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In South Asia, Africa and Middle East, Cemex planned the companys expansion by the process of acquisitions.

The chances of success of Lorenzo Zambrano to establish the company global giant in the market has been critically evaluated below using module theory and evidence from the case of Cemex case study. We can identify Cemex as a multinational company by reading the case. Usually, multinational companys run and manage their operations in two or more countries through their workforce, setting up branches, production and distribution plants. The plan for expansion through the process of acquisition was very challenging for Zambrano as a Cemexs CEO as well as for the assigned vice presidents, country level and regional managers. According to Bartlett et al (2008), the plan for global expansion of the companys international operation will open the door for some of the possible opportunities such as explore new markets, gain competitive a place globally, the global-scale efficency and multinational flexibility as well as economies of scale, chance of creating new information source & knowledge and low-cost resources globally. As evidence taken from the case study (p247) in 1999 as the third largest cement company, Zambrano was ready for the expansion to become a global enterprise by widen his chances for the strategic moves to be able to compete in the regional and international market and transforming the company as a global brand. Factors like global scanning and learning capability opportunities can be considered as the critical factors that a companys faces in planning its international strategy (Bartlett et al, 2008). To identify and finalize in which countries the company can invest as well as plan expansion through acquisitions, Cemex successfully developed effective tools for the process of screening opportunities. According to Bartlett et al (2008) foreign-market entry can be considered as process of learning and to gain knowledge about customers and competitors in the market and the regulatory conditions Uppsala model of internationalization used by the companies. Cemex started its internationalisation process by exporting into USA. Likewise, the company done its expansion process through similar acquisition process mentioned in the case study (p256). Through global scanning, Cemex was trying to identify its opportunities, due diligence and post-merger integration. Cemex screened the countrys qualitative and quantitative analysis in the regional context by which they were successfully identified and

finalized the possible company for acquisition and evaluate the possibilities for restructuring to prepare the acquired company to compete in the market from a better position. This proves that Zambrano was developing effective ideas and plans to become the global leader in the market of cement industry. Moreover, the companys expansion plans will be much more effective. According to Bartlett et al (2008), MNEs should follow three conditions to help them to exist in the market. Such as, a country can attract foreign companies to invest there by having certain location advantages. In the same way Cemex was involved in selecting locations such as USA, Latin America or in Middle East or to select any well established company to fulfil the first condition. Secondly, the selected business should have strategic competences to be able to compete itself in the foreign markets. Finally, to achieve expected profit margins after acquisition the business has to have some organisational capabilities. Along with the global expansion, many challenges like culture, language barrier, perception and behaviour of the customers of any particular new markets arises. Likewise, Cemex faced different challenges those occurred regarding environmental, geographical and cultural issues. In this case communicating with the local companies can give Cemex the chance to learn more about different culture to ensure their growth. Furthermore, in a very short time Cemex has become global enterprise from a local company. Cemex expansion plan was based on acquisition process of the foreign local companies. Over time Cemex was successfully following this acquisition process which helped them to make a brand name globally. According to Ghemawat Pankaj (2008), the CAGE framework aided Cemex to examine the challenges and opportunities related with its global expansion, in context to cultural, administrative, geographical and economic the four dimensions of distance. By analyzing the above mentioned article, country portfolio analysis helps to evaluate the global opportunities more efficiently. National GDP, financial situation of the customers and their tendency towards consuming any particular potential product are the main issues for CPA to focus. Equally, demand for cement is has a direct relation with the national GDP, particularly with the expenditure for construction, where government expenditures in GDP affect the demand increase or decrease. Cemex as one of the major international cement company in the industry with profitability rate increasing everyday was on the expanding their business globally through acquisitions of

local companies operating business in Asia, Africa and the Middle East. As part of the plan Cemex started investing heavily in emerging markets like India, China, and Brazil in May 2000. As mentioned in the case Zambrano along with his team was getting benefits from the globalization process with the help of acting as a local company whilst operating globally in spite of their unique culture of expansion process known as acquisitions. Currently, Cemex has become the market leader in of cement industry of Mexico by owning large proportion market share. In addition, Cemex appears to grow its market share on international scale along with trade volume and overall profitability. As the market leader the company is growing more and more for its efficient administration such as meetings between country management with vice presidents on regular basis.

Level of Management is used as terms to differentiate between different managerial positions in an organization. The number of employees increases with the increase of the organization growth. Usually three management levels exist in an organisation such as top, middle and lower management level.

Top management consists of the Managing Director, General Manager, Chief Executive and Board of Directors controlling the authority of the organisation. They Plan and co- ordinate, make policy and sets up goals as their main duties. Top level management also appoints the mid level managers. In Cemex top level management lies in the parent country which is Mexico which continued to play a key role in its strategy such as developing, testing, and refining new ideas regarding emerging markets (case study, p59). Middle level Management is formed by the department and branch heads. The Middle level management always reports to the top level management to ensure smooth functions of their departments. Organizing and directing various functions are done by the mid level managers. As directed by the top management, implementing the goals and plans of the organization is also done by mid level managers. Top and lower level management is connected through mid level management through clarify and explain the company policies to the top and lower level. Also they maintain communication from lower level to the top level management using trivial data and reports. It encourages the lower level managers to perform better by train managers accordingly.

The supervisors, foremen, superintendents etc falls under the Lower level Management. A manager from this level usually communicates directly with the lower level employees. Functions like directing and controlling has to perform by the lower level managers. They provide training and motivate the workers. The lower level management has to resolve the problems and complaint of the general workers.

CEMEXs organizational arrangements are different from its competitor. One of the main differences at CEMEX is country-level managers reports straight to regional directors whereas, rival companies has an additional level of area managers between regional and country managers. There are 7-9 departments in the Cemex plants including vice president of its own. The country president and the regional manager are being reported by these vice presidents every month using a standardized format which consist of all aspects of the plants.

Moreover, every month CEO Zambrano including his executive committee, regional directors and the country presidents meet on regular basis. Whereas, rivals hold these types of meetings irregularly to decentralized the decision making process. Cemex maintains a structure along with a Mexican division and three other regional divisions including North America, South America and the Caribbean, and Europe and Asia. However CEO is in the head of these structures. Zambanos the CEO of Cemex personally exchange e-mail and Lotus Notes, which differentiate him from other company CEOs . CEMEX provided its employees with a number of IT training programs and had also been aggressive in using new technology to overhaul its training function. A private satellite TV channel was acquired for this purpose, and CEMEX developed a virtual MBA program in collaboration with Monterrey Tech that combined satellite TV, the Internet, and the universitys network of campuses to deliver courses to executive (part-time) MBA students. Recruitment was greatly aided by the companys public profile and included not only the graduates of Mexicos top educational institutions, but also Mexican graduates of top foreign business schools and alumni of other leading firms. Thus, while the Boston Consulting Group had long been CEMEXs principal strategy consultant, more than one of the professionals in the companys strategic planning function was a McKinsey alumnus. Overall, many regarded CEMEX as having shifted over time from an engineering-driven approach to one more dependent on economics.

Over the year Cemex has expanded their business in many new countries, other broad aspects of its management changed as well. Geographic diversification had reduced earnings volatility: thus, over 1994-1997, the standard deviation of quarterly cash flow margins averaged 7.1% for CEMEX as a whole, compared to 9.5% for Mexico, 12% for Spain, 22% for the U.S., and 30% for Venezuela. Financing, nevertheless loomed large as an issue because of the asset-intensity of the international acquisition strategy, which included not only paying for equity but also the assumption of significant debt and incurral of large investments in modernizationup to 50% of purchase prices in some cases. While high costs ofcapital had always been a major issue for Mexican companies, the situation was exacerbated by the peso crisis, which simultaneously raised domestic interest rates and restricted the extent to which Mexican cashflows could be used to finance foreign direct investment (because of the 70% devaluation of the peso against the U.S. dollar). CEMEX responded by folding the ownership of its non-Mexican assets into its Spanish operations and financing new acquisitions through the latter. This was several hundred basis points cheaper for CEMEX, partly because Spain had an investment grade sovereign rating, and partly because all interest expenses were tax-deductible in Spain (compared to just real interest expenses in Mexico). Consolidating its bank debt through the Spanish operations in 1996 was estimated to have saved CEMEX about $100 million per year in interest costs, and to have better matched dollar-linked assets and its principally dollar-denominated debt. CEMEXs net debt amounted to $4.8 billion at the end of 1999, leaving it relatively close to the 55% limit on debt-to-total-capital that was specified in bank covenants. The company had managed, however, to satisfy the cap on leverage and the floor on interest coverage that it had set for itself more than one year ahead of schedule, and further strengthening of capital structure had been promised. CEMEX had also tried to broaden its sources of capital. In 1998, it sold its plant in Sevilla, as described above. In early 1999, it partnered with AIG, the insurance company, and the private equity arm of the Government of Singapore Investment Corporation, among others, to set up a fund of up to $1.2 billion to invest in some of the cement assets it was acquiring in Asia. In September 1999, CEMEX listed and started to trade on the New York Stock Exchange. And while no new shares were offered in conjunction with that listing, the company issued $500 million of warrants later on in the year.

CEMEX also continued to distinguish itself by the intent of its emphasis on emerging markets, even though some of its competitors had moved in the same direction. The company

calculated that the weighted average growth rate in cement demand in the countries in which it was present was close to 4%, compared to 3% for Holder bank and Lafarge and 2% for the three other international majors. CEMEX also thought that its emerging market business should command higher price earnings ratios in cement than business in advanced markets the reverse of the situation that prevailed. According to CEO Lorenzo Zambrano, They assign us the ratios of developing-country companies, even though we have very little volatility and our risk is limited due to our geographical diversification.

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