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?
CEMEX is a global building materials company that provides high quality products and reliable service to customers and communities throughout the Americas, Europe, Africa, the Middle East, and Asia. They produce, distribute, and sell cement, ready-mix concrete, aggregates, and related building materials in more than 50 countries, maintain trade relationships in approximately 102 nations. Their approach can be best describe as constant evolution, flexibility in their operation, creative in commercial offerings, sustainable use of resources, innovative approach in global business, efficient in use of capital allocation and above all they are the leader in using information technology to match up with consumer demand. (Cemex, 2013). They also devote a great attention to marketing know- how in order to acquire unit and improve their performance globally.
1.1 CEMEX’s theoretical explanation of FDI
According to the present case, the theoretical explanation that can best describe Cemex’s foreign direct Investment (FDI) is the theory of internalization. The Foreign Direct Investment occurs when a firm invests directly in new facilities to produce and/or market in a foreign country. Once a firm undertakes FDI it becomes a multinational enterprise. (Hill, 2008). As per, Buckley and Casson (2009) a firm will favour FDI over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. So, a firm will favour FDI over licensing when it wishes to maintain control over its technological know-how, or over its operations and business strategy, or when the firm’s capabilities are simply not amenable to licensing. However, Cemex's foreign direct investment (FDI) activity is that of internalization due to limitations of licensing or also known as the market imperfection approach. Market imperfections are factors that inhibit markets from working perfectly. (DeGeneres, 2005).
Furthermore, Buckley and Casson (2009) described
1.1 CEMEX’s theoretical explanation of FDI
According to the present case, the theoretical explanation that can best describe Cemex’s foreign direct Investment (FDI) is the theory of internalization. The Foreign Direct Investment occurs when a firm invests directly in new facilities to produce and/or market in a foreign country. Once a firm undertakes FDI it becomes a multinational enterprise. (Hill, 2008). As per, Buckley and Casson (2009) a firm will favour FDI over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. So, a firm will favour FDI over licensing when it wishes to maintain control over its technological know-how, or over its operations and business strategy, or when the firm’s capabilities are simply not amenable to licensing. However, Cemex's foreign direct investment (FDI) activity is that of internalization due to limitations of licensing or also known as the market imperfection approach. Market imperfections are factors that inhibit markets from working perfectly. (DeGeneres, 2005).
Furthermore, Buckley and Casson (2009) described