Cemex
3. Why CEMEX preferred equity entry mode (mainly acquisition) instead of non-equity entry mode (such as exporting) in its international expansion? Use relevant IB theory to support your argument.
CEMEX opted for the acquisition based method of entry to a foreign country due to the increasingly difficult trading barriers imposed by the USA
4. Critically anayse the reasons for CEMEX and other firms to buy existing capacity to enter new fields rather than greenfield entry strategy? * Because CEMEX prefers transferring its skills to other cement companies * They believe they can reduce mistakes with their own organizational management
3. Reread the Management Focus on Cemex and then answer the following questions:
a) Which theoretical explanation, or explanations, of FDI best explains Cemex’s FDI?
b) What is the value that Cemex brings to the host economy? Can you see any potential drawbacks of inward investment by Cemex in an economy?
c) Cemex has a strong preference for acquisitions over greenfield ventures as an entry mode. Why?
d) Why do you think Cemex decided to exit Indonesia after failing to gain majority control of Semen Gresik? Why is majority control so important to Cemex?
e) Why do you think politicians in Indonesia tried to block Cemex’s attempt to gain majority control over Semen Gresik? Do you think Indonesia’s best interests were served by limiting Cemex’s FDI in the country?
Answer: a) Cemex is a cement company. Consequently, exporting is difficult because of the weight of the product. If Cemex wants to expand into new markets, the company would either need to license a local company or make an investment in the market directly. Cemex’s success is due in part to its top notch customer service, and relationship with distributors. Because these advantages could be difficult to transfer, the company will probably choose to invest directly. Students should reflect on these factors as they consider the various theories
CEMEX opted for the acquisition based method of entry to a foreign country due to the increasingly difficult trading barriers imposed by the USA
4. Critically anayse the reasons for CEMEX and other firms to buy existing capacity to enter new fields rather than greenfield entry strategy? * Because CEMEX prefers transferring its skills to other cement companies * They believe they can reduce mistakes with their own organizational management
3. Reread the Management Focus on Cemex and then answer the following questions:
a) Which theoretical explanation, or explanations, of FDI best explains Cemex’s FDI?
b) What is the value that Cemex brings to the host economy? Can you see any potential drawbacks of inward investment by Cemex in an economy?
c) Cemex has a strong preference for acquisitions over greenfield ventures as an entry mode. Why?
d) Why do you think Cemex decided to exit Indonesia after failing to gain majority control of Semen Gresik? Why is majority control so important to Cemex?
e) Why do you think politicians in Indonesia tried to block Cemex’s attempt to gain majority control over Semen Gresik? Do you think Indonesia’s best interests were served by limiting Cemex’s FDI in the country?
Answer: a) Cemex is a cement company. Consequently, exporting is difficult because of the weight of the product. If Cemex wants to expand into new markets, the company would either need to license a local company or make an investment in the market directly. Cemex’s success is due in part to its top notch customer service, and relationship with distributors. Because these advantages could be difficult to transfer, the company will probably choose to invest directly. Students should reflect on these factors as they consider the various theories