com Strategic Maps 1 H Delivery M L L M H Brand Equity Holcim Lafarge CM Conclusion: CEMEX has a better delivery but their brand equity is medium. Market share depends more on brand equity.

8www.cemex.com Strategic Maps 2 H Fineness M L L M H Customer Retention Lafarge Holcim CM Conclusion: Finer cement is easier for construction and hence customers prefer brands with finer cement quality.

9www.cemex.com Strategic Maps 3 H Packaging M L L M H Strategic Acquisitions Holcim Lafarge CM Conclusion: Good packaging of cement helps reduce wastage while transportation and plays an important role.

10www.cemex.com Key & Threshold Success Factors  Brand Equity In the case of cement, the brand recognition is important as it influences the decision of the buyer. The quality is the same for any brand and obviously people buy the known brand.  Delivery The speed and efficiency of delivery to the customer plays a crucial role as people prefer to have quick delivery.  Packaging The packaging material is usually paper or polyethane bags. The bag quality is very important as they are stored in the open and moisture is harmful to cement.  Customer Retention Customers includes big real estate builders who order in bulk. Their demand for cement is constant as they keep constructing buildings.  Fineness of cement Finer cement is preferred by the masons as it is easier to mix with water and sand to make concrete.  Strategic Acquisitions It does not directly influence the decision of the customer’s buying pattern but helps capturing new markets.  Price Price of cement is fixed by the government and companies take advantage of efficient supply chain to reduce costs.

11www.cemex.com Competitive Matrix Conclusion: The customers prefer a brand based on brand equity and Delivery capability and Price is a threshold as it is fixed by the government.

12www.cemex.com Triangle Model Vision/MissionKey Success Factors Brand Equity Delivery Packaging Customer Retention Fineness of Cement Strategic Acquisitions Price Strategic Competencies High Production Capacity Efficient distribution network Lean Management Premium service offerings Patrimonio Hoy program Timely delivery of cement Maximizing overall performance Value Proposition

13www.cemex.com Mission/Vision/Values of CEMEX  Mission Statement: Our mission is to serve the global building needs of our customers and build value for our stakeholders by becoming the world's most efficient and profitable building materials company.  Vision Statement: We at the CEMEX Shared Service Center know about ourselves, that we are a knowledge based value added services provider, delivering our product portfolio above industry level benchmark achieving customer and employee engagement.  Values Collaboration We work with others in a collective pursuit of excellence. Collaboration is at the core of all our relationships. We collaborate with customers, colleagues, suppliers, and other partners in order to reach common goals.  Integrity We act with honesty, responsibility, and respect towards all the people and organizations with which we interact.  Leadership We aim to be leaders not only in the building materials industry, but also in all of our relationships. We are a company with a sound vision for the future based on sustainability, excellence, and innovation.

14www.cemex.com Ladder Model Resources: -Product -People -Capital -Knowledge -Technology -Suppliers Incompetency Competencies: -Strong supply chain -Well distributed network -Volume Sales -Well located shops -Technology -Cost Culture -Product Mix -Timely delivery -Consistent production Strategic Competencies: -Strong supply chain -Well distributed network -Volume Sales -Technology -Cost Culture -Product Mix -Consistent production Peripheral Competencies: -Well located shops -Timely delivery Threshold Competencies: -Volume Sales -Consistent production Distinctive Competencies -Strong supply chain -Well distributed network -Technology -Cost culture -Product Mix Competitive advantage: -Technology -Well distributed network Sustainable Competitive advantage: -Strong Supply chain -Cost culture -Product Mix

15www.cemex.com Long Term Objectives  Overall, CEMEX has identified close to US$500 million in recurrent annualized cost reductions.  Some of the cost reduction initiatives include budget cutbacks, capacity closures, and headcount reductions.  Continue to re-evaluate all of the processes and procedures of the business, on a global basis, with a view towards achieving significant overall cost-reduction and appropriate rightsizing of the business. Groundwork for Internationalization Stepping Out Growing Up Stepping Up

16www.cemex.com New Triangle Model Vision/MissionKey Success Factors Substitute for limestone Use of alternative fuels Packaging Brand Equity Delivery Customer Retention Price Strategic Competencies High Production Capacity Efficient distribution network Lean & Agile Management Premium service offerings Lessen the houseless people Timely delivery of Cement Maximizing overall performance Value Proposition

17www.cemex.com New Matrix Key Success Factors Weightage Cemex Holcim Ltd Lafarge S.A Substitute for limestone 25% 8 9 8 Alternative fuels 15% 9 8 7 Packaging 15% 8 9 8 Brand Equity 15% 8 9 8 Delivery 10% 8 8 8 Customer Retention 10% 8 7 8 Price 10% 8 8 8 Total scores 100% 7.35 7.65 7.05 Market Share 100% 17% 30% 24% Conclusion: Limestone which is the raw material and Coal which is fuel used for firing is a non renewable resource and hence there will be a need to find a vastly available substitute to meet the future demand once the deposits are exploited.

18www.cemex.com SWOT Generation of Strategic Options SWOT Analysis Strength S1 Brand Image/Loyalty S2 Quick Delivery S3 Dominant position local market S4 High R&D Investments Weakness W1 Lack of identifying proper partners W2 Resource constraint in International Division. W3 Poor International brand name. Opportunities O1 Globalization O2 First time Constructors O3 Better Marketing in Emerging Markets Strategic Options S1 O2 Better Branding S2 O3 Increased customer base. Strategic Option W1 O3 Choose international partners carefully. Threats T1 Rivalry with small cement producers T2 Competition from new entrants T3 Changing Customer Demands Strategic Option S4 T3 Product Innovations S3 T2 Acquisitions Strategic Options W2 T1 Alternative raw material W3 T2 Better Service

19www.cemex.com Options Filter Strategic Options LTO 30% VP 30% Organizational Capability 30% Alignment with Mission/Vision/ Values 10% Total Score Better Branding 8 7 8 8 7.7 Increased Customer base 7 8 8 9 7.8 Product Innovations 7 7 9 8 7.7 Strategic acquisitions 8 7 8 8 7.7 Alternate Raw Materials 6 5 7 7 6.1 Better Service 7 8 7 8 7.4

20www.cemex.com  Focus on core business of cement, aggregates and ready-mix concrete Provide customers with the best value proposition Regain financial flexibility Maximize operational efficiency Foster sustainable development Short & Long Term Recommendations Find an alternate source of raw material as limestone is non renewable.  Use of alternate source of fuel apart from coal for firing purpose.  Lean management technique to eliminate waste and improve process.  Innovative way of delivering cement to the poor who are potential customers.

21www.cemex.com BIG- B Framework This Model is based in 3 objectives and focuses on 7 action oriented priorities: Enhance Value Creation • Lead in Sustainable Construction • Low Income Housing & Infrastructure Manage Footprint • Enhance our Carbon Strategy • Excellence in Environmental & Biodiversity Management Engage Stakeholders • High Priority to Health & Safety • Strengthen local communities • Partnership with Key Stakeholders

22www.cemex.com Sources  www.cemex.com  http://www.dominicantoday.com/dr/economy/2010/7/7/36244/print  http://www.managementexchange.com/story/shift-changes-way-cemex- works  http://www.crisil.com/Ratings/SectorMethodology/MethodologyDocs/CRISIL -Ratings-crieria-cement-industry_2007.pdf

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