Cinépolis: Lights, Camera, Go Global!

School of Business and Economics
Cinépolis
Lights, Camera, Go Global !
Written By: Denisse Hernández ID124149
REV B – 08.22.2017
Cinépolis began with a man’s fascination with movies, and turned it into a business. Over the course
of three generations the company received the right impulse and innovation, becoming a true empire
in the film industry. Its innovative culture, the vision of its leaders and business model, have brought
Cinépolis to becoming the leading Latin American and 4th worldwide leader in the multiplex cinema
industry. It is a Mexican company with an important international presence and no plans of backing
down. On the contrary, it’s aiming to reach further to the top (Vargas, 2015)
Contents
1. The Company .......................................................................... 1

Family Business ...................................................................... 1
2. The Industry............................................................................. 3
Once Upon a Time in Mexico .......................................... 3
Back to the Future ................................................................ 5
3. The Entry to Foreign Markets ........................................... 8
On the Road............................................................................ 9
4. The Distance Dimensions ............................................... 12
Easy Rider .............................................................................. 13
5. Trade Theories of the MNE ............................................ 19
The Eclectic Paradigm ...................................................... 19
6. Innovation in Motion ................................................... 22
7. Conclusion ....................................................................... 25
8. References........................................................................ 26
MIM5161 – Advanced Contemporary Topics

Professor: Dr. Jorge Luis Alcaraz Vargas

Page 1 CINÉPOLIS® •
1. The Company
Family Business
Cinépolis is a privately owned corporation founded in the city of Morelia Michoacán in México circa 1971. The
company is the leading cinema exhibition chain in Latin America. At a global scale Cinépolis is the second largest
exhibitor in terms of box office sales, the largest luxury cinema operator, and the fourth biggest cinema exhibitor.
Cinépolis operates more than 564 cinemas in 13 countries including India, Brazil, the United States, and Spain.
As of May 2017, the cinema exhibitor has sold over 317 million tickets, it accounts 37,000-plus employees, 4,973
screens in more than +220 cities, and 878,346 seats worldwide (Cinépolis, 2017).
This Mexican Multinational aspires to “lighten up the movie of your life life with laughter and unforgettable
moments”. Amusement, innovation, and a stellar customer service are the pillars upon wich Cinépolis relies to
becoming the preferred entertrainment choice in the film industry. The set of values guiding the company are:
passion for results, commitment, integrity, customer service and being “palomita” 1 . Cinépolis has forged
partnerships with The Coca Cola Company ©, Imax Incorporation, Banamex, and 4D (Cinépolis, 2017).
The origins of Cinépolis can be traced up to 1947, when its founder Enrique Ramírez Miguel established “Impulsora
de Cines Independientes, S.A”. In 1949 he opened Cinema Morelos in Morelia, Michoacán. In 1950 Enrique Ramírez
partnered with Gabriel Alarcón Chagoy and founded “Cinematográfica Cadena de Oro”; sold a year later to COTSA2,
the mexican operated company (Trujillo, 1999). Ramírez Miguel inaugurated Cinema La Raza in 1971 operated by
“Organización Ramírez”; he continued expanding the network of cinemas under the label “Cinemas Gemelos” until
1993. Cinépolis-labeled multiplex cinemas were inaugurated in 1994. Enrique Ramírez Villalón, son of the founder,
became the chairman in 1996. Alejandro Ramírez, grandson of the founder, was appointed General Manager of
Cinépolis in 2004, and two years later he became the Chief Executive Officer. See Appendix 1
The Cinépolis theaters also screen alternative content -from New York’s Metropolitan Opera House and London’s
Royal Opera House, basketball games, concerts, wrestling, soccer games, the Olympics — helping to shore up
weekday profits (Ramírez, 2013). Cinépolis offers food and beverages through its business units Dulcípolis®,
Cinecafé, Coffee Tree®, Helados Spyral®, and Baguis®. The world-class cinema exhibitor has fifteen global brands:
Cinépolis, Cinépolis V.I.P, Cinépolis Luxury Cinemas, Cine Hoyts, Yelmo Cines, Fun Cinemas, Cinépolis Pluus,
Cinépolis IMAX Theater, Junior, Macro XE, 4DX, Sala de Arte, Xtreme Cinemas, Cinema Park, and CinépolisKlic.
Graphic 1 highlights the achievements of Cinépolis, product offering, brands, and key facts and figures related to
the cinema exhibitor as of 2017.

1 Ponte Palomita is a corporate culture promoting the alignment of the employees with the values of the company, in order to
achieve the results through leadership, organization and accountability. Palomita is a mexicanism for check marks.
2 Compañía Operadora de Teatros
UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Graphic 1. Cinépolis Key Facts and Figures

Source: Author’s own compilation and elaboration

2. The Industry

Once Upon a Time in Mexico
When Enrique Miguel Ramírez started up “Cinemas Gemelos” in the early 70’s the mexican cinematography was
practically managed by the mexican state during the presidency of Adolfo López Mateos3 and Luis Echeverría
Álvarez4, as a consequence there were relatively few competitors to produce and distribute films in Mexico (Ruiz,
1998). The regulation of the industry challenged Organización Ramírez in the operation, management, and
expansion of the business:
Firstly, the ticket was fixed and it could be sold over 0.50 cents dollars5 (at the exchange rate of 1971) resulting
in a shortage of capital to invest in infrastructure and technology. Secondly, the competitor was COTSA -the
government operated company- and it had the monopoly of movies distributed by the biggest studios such as:
The Warner Brothers, Metro-Goldwyn-Mayer, Paramount, Universal, and Disney. Organización Ramírez only
exhibited films distributed by Columbia Pictures, a studio that distributed movies made by the mexican comedian
Cantinflas 6 , which were extremely popular in México; this helped Organización Ramírez to stay in business.
Eventually Organización Ramírez would also exhibit movies by the 20th Century Fox. Thirdly, the syndicate
designated the employees for every cinema exhibitor, Organización Ramírez could not hire or train employees and
the syndicate continually rotated the employees (Ramírez, 2015).
During the 60’s and the 70’s the government produced and operated most of the goods and services consumed
in Mexico: basic goods like sugar, and services such as hotels, banks, television networks, cinemas, etc. The
protectionism in Mexico and the captive market implicit on it promoted an oligopolistic market structure, expensive
products with low quality, a limited market and the growing unprofitability in some enterprises due to controversial
relationship between unions and government (Alcaraz & Montoya, 2017)
For Organización Ramírez it was difficult to compete with COTSA because it was subsidized by the federal budget
and it could operate with losses. The regulation in the distribution of content slowed down the growth of the
cinema exhibition industry in Mexico: no movies to exhibit, no need to build more and bigger theaters.
The resilience of Organización Ramírez and its passion for the cinema allowed the company to grew from 3 screens
on 1971 to 123 screens in 1991 despite the over-regulation and the adversities in the industry (Cinépolis, 2017).
Table 1 presents the accumulation of screens between 1971 and 1991 (before the full privatization of the cinema
exhibition business in Mexico). During the 1970s, Cinépolis grew 42% annually, and 1,167% if we compared the
number of screens the company had in 1971 (3 screens) to the number of screens in 1979 (38 screens). In the
1980s the business grew the number of screens 11% on an annual basis, and 7% from 1990 to 1991.

3
President of Mexico from 1958 to 1964, affiliated with the Institutional Revolutionary Party (PRI).
4
5
Banxico (Bank of Mexico) reports an exchange rate of 0.01250 pesos for dollar from April 19, 1954 to August 26, 1976.
6
Mario Moreno Cantinflas (1911-1993), Iconic and beloved Mexican comedian, actor, and producer.

Table 1. Accumulation of Screens 1971-1991

Source: Author’s own compilation and elaboration based on Cinepolis Fact Sheet 2017
Screens Annual Growth by

Time Period
Accumulated Growth Decade
1971-1979 38 42% 1167%
1980-1989 107 11% 155%
1990-1991 123 7% 4%
In November 1992, Salinas de Gortari7 “liberalized” the industry signing the Federal Law of Cinematography.
This law was very scrutinized as oponents argued that it would benefit the monopolies and foreign capitals.
The law had a clause that the cinemas would exhibit mexican films 50% of the business hours (De la Vega Alfaro,
1995). Eventually, the neoliberal policies on the cinematographic industry led to the following: a) the contraction
of the mexican film industry, b) the concentration of films in a few distribuitors and exhibitors, and c) an accelerated
transnationalization of films, controled by the United States (Ruiz, 1998).
In terms of openness, Mexico sign in to the General Agreement on Tariffs and Trade (GATT) in 1986. Then, in 1992
was signed the North American Free Trade Agreement (NAFTA) enacted in 1994 (Arriaga, 1994). Regarding the
deregulation, the Mexican Constitution has had several changes making the rules less restrictive encouraging
international commerce, international movement of capitals and global integration. This is the case of the foreign
direct investment, changes in the Constitution has enabled more participation in shares and industries (Alcaraz &
Montoya, 2017).
The de-regulation of the industry in 1992 removed the fixed price on the tickets, and COTSA no longer had the
monopoly of films. The cinema exhibition was a free market and Organización Ramírez grew from 136 screens in
1991 to 203 screens in 1994, in one year more screens were opened than in the previous two decades combined
(Cinépolis, 2017). Operadora Ramirez opened the first Cinépolis-labeled cinema the same year, and introduced the
introduced the multiplex concept. COTSA remainted the biggest competitor. In 1994 the american company
Cinemark entered the mexican market taking advantage of North American Free Trade Agreement, by 1995 they
opened 100 screens, nontheless the newly born Cinépolis captured 46% of the box office sales in Mexico City
Cinemex also entered the market in the same year (Ruiz, 1998). Today, Cinépolis is positioned as the number one
cinema exhibitor in Mexico, it is located in 99-plus cities and it has a market share of 67.7% (Cinépolis, 2017).

7

Table 2. Accummulation of Screens 1992-2017

Source: Author’s own compilation and elaboration based on Cinepolis Fact Sheet 2017
Screens Annual Growth by

Time Period
Accumulated Growth Decade
1992-1999 668 24% 443%
2000-2009 2,219 13% 232%
2010-2017 4,973 11% 124%
Table 2 presents the accummulation of screens between 1992 to 2017. In the 1990s the growth was 24% annually..
During the 2000s the number of screens grew at a rate of 13% anually, and 11% since 2010. See Appendix 2
Back to the Future
The exhibition industry in Mexico is one of the most modern in the world, where the supply of screens has tripled
since the late 90’s. The possibilities offered by this exhibition infrastructure are enormous (Smith, 2014), and
Cinépolis has largerly contributed to improving modern cinemas infrastructure with eight out of ten screens in big
multiplexes (The Economist, 2011).
Mexico is considered as one of most cinephile countries, in 2014 it was the fourth market worldwide in terms of
box office sales just behind India, The United States, China, and the only country from Latin America. The annual
per capita assitance in Mexico was 2.2 times per citizen during the same year: the highest ratio in Latin America
and among emerging markets. The assistance per capita is the result of dividing the total number of cinema tickets
sold in Mexico divided by the entire population. In México, the cinema is out of reach for millions of mexicans
living in poverty or in marginalized communities. According to the 2014 National Survey on Household Income,
only 18% of the households reported an expenditure in cinema. The rest of the population would consume movies
through open television, cable television, on-line streaming, and piracy. Mexicans go to the movies more frequently
than other countries with a higher per capita income, such as Germany and Japan. (Ramírez, La Innovación como
Motor de Crecimiento, 2015).
#Screens per Saturation rate per

Assistance Box Office #Screens per
#Tickets Sold million people thousand people by
Per Capita Revenue US$M million people
(GDP) Screen
258 million 2.2 $ 845 43 115 20.5
Table 3. Figures of the Cinema Industry in Mexico, 2014

Source: Author’s own compilation and elaboration based on “La innovación como Motor de Crecimiento” (2015)

In 2014 Mexico generated $845 million dollars in box-office sales, positioning as the 12th global market. There
were 43 screens per million people, and when this statistic was adjusted to the gross domestic product per capita,
the number of screens per million people increased to 115, resulting in more screens per mexican citizens than in
the United States, Germany, Korea, and Brazil. The saturation market rate was 20.5 thousand mexicans per screen,
the lowest in Latin America if compared to the 56.64 thousand citizens per screen -on average- in Argentina, Chile,
Peru, Colombia, and Brazil (Ramírez, La Innovación como Motor de Crecimiento, 2015). See Appendix 3
In 2016, the global box office reported sales of $38.6 billion sales, a 1% increase from 2015. In the United States
and Canada the sales grew by 2%. Until 2005, the box office sales used to be 50/50 between the United
States/Canada and the international markets, however, since 2006 the box office sales worldwide have increased
exponentially, and by 2016 the international box office accounted for 71% of total sales ($27.2 billion USD).
Mexico moved up three places in the ranking of top international box office markets, positioning as the 9th global
market with $0.8 billion dollars in sales. Even with an incredible variety of viewing choices available to audiences,
cinema remains the premier way to experience the magic of the movies, and there are signs of positive growth in
the future (Motion Picture Association of America, Inc. , 2016).
In terms of regional box office sales, Asia Pacific accounted for 55% of the box office sales followed by Europe,
Middle East and Africa with 35% of total sales. The 10% remaining corresponds to the Latin America box office.
Japan and India were the primary drivers of growth within the Asia Pacific region. The most significant decreases
in the European market were in the United Kingdom (-10%) and Germany (-13%) because the pound and the euro
depreciated against the U.S. dollar. The Latin America box office decreased 18 percent in U.S dollars when
comparing 2016 to 2015. Brazil’s box office was an exception, increasing 5% in U.S dollars from 2015. The
depreciation of currencies against the U.S dollar in Mexico (-15%), Argentina (-37%), and Venezuela (-31%),
contributed to the overall decline in regional box office (Motion Picture Association of America, Inc. , 2016).
See Appendix 3
According to Cinépolis CEO, one of the characteristics of the cinema exhibition industry is that it remains highly
capital intensive. A 12-screen multiplex costs between $6 million-$10 million to build. “Outside the U.S., few
exhibitors have the size to start international expansion” (Ramírez, 2013). Cinépolis has 67.7% of the market share
in México, followed by Cinemex® with 29.9% of the market share (Cinépolis, 2017). The main international
competitors of Cinépolis are the Regal Entertainment Group, AMC Theatres, Cinemark, Cinemex, Odeon, and
Cineplex.
Table 4 shows a matrix with key figures of the main competitors of Cinépolis in 2016. The Mexican multinational
is the fourth biggest exhibitor, and the only private company besides Cinemex. America Economía estimated that
the company sold $1,907.7 million dollars in 2016. Compared to Regal Entertainment (the biggest cinema exhibitor
in the world), Cinépolis operates more cinema theaters than Regal, however Regal has more screens per cinema
than Cinépolis. Cinépolis reports a higher attendance compared to Regal Entertainment but Regal’s sales are almost
40% higher, since Regal’s sales are mostly in dollars and Cinépolis’s in currencies with a lower value.

Table 4. Biggest International Cinema Exhibitors 2016 Source: Author’s own compilation and elaboration based
on exhibitors annual reports. * asterisks = estimations or information not confirmed by the cinema exhibitor.
Exhibitor Country #Screens Theaters Tickets Sold Sales USD Company

Regal Entertainment United States 7,267 561 211 million $3.1 billion Public
AMC Theatres United States 5426 387 200 million $2.9 billion Public
Cinemark United States 5,903 526 287 million $2.9 billion Public
Cinépolis México 4,973 564 317 million $1.9 billion* Private
Cinemex Mexico 2,565 295 100 million* $422 million* Private
Odeon England 2,236 - - - -
Cineplex Canada 1,683 165 - $1.5 billion Public

Table 5. Number of Tickets Sold by Country in 2016

Source: (Ramírez, 2015).
“It is not surprising that the two (Cinépolis and PVR) would be
interested in each other. “I have respect for them,” says Bijli.
“They are the giants from Mexico who have deep pockets and
an ambitious BRIC strategy to expand,” he adds. More
importantly, the Mexican company, through its half-a-century

experience, has mastered the art of movie exhibition and treats
each of its screens as a product and not a commodity, as is

the norm”. Jay Bijli, the chairman and managing director of
PVR Cinemas for Forbes India. PVR Cinemas is the leading

cinema operating chain in India (Forbes India, 2012)

3. The Entry to Foreign Markets
Alejandro Ramírez set two priorities on the business agenda when he was appointed Chief Executive Officer of
Cinépolis in 2006: (1) the institutionalization of a family business (introducing better practices of corporate
governance), and (2) the internationalization in response to market maturity and saturation (Ramírez,, 2013).
Cinépolis had seized its market chances for three decades with caulculated aggression, beginning with Mexico
itself. The idea of exploring business opportunities across the borders was driven by the local restrictions (market
maturity and market saturation), the possibilities in developing and underscreened economies, and the operational
experience acumulated over local and foreign competitors.
Cinépolis decided to capitalize on its competitive advantages and entered the first foreign country in 1999.
Guatemala was chosen to inaugurate the first cinema theater abroad, followed by Costa Rica in 2003. The expansion
continued in Central America throughout 2005 with cinemas in El Salvador and Panamá. From 2008 to 2010 more
cinemas were opened in Colombia, Perú, India, Brazil, and Honduras. Between 2011 and 2015 the company frontiers
expanded further to the United States, Spain, and Chile.
Cinepolis’ strategy for international growth is deceptively simple: expand to markets that need more cinemas; that
have high growth potential and that are severely underscreened.The key factor for the exponential growth of the
company in the last decade has been to reinvesting constantly most of what the company produces, 87% to be
precised (Ramírez, 2013). Cinépolis has financed the international growth with its own capital and a few bank loans.
The company has not sold any equity and there are no plans to do so in the near future (Ramírez, 2015).
The success abroad is as well the result of understanding the reality of each country, and treating each market
individually, regardless of the economic and socio-cultural similarities.
Table 6. Internationalization Timeline

Entry Entry Flow of

Country
Year Mode FDI
Guatemala 1999 Greenfield Down-Market
Costa Rica 2003 Greenfield Down-Market
El Salvador 2005 Greenfield Down-Market
Panamá 2005 Greenfield Down-Market
Colombia 2008 Greenfield Down-Market
Peru 2009 Greenfield Down-Market
India 2009 Greenfield Down-Market
Brazil 2009 Greenfield Down-Market
Honduras 2010 Greenfield Down-Market
U.S.A. 2011 Greenfield Up-Market
Chile 2014 Acquisition Down-Market
Spain 2015 Acquisition Up-Market

On the Road
The emerging markets are a kind of promised land for the world's businessmen: billions of consumers who are
increasing their purchasing power every day (Ramírez, 2013). For Cinépolis, Central America served as a platform
to explore territories that were more distant but also more profitable in terms of growth. Such are the cases of
Brazil, India, Colombia, and Peru. Cinépolis is constantly reviewing and revising its international strategy to better
evaluate potential for growth (Smith, 2014). Central America offered a green and profitable market but also an
accelerated pace on the learning process to successfully operate in foreign markets because the psychic distance
between Mexico and these countries minimized the liability of foreigness and uncertainty.
It has been assumed that reducing uncertainty has to do with the differences between the culture and institutions
of the home country and those of the foreign country. The learning phase, and the commitment phase to
internationalization are strongly related to identifying and exploiting opportunities (Alcaraz J. V., 2017).
The learning phase for Cinépolis ocurred between 1999 and 2008, this period is characterized by a gradual
internationalization speed in countries that were geographically and culturally close to Mexico.. The expansion
parth was simple, as they went from neighbour countries, to slightly more distant countries and there was a window
time of 2.25 years between each new entry to another. The competitive advantages and politica capabilities of
Cinépolis were strong, The organizational adaptability was rather low because during these years Cinépolis was
restructuring the company. The destination of foreign direct investment went from North to South (down-market).
The commitment phase ocurred between 2009 and 2015, Cinépolis rush into new markets and simultaneously
opened cinemas in farther developing and developed countries. The entry modes were through organic and
inorganic growth (acquisitions), the organizationa adaptability improved thanks to a strenghtened structure and
leadership at a corporate level. The destination of the foreign direct investment was north to south (down-market)
and north to north (up-market). See Table 8
Table 7. Internationalization Stages

Source: Author’s own compilation and elaboration based on (Alcaraz J. V., 2017)
Dimension Learning Stage (1999-2008) Commitment Stage (2009-2015)

Speed Gradual Accelerated
Competitive Advantages Strong Strong
Political Capabilities Strong Strong
Expansion Path Simple Dual
Default Entry Modes Internal growth Internal and external growth
Organizational Adaptability Low High
Up-Market FDI (South to North)
Destination of FDI Down-Market FDI (South to South)
Down-Market FDI (South to South)

Table 8 summarizes the key figures of the international operation in 2016. 33% of assets (cinemas and screens)
are located in Central America, South America, Spain, and India, 32% of the total attendance comes from these
regions as well (Cinépolis, 2017). In terms of revenues, America Economía, estimates that 15% of the net sales are
generated abroad.
Table 8. Comparison of key figures generated in Mexico and Abroad

Source: Author’s own compilation and elaboration based on Cinépolis Fact Sheet from April 2017
Location Sales US$Million #Cinemas #Screens #Tickets Sold

México $1.62 368 3269 2.146
International $0.29 196 1,456 102.4
Int. Share% 15% 35% 31% 32%
Table 9 shows the list of countries that Cinépolis has entered to, and the total number of cities that the cinema
exhibitor covers in each country. The table exhibits the distribution of cinemas and screens around the world.
Mexico is included as a reference to better evaluate the international expansion of Cinépolis compared to the
home country. Cinépolis has a wider coverage of cities in India and Brasil, in both countries Cinépolis has acquired
local cinema exhibitors to speed up the presence in these territories. India and Brazil are the markets where
Cinépolis has the higher number of cinema theaters, followed by Spain and Chile, where the entry mode opted
was the acquisition of leading cinema exhibitors: Hoyts Cinemas in Chile, and Yelmo Cines in Spain. Central America
has 4% of the overall screens, and based on the number of cinemas and citites covered, the region has been not
developed with the same enthusiasm as South America.
Table 9. Key Facts and Figures of Cinépolis Operations in Foreign Markets

Country Entry Year #Cities #Cinemas %Cinemas #Screens %Screens
México 1971 99 352 62% 3,108 66%

Guatemala 1999 4 8 1% 65 1%
Costa Rica 2003 4 8 1% 49 1%
El Salvador 2005 2 3 1% 24 1%
Panamá 2005 2 8 1% 57 1%
Colombia 2008 4 8 1% 54 1%
Peru 2009 3 4 1% 36 1%
India 2009 28 46 8% 232 5%
Brazil 2009 32 45 8% 348 7%
Honduras 2010 2 3 1% 16 0%
U.S.A. 2011 11 16 3% 161 3%
Chile 2014 11 26 7% 161 3%
Spain 2015 18 37 5% 414 9%
220 564 100% 4,725 100%

In Table 10 a more detailed and concised analysis was made at a regional level, following the same indicators:
number of cities covered, number of cinemas, and number of screens. North America outperforms the rest of the
regions, but if we remove Mexico from the equation; only 3% of the cinemas and screens are located in the United
States (distributed between California and Florida).
Table 10. Key Facts and Figures by Region

Country #Countries #Cities #Cinemas %Cinemas #Screens %Screens

North America 2 110 368 65% 3269 69%
South America 4 50 83 15% 599 13%
Europe 1 18 37 7% 414 9%
Asia 1 28 46 8% 232 5%
Central America 5 14 30 5% 211 4%
220 564 100% 4,725 100%
In South America, Cinépolis has made significant investments. Cinepolis’ Brazil ramp-up has been dramatic.
Opening its first multiplex in June 2010, the cinema theater chain has morphed from market entrant to Brazil’s
second biggest exhibition loop – in screens, revenues and attendance. Cinepolis now owns 40 multiplexes and
300-plus screens in 30 cities across Brazil, building via plexing and two major acquisitions: Box Cinemas and Cine
Maiz, Cinemark, Brazil’s largest operator, took some 15 years to reach 500 screens (Hopewell, 2014). In 2014
Cinépolis purchased Hoyts Cinemas in Chile, the acquisition gave Cinépolis 40% of the market share, with 96
screens in nine multiplexes (von Sychowski, 2015).
India is the biggest market of moviegoers in the world, the largest pipeline of content, or movies; and most
importantly, the lowest penetration of multi-screen exhibition complexes, or multiplexes, in the world. The country
has a vibrant local movie industry, and Bollywood pictures dominate on India’s silver screen – unlike Mexico, where
Hollywood productions are the big draw. India also has a dynamic economy with a growing middle class. Despite
the huge market and the rooted movie culture in the country, 95% of the theaters had a single screen, presenting
a big opportunity for modern cinemas, such as those of Cinépolis. The sector was not restricted to foreign
investment, like many other industries in India (Latin Trade, 2010). Cinépolis India debuted in Amristar with four
screens in 2009. By 2012 they grew to 39 screens, and to 79 screens the year after. In 2014, the company acquires
FUN cinemas, and became the third cinema exhibitor in the country. By 2016, Cinépolis had achieved 226 screens.
“The fact that we are a family business has helped us to really be
focused on the business long-term,” declared Alejandro Ramírez

Magaña, CEO. “We are not so much concerned with short-term
profitability, although it is important as well, but we make our
investments and decisions for the future.” (Film Journal International,

2013)

4. The Distance Dimensions in the Global Strategy
Pankaj Ghemawat believes that companies routinely exaggerate the attractiveness of foreign markets, and that can
lead to expensive mistakes. Ghemawat suggests that traditional tools (such as country profile analysis) do not take
into consideration a crucial factor in the global expansion: distance (Alcaraz J. V., 2017). By considering the potential
impact of distance on the industry, companies may idenify highly promising global-investment opportunities
(Ghemawat, 2001). Distance between two countries can manifest itself along four basic dimensions: cultural,
administrative, geographic, and economic. The types of distance influence different business in different ways.
(Ghemawat, 2001) See Table 11.
Table 11. Ghemawat’s Distance Dimensions

Source: Author’s own elaboration based on (Ghemawat, 2001)
Distance Dimensions and Its Characteristics
Cultural Country’s cultura attributes influencing the interaction of people, companies and institutions.
Admnistrative Country’s institutional infrastructure and functioning legal system.
Geographic Country´s geographical attributes that facilitate or challenge trade between countries
Economic Country’s consumers wealth and income compared to another country.
Ghemawat’s theory resounds strongly with the expansion path that Cinépolis followed between 1999 and 2008.
In fact, if we look closely to the the flows of foreign direct investment made from México to Central América, we
can observe that the cinemas abroad (whether intentionally or not) were opened relativelly from the closest to the
farthest country from Mexican borders. Culturally speaking, ther distance between Mexico and the countries in
Central and Souh America is minimal: in every country spanish is the official language, the roman-catholic religion
is practiced by the majority of the population, and most of the countries score within the ranges of the Hofstede’s
cultural dimensions. Some differences are more perceptible at an institutional and economic level. See Table 12
for a quick overview of the distance dimensions between Mexico and the countries where Cinépolis opened its
firsts cinemas abroad. The analyis will be expanded further in the following pages.
Table 12. Distance Dimensions between Mexico and Central America

Cultural Distance Administrative Distance Geo Distance Economic Distance

Population GDP Per
Entry Air Distance
Country Language Religion Government Currency million Capita (US$)
Year KMs
people 2016 2016
Mexico 1971 Spanish Catholic Republic Mex Peso - 127.00 $9,009.30
Guatemala 1999 Spanish Catholic Republic Quetzal 1,557.88 16.30 $3,929.10
Costa Rica 2003 Spanish Catholic Republic Colon 2,525.76 4.80 $10,936.20
El Salvador 2005 Spanish Catholic Republic US Dollar 1,806.98 6.40 $4,040.30
Panamá 2005 Spanish Catholic Republic US Dollar 2,863.94 4.00 $13,012.60
Colombia 2008 Spanish Catholic Republic Col Peso 3,700.70 48.20 $6,083.50

Easy Rider
The Author has selected key indicators to better exemplify the application of the CAGE Model to the Global
expansion of Cinépolis. There are countless factors that could be considered when analyzing the distance
dimensions across countries, however, the author has limited the analysis to 3 to five indicators by distance
dimension.
• Cultural Distance
It refers to a country’s cultural attributes that determine the interaction between people, companies, and
institutions, for example: religion, race, social norms, and lenguage. Cultural distance affects consumer’s products
preferences. Table 13 shows the cultural affinities and differences between Mexico, Cinépolis home country, and
the 12 countries where it operates.
Culturally speaking, there is not a significant gap between the mexican multinational and the foreign markets. 9/12
countries speak spanish (69%), 10/12 countries practice the catholicism (77%). Hofstede’s cultural dimensions have
been integrated to the analysis: power distance, individualism, masculinity, uncertainty avoidance, long-term
orientation and indulgence. It is assumed that “all latin american countries are the same”, but in the spirit of
fairness, we added the scores by country and attempted to have an accurate and impartial analysis.
In order to have a general view of the cultural affinities and differences, we calculated the average score by country
on the Hofstede’s cultural dimensions. Then we calculated the difference between Mexico’s average score and each
country where Cinépolis has opened cinema theaters. The average of Mexico’s score is 63.8 points.
Based on this analysis, the country closest to Mexico -culturally speaking- was Guatemala, with a national average
of 57.7 points, which curiously, is also the closest to the mexican territory. The countries that have a difference of
less than 10 points when compared to Mexico were: Panama (57.5), Brazil (55.8), The United States (55.5), El
Salvador (54.7), and Spain (54.7). In the middle, countries with a distance of 10 to 15 points, were: Colombia (53.3),
Honduras (49.8), Chile (49.8), India (49.7). Costa Rica (44.3) and Peru (46.7) were the farthest from México with an
average of 18.3 points of difference between their national average score and Mexico’s.
"Cinépolis is known to be fussy about every little detail: Leg space
between seats, big screen size, a special coating on the 3D screen that
makes it easier on the eye, better 3D glasses and sophisticated air

conditioning. Cinépolis auditoriums typically have about 10 percent fewer
seats compared to its peers so that there is enough space for food to be
served at the seat. And they’ve been known to pull out of the mall if the
developer doesn’t have enough space for parking. In many ways, that’s
what helps them get repeat customers” (Forbes India, 2012)

Table 13. Cultural Distance Among Cinépolis’s Foreign Markets

Individualism
Uncertainty
Variance vs
Masculinity
Orientation
Indulgence
Long-Term
Avoidance
Entry Year
Language
#Screens
Distance
National
Average
Religion
Country
Mexico
Power
Score
Mexico 1971 3108 Spanish Catholic 81 30 69 82 24 97 63.8 ‘
Guatemala 1999 65 Spanish Catholic 95 6 37 99 20 89 57.7 6.2
Panamá 2005 57 Spanish Catholic 95 11 44 86 20 89 57.5 6.3
Brazil 2009 348 Portuguese Catholic 69 38 49 76 44 59 55.8 8.0
U.S.A. 2011 161 English Protestant 40 91 62 46 26 68 55.5 8.3
El Salvador 2005 24 Spanish Catholic 66 19 40 94 20 89 54.7 9.2
Spain 2015 414 Spanish Catholic 57 51 42 86 48 44 54.7 9.2
Colombia 2008 54 Spanish Catholic 67 13 64 80 13 83 53.3 10.5
Honduras 2010 16 Spanish Catholic 80 20 40 50 20 89 49.8 14.0
Chile 2014 161 Spanish Catholic 63 23 28 86 31 68 49.8 14.0
India 2009 232 English Hindu 77 48 56 40 51 26 49.7 14.2
Peru 2009 36 Spanish Catholic 64 16 42 87 25 46 46.7 17.2
Costa Rica 2003 49 Spanish Catholic 35 15 21 86 20 89 44.3 19.5
In terms of “power distance” Mexico scores 81 points, the country with the lowest power distance was Costa Rica with a score of 35 points. In terms of “individualims”,
Mexico scores 30 points, being Guatemala the least individualistic country with a score of 6 points. Mexico scores 69 points in “masculanity”, Costa Rica exhibits the
lowest score (21 points) in this dimension. Mexico is the country with the highest score in “indulgence” (97 points), being India the country with the lowest score
in this dimension (26 points). For further details, please refer to Table 13.

• Administrative and Political Distance
For this analysis, we refered to the Global Competitiveness Report (GCR) 2016, an analysis made by the World
Economic Forum (WEF) on 138 countries. The GCR takes into consideration 114 indicators that matter for
productivity, grouped in 12 pillars of competitive strenghts. Table 14 exhibits the factors we considered to compare
the administrative and political distance in Cinepoli’s foreign markets. We started with the comparison of form of
governments; Mexico has in common the same form of government (Republic) with 11 countries. Spain is the
exception with a Parliamentary government. Cinépolis trades with 11 different currencies.
The institutional environment of a country depends on the eficiency and the behaviour of both public and private
stakeholders. The legal and administrative framework influences investment decisions and the organization of
production and plays a key role in the ways in which societies distribute the benefits and bear the costs of
development strategies and policies (WEF, 2016-2017), The column “Institutions” in the table, is the score that the
WEF assigned to each country in 2016. Scores range from 1 to 7 points. Mexico scores 3.30/7.0 on the pillar
“Institutions”, Chile scores 4.50/7.0 positioning as the country with the strongest institutional environment in the
region. El Salvador scores the lowest in this pillar (3.00/7.00), however, the Latin America region’s average score is
3.57/7.00, which does not represents a significant gap.
A helathy workforce is vital to a country’s competitiveness and productivity, therefore it is important to consider
the state of the health institutes and the educational institutions in the foreign markets where the company plans
to invest. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower
levels of efficiency. Basic education increases the efficiency of each individual worker (WEF, 2016). Mexico scores
5.70/7.00, Spain scores the highest with 6.30/7.00. The average score in Latin America is 5.52/7.00.
We did not find a link between the efficiency on the institutional environment and the number of screens Cinépolis
has opened abroad, for example, Brazil scores 3.20/7.00 in “Institutions” and has 348 screens, when India scores
4.40/7.00 in the same pillar and has 33% less screens than Brazil. In both “Institutions” and “Health and Primary
Education” there is not a significant gap between countries, with a few exceptions like Spain and the United States.
Cinépolis has dealt with similar and worst instiutional conditioins in the past and this experience helped the
company to conduct business in foreign countries.
The most problematic factors for conducting business is a country is an indicator that companies should know
prior to engaging in foreign direct investment in order to minimize or prevent bad outcomes during the strategy
execution. The countries were Cinépolis operates do not only share the same level of instituional environment,
they also have in common the problems and pains challenging businessess in these developing economies.
Corruption, Bureaucracy, and Taxation are the most problematic factors for doing business in the countries where
Cinépolis has expanded its operations.

Table 14. Administrative and Political Distance Among Cinépolis’s Foreign Markets
Government
Problematic
Institutions
Health and
Factors for
Entry Year
Education
#Screens
Currency
Business
Primary
Doing
Most
Country
Mexico 1971 3108 3.30 5.70 Republic Mexican Peso Corruption

Guatemala 1999 65 3.30 5.00 Republic Quetzal Crime and Theft
Costa Rica 2003 49 4.10 6.20 Republic Colon Bureaucracy
El Salvador 2005 24 3.00 5.40 Republic US Dollar Crime and Theft
Panamá 2005 57 4.00 5.80 Republic US Dollar Corruption
Colombia 2008 54 3.30 5.40 Republic Colombian Peso Tax Rates
Peru 2009 36 3.40 5.30 Republic Peruvian Sol Bureaucracy
India 2009 232 4.40 5.50 Republic Indian Rupee Tax Regulations
Brazil 2009 348 3.20 5.30 Republic Brazilian Real Tax Rates
Honduras 2010 16 3.30 5.60 Republic Honduran Lempira Bureaucracy
U.S.A. 2011 161 5.00 6.20 Republic US Dollar Tax Rates
Chile 2014 161 4.50 5.70 Republic Chilean Peso Bureaucracy
Spain 2015 414 4.10 6.30 Parliamentary Euro Tax Rates
• Geographic Distance
This dimensions refers to the country’s geographic attributes that facilitate or difficult trade between countries, for
example: distances between borders, country size, access to waterways and the ocean, topography. Geographic
distance affects the costs of transportation and communication.
Cinépolis does not disclose the origin of its Air Distance

Country Entry Year #Screens
screens and supplies to furnish its cinemas in KM
Mexico 1971 3108
abroad to estimate costs of logistics. Most of
Guatemala 1999 65 1,558
the corn is imported form the Untied States.
Costa Rica 2003 49 2,526
The food and beverage offering is adapted to
El Salvador 2005 24 1,807
the local interests and tastes to better satisfy its Panamá 2005 57 2,864
customers. Colombia 2008 54 3,701
Peru 2009 36 4,725
India 2009 232 15,111
Brazil 2009 348 6,936
Honduras 2010 16 1,951
Table 15. Geographic Distance Among U.S.A. 2011 161 1,916
Cinépolis’s Foreign Markets Chile 2014 161 7,366
Source: Author’s own compilation and
Spain 2015 414 9,036
elaboration

• Economic Distance
This dimensions refers to the wealth or income of consumers between countries. Companies that rely on economies
of experience, scale, and standardization should focus more on countries that have similar economic profiles. In
other industries, competitive advantage comes from arbitrage – the exploitation of cost and price differentials
between markets. (Ghemawat, 2004; Alcaraz J. V., 2017) To determine the economic distance between the 13
markets where Cinépolis is located, we chose 8 factors that (we believe), have the most influence when deciding
if it is a high growth potential economy. See Table 16
Firstly we considered the population and purchasing power of the foreign market. Cinépolis CEO has constantly
mentioned that they will invest in countries that need more cinemas; therefore, more population more
opportunities to open cinemas. Aditionally, the population must have the purchasing power to indulge the
moviegoing experience. Secondly we included the country’s competitiveness rank; which is the result of measuring
the soundness of institutions, well-developped infrastructure, and strong macroeconomic conditions, which
together determine the environment in which companies operate (WEF, 2016).
Thirdly, we included the scores of each country in the following factors: “Infrastructure”, “Macroeconomic
Environment”, “Market Size”, “Business Sophistication” and “Innovation”. Extensive and efficient insfrastructure is
critical for ensuring the effective functioning of the economy. The stability of the macroeconomic environment is
important for business and, therefore, is significant for the overall competitiveness of a country. The size of the
market affects productivity since large markets allow firms to exploit economies of scale. In the era of globalization,
international markets have become a substitute for domestic markets. The market size indicator considers both
domestic and foreign demand (WEF, 2016).
Cinépolis is an innovation driven company, as its internationalization commitment strenghtens, business
sophistication and innovation in foreign markets will have a greater importance in the global strategy. Business
sophistication concerns two elements that are intricately linked: the quality of a country’s overall business networks
and the quality of individual firms’ operations and strategies. These factors are especially important for countries
at an advanced stage of development when, to a large extent, the more basic sources of productivity improvements
have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the
quantity and quality of local suppliers and the extent of their interaction. When companies and suppliers from a
particular sector are interconnected in geographically proximate groups, called clusters, efficiency is heightened,
greater opportunities for innovation in processes and products are created, and barriers to entry for new firms are
reduced. Innovation is particularly important for economies as they approach the frontiers of knowledge, and the
possibility of generating more value by merely integrating and adapting exogenous technologies tends to
disappear. In these economies, firms must design and develop cutting-edge products and processes to maintain
a competitive edge and move toward even higher value-added activities (WEF, 2016).

Table 16. Economic Distance Among Cinépolis’s Foreign Markets

Source: Author’s own compilation and elaboration based on the Global Competitiveness Report 2016.2017.
Macroeconomic
Competitivenes
GDP Per Capita

million people
Sophistication
Infrastructure
Environment
Market Size
Population
Entry Year
s Ranking
#Screens
Business
Country
Global
(US$)
Mexico 1971 3,108 #51 127.00 $9,009.30 4.30 5.00 11 4.2
U.S.A. 2011 161 3 321.60 $55,805.20 5.90 4.60 2 5.60
Spain 2015 414 32 46.40 $25,864.70 5.90 4.30 16 4.50
Chile 2014 161 33 18.00 $13,340.90 4.70 5.40 44 4.10
India 2009 232 39 1292.70 $1,617.30 4.00 4.50 3 4.40
Panamá 2005 57 42 4.00 $13,012.60 4.90 6.00 79 4.30
Costa Rica 2003 49 54 4.80 $10,936.20 4.10 4.40 83 4.30
Colombia 2008 54 61 48.20 $6,083.50 3.70 5.00 35 4.00
Peru 2009 36 67 31.90 $6,021.10 3.60 5.40 48 3.80
Guatemala 1999 65 78 16.30 $3,929.10 3.80 4.90 73 4.20
Brazil 2009 348 81 204.50 $8,670.00 4.00 3.50 8 4.00
Honduras 2010 16 88 8.40 $2,406.60 3.30 4.90 97 3.80
El Salvador 2005 24 105 6.40 $4,040.30 4.00 4.20 94 3.70
This table is organized from the most competitive country to the least competitive. Mexico is left at the top to facilitate the analysis. It seems that the economic
indicators and the number of screens Cinépolis has deployed worldwide are more interlinked that the other dimensions previously analyzed. Cinépolis CEO has
said in recent interviews that the exhibitor’s focus is on India, Brazil, the United States , Colombia and Peru. Altough these are not the most competitive markets,
they are the ones with the biggest population, Peru is the exception. If we sort the chart by GDP per capita, we observe that Spain and Chile come in second and
third place, in both countries, Cinépolis purchased local exhibitors to enter the market. The United States, Spain, and Chile are in the top five of countries with the
best infrastructure. If the table is organized by market size, the Untied States, India, Brazil, Mexico, Spain and Colombia figure at the top of the list., demonstrating
that the economic distance is the dimension that matters the most in Cinepolis’s global strategy.

5. Trade Theories of the Multi-National Enterprises
Foreign expansion by Mexican companies was arguably negligible until the late 1990s. However, the decade of the
2000s began with a notable increase in the flow abroad of domestic capital and basically this trend has grown
over subsequent years with the exception of 2001, 2008 and, more recently, 2012. The growing internationalization
of Mexican firms has been facilitated by the liberalization of the national economy (Basave & Gutiérrez-Haces,
2010), through its integration with other markets from the region as well as from other regions (Alcaraz & Zampila,
2017). Multinational firms from emerging markets must possess an array of proprietary advantages that set it apart
from purely domestic firms to overcome the liability of foreigness. Multinational firms exist because certain
economic factors and proprietary advantages make it advisable and possible for them to profitably undertake
production or a good or service in a foreign location (Alcaraz J. V., 2017).
Cinépolis, a mexican multi-national enterprise, saw and seized the opportunity of entering developing economies
motivated by the saturation of the domestic market, and the confidence that it could maximize the competitive
advantages earned after three decades operating cinema theaters in a country with similar conditions of those in
its sight. Ranked number 81 in the list of Multilatinas 2016, Cinépolis is an exceptional case given the factors and
political framework that challend the company in the 1970s and 1980s, moreover, its success in foreign countries
is the result of resilience, long-term focus, and strategic moves rather than government influence and support.
The theories of multinational enterprises attempt to answer the fundamental questions motivating and allowing
the flow of foreign direct investment. The internationalization process of Cinépolis will be discussed based on the
Eclectic Paradigm of John Dunning.
The Eclectic Paradigm
The eclectic paradigm is a theory in economics and is also known as the OLI-Model. It is a further development
of the theory of internalization and published by John H. Dunning in 1993. The theory of internalization itself is
based on the transaction cost theory. This theory says that transactions are made within an institution if the
transaction costs on the free market are higher than the internal costs. This process is called internalization. For
Dunning, not only the structure of organization is important. He added three additional factors to the theory:
Ownership advantages (trademark, production technique, entrepreneurial skills, returns to scale), Locational
advantages (existence of raw materials, low wages, special taxes or tariffs). Internalisation advantages (advantages
by producing through a partnership arrangement such as licensing or a joint venture) (World Heritage Encyclopedia,
n.d). According to John Dunning’s eclectic paradigm, firms need to have ownership, location, and internalization
advantages in order to cross borders and engage in foreign direct investment (da Silva, 2010).The eclectic paradigm
is influenced by home and host country cultures. Dunning and Bansal postulate that asset based ownership
advantages (Oa) are created by cultures that are individualistic; transaction based advantages (Ot) are more likely
to be strength of integrated, moral and high trust (Casson, 1992) cultures. The Oa come from the possession of
specific assets and Ot reflect the capacity of the firm to capture the benefits of the transaction. In the exploitation

of the intangible assets Oa, frequently, firms have the option to choose between using them in the foreign market
or not (Alcaraz J. V., 2017). Modal choices are also a function of Hofstede’s (1980) uncertainty avoidance, power
distance and masculinity measures; fore example, high trust cultures which are also high in terms of power distance
(Shane, 1994 and 1995) show a lower tendency to internalize. Location choices are determined by the cultural
distance between the home and host countries perceived by the investing firms, as well as their attitudes to risk
and uncertainty (Dunning and Bansal, 1997)
Ø Ownership Advantages
Trademarks
• A notorious and leading brand of multiplexes in key countries.
Innovation
• An early adoption and implementation of new technology developed by a third party.
• An open source approach to innovation involving employees, customers, and tech start-ups.
• A learning organization promoting continuous improvement across the company.
• A list of breakthroug novelties that have innovated the moviegoing experience for forty years.
Entrepreneurial Ability
• Industry Know-How: An experience of thirty-plus years in the cinema exhibition business.
• Political Know-How: A competence to thrive in a business environment controlled by the government.

• Resilience: A capacity to overcome difficulties: the founder of Cinépolis opened, closed and sold three
cinema exhibition companies (1947-1963) before establishing Oganización Ramírez in 1971.
• Long-Term Focus: An ability to see the big picture and potential of the business, executing coherent
strategies aligned to the objectives of the company.
• Leadership: An aptitute for mobilizing people, resources, and ideas towards a greater goal and purpose
Customer-Centric Company
• A culture that puts the customer at the center of the company’s purpose and operations.
Cumulative Advantage
• An ever-evolving operation, uniqueness and personalization of the brand (Lafley & Martin, 2017)
Capital
• A power to finance foreign entry modes with its own capital by reinvesting almost 90% of what the company
produces.
“Many people just find it very comfortable and cost-effective

to watch movies at home. That’s why we continue to put a
lot of emphasis on creating a really different and special, the

very best experience of consuming a film on the large
screen.” Alejandro Ramírez, CEO (Film Journal International,
2013)

Ø Locational Advantages

Factor Conditions
• Entry to countries with modern infrastructure, or significant investments in developing one.
• Competitive labor costs
• Supply of skilled labor
Demand Conditions
• Entry to countries whose population has a disposable income to spend in entertrainment
• A population that has a keen interest in movies.
•
Related and Supporting Industries

• Entry to countries with an intense and dynamic real-state development (malls/shopping centers)
•
Firm Strategy, Structure, and Rivalry
• Entry to countries with a similar managerial system
• Entry to countries that are severly underscreened.
• Entry to countries with a fragmented (dispersed) cinema exhibition industry
• Entry to countries where competitors have no competitive or distinctive advantages
Ø Internalization Advantages
Business Model
• A business model can be easily trasnfered, replicated, and scalated in a foreign country.
• A business model that is flexible in adapting to the home country processes, culture, and tastes.
Entry Modes
• Green Fields: the entry mode by default

• Acquisitions: An entry mode that is opted after the company has some experience in the foreign market,
being Chile and Spain the only exceptions where acquisition was the initial entry mode.

“We will also look at acquisitions during this period of

expansion. That being said, it is more important for us to zero in
on the right property and location instead of just chasing
numbers,” Javier Sotomayor, Managing Director at Cinépolis India
(OutlookBusiness, 2016)
6. Innovation in Motion
“The cinema has not been disrupted since the Lumiere brothers invented it 120 years ago in Lyon […] the concept
is still the same: basically it is an image projected 24 frames per second, giving the illusion of movement.
What we have tried to innovate is the experience of going to the movies. We have to stay relevant so the customers
are willing to go out and pay for a ticket” Alejandro Ramírez, CEO (2015).
According to Michael Porter, companies achieve competitive advantage through acts of innovation that can be
manifested in a new product design, a new production process, a new marketing approach, or a new way of
conducting training. The innovation in more likely to occur through a cumulation of small insights and advances
than on a single, major technological breakthrough. It always involves investments in skill and knowledge, a well
as in physical assets and brand reputations (Porter, 1990).
Cinépolis fanatical attention to customer service has led to breakthrough novelties in the industry and the
innovation in the moviegoing experience for more than 40 years. The use of the latest technologies and the
continuous improvement in the operation of cinemas is palpable before, during, and after the customer purchase
a ticket.
Cinépolis was the first circuit in Mexico to bring multiplexes8, the IMAX screen, 3-D and 4-D screens. It was the
pioneer of the luxury cinema concept, stadium seating, numbered seating, reserved seating, on-line ticket
purchasing, loyalty programs (Club Cinépolis® has over a million of members), and the digitizacion of screens.
Cinépolis was the first to show recorded or live opera concerts, musical concerts, NBA9 basketball games, World
Cup soccer games, WWE10 wrestling, and other sporting and cultural events. Cinépolis created the edutainment11
concept supported by its brand CinemaPark®. The options to buy a ticket range from a traditional sales point in
theaters and the telephone, and via internet, smartphones, and Facebook. The diversity of food and beverages in
theaters is one of a kind: in-home made food, beverages, gourmet dishes, and a sushi bar in traditional and luxury
cinema theaters.

8
A movie theater complex with multiple screens, usually housed in a specially designed building (Wikipedia, 2017)
9
National Basketball Association in the United States
10
World Wrestling Entertainment
11
Educational content designed to teach and educate through entertainment

Cinépolis partnered with the Harvard Business Publishing to create a development framework that integrates
Leadership Direct, Harvard ManageMentor, Harvard Business Review archive, New Leader Program, case discussions
and application exercises. The purpose of the program is to drive engagement and a culture of learning company-
wide at all levels in the company (Rosas & HBR, 2015).
Cinépolis continues to establish an innovation culture internationally. The corporate manager program is expanding
to Brazil, India, the United States, and Latin America growth markets.“Cinépolis has always been an innovator. Now,
with so many entertainment alternatives to moviegoing, we need to keep innovating. To do so, we must develop
our leaders, not just in Mexico but in our international growth markets as well” Alejandro Ramírez, CEO (Harvard
Business School Publishing, 2015)
Table 17. Cinépolis Main Innovations and Contributions in the Industry

Year Innovation
1971 Cinépolis introduces the Duplex concept with the inauguration of Cinema La Raza.
1994 Cinépolis builds the first Multiplex concept cinema in Mexico.
1997 Cinépolis develops the stadium sitting in theaters.
1999 Cinépolis pioneers the V.I.P concept (luxury cinemas).
2004 Cinépolis inaugurates the first IMAX® screens.
2005 Cinépolis launches on-line purchasing of tickets.
2010 Cinépolis develops Macro XE screens (company brand and technology for macro screens)
2011 Cinépolis pioneers numbered seats.
2011 Cinépolis opens the first theaters with 4D technology (interactive + multisensorial experience)
2014 Cinépolis invents the Junior concept for children. (a play room inside the theater)
2015 Cinépolis Leadership Program in partnership with the Harvard Business Review
Cinépolis aimes to digitize most of its processes in order to facilitate the operation and service to its customers.
The sales points on-line (web-site, facebook) and the application for smartphones are user friendly and the
company is constatly looking to make the purchase of a ticket better, easier and faster. In 2015, the application
for smartphones reported 4,076,316 downloads for Android, IOS and Windows Phone (Ramírez, Conferencia
Magistral, 2016)
Cinépolis has an open source approach to innovation, meaning that the continuous improvement in the company
is a collaboration of employees, customers (focus groups are used since 2004), market trends, and recently through
““Cinépolis Accelerator” – a program sponsored in partnersihp with BlueBox Ventures to maximizing the growth of
startups. A constant emphasis on innovation, the development of new concepts, and a customer-centric approach
has been key for the success of the cinema exhibitor (Film Journal International, 2013)
The digitization of movie theaters is the one of the most important technological transformations in the industry:
it enhanced the quality of projection, alleviated the costs of film distribution, and allowed the cinema exhibitors to
transmit non traditional content or alternative content in cinemas (Smith, 2014)

“In each market where Cinépolis operates, a strongly competitive situation exists. The exhibition sector has been
modernized and customers are becoming more sophisticated. These challenges mean that exhibition companies
are constantly thinking about how we can innovate to offer value-added services to our customers and thus gain
their trust and loyalty. In the case of Cinépolis, we have been successful in achieving this process of securing
customer loyalty through innovation […] The main effect of these changes is that we can rely on remarkable
customer-base that is loyal to our brand week in, week out” revealed Aejandro Ramírez, CEO (2014) (Smith, 2014)

7. Conclusion

The success of Cinépolis in international markets is the result of decades of resilience, focus, continuous
improvement and fanatical attention to customer service. The mexican multinational has seized the opportunities
offered by local and foreign markets with calculated aggression, capitalizaing on the competitive advantages gained
for over forthy years in the cinema exhibition business. Cinépolis has embarked on the international journey with
its own resources, perhaps sacrificing profitability and growth, but it is part of the company’s long-term focus to
remain privately owned and to have the control of the investments and decisions for the future. Cinépolis has
successfully internalized its business model in twelve countries, and in the last years it has accelerated the pace in
order to increasing its global foot print and revenues. The developing countries served as a platform to explore
territories and learned about the good, the bad, and the ugly of entering foreign markets, however after fiftheen
years operating in the Latin American region, Cinépolis has realized that they need to go to more distant, but also
more profitable countries for a sustained growth.
Alejandro Ramírez Magaña, Chief Executive Officer.

8. References
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Alcaraz, J., & Montoya, M. (2017). Mexican Multinationals: How to Build Multinationals in Emerging Markets.
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Bussey, J. (2010, October 9). Mexican Theather Chain Spearheads South-South Expansion. Latin Trade, pp. 62-63.
Cinépolis. (2017). Fact Sheet. Mexico: Cinépolis.
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opportunity.
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APPENDICES CINÉPOLIS® •
Appendix 1: Business Timeline

1947 Enrique Ramírez Miguel establishes "Impulsora de Cines Independientes, S.A".
1949 Enrique Ramírez opens "Cine Morelos" in Morelia, Michoacán.
1950's Enrique Ramírez establishes "Cinematográfica Cadena de Oro" in partnership with G. Alarcón Chagoy.
1950's Alarcón Chagoy sells "Cadena de Oro" to COTSA (Compañía Operadora de Teatros).
1956 Enrique Ramírez builds Cinema Morelia.
1963 Enrique Ramírez partners with Gabriel Alarcón Sr. and Jr. and build 23 large, widescreen movie
houses, becoming the first truly independent operators in Mexico until, in 1971, they sold the company to
the government.
1970 Multiplex concept is introduced in Mexico.
1971 Enrique Ramírez Miguel establishes "Organización Ramírez" with family members. The success of the
newly formed corporation is based on technology, distribution and customer service.
1971 Organización Ramírez inaugurates "Cinema La Raza".
1972 Enrique Ramirez founds the brand "Cinemas Gemelos" (DUPLEX).
1973 Organización Ramírez expands introducing the Multicinema concept with four screens.
1980's COTSA operates 260 cinemas (159 fully owned and 101 leased).
1980's Content distribution is restricted. The industry migrates its 35mm format to BETA and VHS.
1990 COTSA closes cinemas for lack of investment, poor maintenance in the cinemas, and lack of films.
1990 Government turned cinema exhibition into a free market enterprise, after decades of overregulation.
1992 Mexican government privatizes the state-run movie theaters and abolishes fixed ticked prices.
1992 Organización Ramírez ramps up a nationwide network of multiplexes.
1993 Mexican government sells/leases COTSA cinemas to Ricardo Salinas Pliego.
1993 Organización Ramírez invests heavily in cinemas and infrastructure.
1994 Mexican government auctions the remaining COTSA cinemas.
1994 Organización Ramírez opens the first Cinépolis-labeled multiplex (10 screens) in Tijuana.
1996 Founder Enrique Ramirez passed. Enrique Ramírez Villalón (son) becomes the chairman of the board.
1997 Cinépolis introduces the Stadium sitting concept in Mexico, Querétaro and Culiacán.
1998 Cinépolis Galerias Guadalajara inaugurates with 22 screens, the biggest complex in Latin America.
1999 Cinépolis develops and pioneers the luxury cinema concept.
1999 Cinépolis accounts 50 million customers, 720 screens and 200,000 seats nationwide.

1999 Cinépolis Magic Place inaugurates in Guatemala, this is the first movie theater abroad.
2000 Cinépolis introduces the first IMAX.
2003 Cinépolis opens first movie theatre in Costa Rica.
2005 Cinépolis launches on line purchasing tickets.
2009 Cinépolis opens first movie theatre in India.
2004 Cinépolis introduces the IMAX screen on November 2004 in Cinépolis Perisur, followed by another
screen in Santa Fe, and Plaza Universidad. The IMAX screen was also introduced to the public in Monterrey
and Guadalajara.
2005 Cinépolis starts B2C commerce. By 2013 online ticket sales grew on average 52% each year.
2005 Cinépolis opens first movie theatre in El Salvador and Panamá.
2008 Cinépolis starts operating in Colombia.
2009 Cinépolis inaugurates movie theatres in Peru and India.
2010 Cinépolis enters the Brazilian market, and opens first movie theatre in Honduras.
2011 Cinépolis inaugurates luxury cinemas in California and Florida, U.S.A.
2012 Cinépolis opens first V.I.P theatre in Honduras.
2014 Cinépolis acquires Hoyts Cinemas in Chile.
2014 Cinépolis acquires FUN Cinemas in India, becoming the thid largest operator in the country.
2014 Cinépolis acquires Box Cinemas, and MaizCinemas in Brazil, becoming the second largest cinema
operator in the country.
2015 Cinépolis acquires Yelmo Cines in Spain.

Appendix 2: Accumulation of Screens 1971-2017

Source: Author´s own elaboration based on Cinépolis Fact Sheet 2017
The percentages represent annual growth in number of screens.
The percentages represent the growth in number of screens by decade.

Appendix 3: Cinema Exhibition in Mexico – Key Figures 2014

Source: Author´s own elaboration based on (Ramírez, 2015).

Appendix 4. Global Box Office Sales

Source: (Motion Picture Association of America, Inc. , 2016)

Cinépolis: Lights, Camera, Go Global!

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Cinépolis: Lights, Camera, Go Global!

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School of Business and Economics

1. The Company .......................................................................... 1

MIM5161 – Advanced Contemporary Topics

the cinema exhibitor as of 2017.

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Graphic 1. Cinépolis Key Facts and Figures

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Once Upon a Time in Mexico

expansion of the business:

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Table 1. Accumulation of Screens 1971-1991

Screens Annual Growth by

transnationalization of films, controled by the United States (Ruiz, 1998).

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Table 2. Accummulation of Screens 1992-2017

Screens Annual Growth by

Back to the Future

#Screens per Saturation rate per

Table 3. Figures of the Cinema Industry in Mexico, 2014

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

the future (Motion Picture Association of America, Inc. , 2016).

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Exhibitor Country #Screens Theaters Tickets Sold Sales USD Company

Table 5. Number of Tickets Sold by Country in 2016

interested in each other. “I have respect for them,” says Bijli.

an ambitious BRIC strategy to expand,” he adds. More

importantly, the Mexican company, through its half-a-century

each of its screens as a product and not a commodity, as is

PVR Cinemas for Forbes India. PVR Cinemas is the leading

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

3. The Entry to Foreign Markets

expanded further to the United States, Spain, and Chile.

individually, regardless of the economic and socio-cultural similarities.

Table 6. Internationalization Timeline

Entry Entry Flow of

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Table 7. Internationalization Stages

Dimension Learning Stage (1999-2008) Commitment Stage (2009-2015)

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Table 8. Comparison of key figures generated in Mexico and Abroad

Location Sales US$Million #Cinemas #Screens #Tickets Sold

developed with the same enthusiasm as South America.

Table 9. Key Facts and Figures of Cinépolis Operations in Foreign Markets

Country Entry Year #Cities #Cinemas %Cinemas #Screens %Screens

México 1971 99 352 62% 3,108 66%

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

Table 10. Key Facts and Figures by Region

Country #Countries #Cities #Cinemas %Cinemas #Screens %Screens

“The fact that we are a family business has helped us to really be

focused on the business long-term,” declared Alejandro Ramírez

profitability, although it is important as well, but we make our

investments and decisions for the future.” (Film Journal International,

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

4. The Distance Dimensions in the Global Strategy

(Ghemawat, 2001) See Table 11.

Table 11. Ghemawat’s Distance Dimensions

Distance Dimensions and Its Characteristics

Admnistrative Country’s institutional infrastructure and functioning legal system.

Economic Country’s consumers wealth and income compared to another country.

Table 12. Distance Dimensions between Mexico and Central America

Cultural Distance Administrative Distance Geo Distance Economic Distance

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017

the 12 countries where it operates.

"Cinépolis is known to be fussy about every little detail: Leg space

makes it easier on the eye, better 3D glasses and sophisticated air

what helps them get repeat customers” (Forbes India, 2012)

UDLAP® - MIM5161 ADVANCED TOPICS – SPRING II 2017