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Mexico’s largest bare cement manufacturer, Cemex, has become a global powerhouse in the cement and construction sector. It at present controls 70 percent with the cement industry in Mexico (Hill 2009). Cemex’s accomplishment is a result of a mix of efficient technology such as car radio transmitters, satellites, and computer hardware that allow the company to anticipate within supply and demand and minimize waste.
Cemex’s achievement is also a result of an attempt to dominate the industry simply by acquiring and buying out competitors worldwide to be able to expand. a. Which assumptive explanation, or perhaps explanations, of FDI ideal explains Cemex’s FDI? I believe that internalization theory greatest explains Cemex’s FDI since Cemex provides taken the initiative to into various countries and in turn of certification, they bought domestic bare cement businesses and also have grown right into a worldwide powerhouse.
According to the textbook, internalization theory explains why firms often prefer foreign direct investment over certification as a technique for entering foreign markets (Hill 2009). While using advanced technology that Cemex uses, so licensing would not always be the greatest opportunity for the organization to take in in an attempt to protect really “technological know-how (Hill 2009). b. Precisely what is the value that Cemex brings to the number economy? Can you see any potential drawbacks of back to the inside investment simply by Cemex in an economy? Cemex is the third largest bare cement company in the world, and a powerhouse in Mexico where it handles 60 percent of the industry.
Cemex is highly focused on efficient manufacturing and customer service. Suppliers are rewarded for their revenue, as are users. The primary gain Cemex brings to host countries involves these types of competitive positive aspects. Cemex receives companies then transfers technological, management, and marketing know-how to the new units, enhancing their efficiency. The company has had several attained companies returning to full development, increasing employment opportunities in the web host country as well. c. Cemex has a strong preference to get acquisitions more than greenfield endeavors as a great entry setting. Why? Cemex has successfully acquired established cement makers in many countries.
Simply by acquiring companies rather than developing them from the beginning up, Cemex can prevent some of the delays that could take place in the start up phase, and, capitalize around the benefits of an existing market presence. Acquiring additional businesses works well because the web host economyalready understands the demographics and the industry. Cemex would be able to make the business better using their technology and research. A Greenfield venture would be dangerous and not affordable. d. Exactly why is majority control so important to Cemex?
Majority control is important to Cemex because of the capacity to implement the policy of transferring solutions. When it would not have the greater part control it might not be able to transfer its own managing resources to newly acquired companies. Also, Cemex might want to take advantage of variations in factor costs across countries, so it will be allowed to import parts from the other places to reduce costs.