consumer behaviour
Globalization “The Cemex Way” Case Analysis
The cement industry and its players made first steps in the direction to Global integration only in the 1970s. It could be seen as somewhat paradoxical, because if we
apply the matrix of Global Integration and Local Responsiveness pressures to the cement industry, we can clearly identify that the industry scores high on most of the factors that should have pushed it to globalization much earlier
Factors
These factors include large investment intensity, technology intensity in production, pressures for cost reduction, universal needs, presence of multinational competitors, and access to localized resources. But that matrix does not take into account the inherent characteristic of the industry’s principal product, namely low-value-to-weight ratio of cement.
Therefore, the move from the fragmented localized markets to formation of the MNCs spanning the globe was caused not by the intrinsic universal need for cement itself or by the opportunities for labor cost arbitrage, as was common for many other industries. Since cement itself was, and mostly remains, not an export-driven business, because it was expensive to transport, there had to be other drivers for globalization of the industry.
Indeed, the emergence of MNCs in the cement industry was caused by significant progress in the development of the supportive functions underlying the industry as a whole, such as telecommunications,information technology, capital markets, knowledge management. Unlike the cement, these functions were much more suitable for “export” and their “value-to-weight” was very high.
Local Need
Analysis of the factors of Local Responsiveness shows us that the cement industry generally does not have high pressures for localizing their product. These pressures are medium at the most. Even though there can be some noticeable differences in consumer demands from developed and emerging markets, e.g. bulk vs. bagged cement, these
The cement industry and its players made first steps in the direction to Global integration only in the 1970s. It could be seen as somewhat paradoxical, because if we
apply the matrix of Global Integration and Local Responsiveness pressures to the cement industry, we can clearly identify that the industry scores high on most of the factors that should have pushed it to globalization much earlier
Factors
These factors include large investment intensity, technology intensity in production, pressures for cost reduction, universal needs, presence of multinational competitors, and access to localized resources. But that matrix does not take into account the inherent characteristic of the industry’s principal product, namely low-value-to-weight ratio of cement.
Therefore, the move from the fragmented localized markets to formation of the MNCs spanning the globe was caused not by the intrinsic universal need for cement itself or by the opportunities for labor cost arbitrage, as was common for many other industries. Since cement itself was, and mostly remains, not an export-driven business, because it was expensive to transport, there had to be other drivers for globalization of the industry.
Indeed, the emergence of MNCs in the cement industry was caused by significant progress in the development of the supportive functions underlying the industry as a whole, such as telecommunications,information technology, capital markets, knowledge management. Unlike the cement, these functions were much more suitable for “export” and their “value-to-weight” was very high.
Local Need
Analysis of the factors of Local Responsiveness shows us that the cement industry generally does not have high pressures for localizing their product. These pressures are medium at the most. Even though there can be some noticeable differences in consumer demands from developed and emerging markets, e.g. bulk vs. bagged cement, these