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Cemex Is A Global Construction Solution Marketing Essay

Cemex Is A WORLDWIDE Construction Solution Marketing Essay

CEMEX is a global construction-solution organization that provides product a consistently top quality and reliable program to customer. CEMEX is advance in the well-getting of how they provide via their relentless concentrate on continuous improvement and the effort of promoting sustainable potential.

The firm was founded in 1906 at Mexico, and now they have become the world’s major building material company. It operates in a lot more than 50 countries and provides 60,000 employees worldwide. CEMEX takeover RMC in 2005 where their procedure starts from extracting recycleables to create cement, distribute and marketplaces cement to consumer over 50 countries which they also uphold business human relationships with an increase of than 100 nations.

Using vertical integration approach, assess the influence of the approach adopted by CEMEX’s organization functions towards its growth.

Vertical integration

“Vertical integration is the extent to which a business owns the network which it is a part. At a strategic level it entails an organization assessing the wisdom of acquiring suppliers and client.” (Slack N et al, 2002) It is where a business decides whether to generate a particular component or to perform a particular service itself, or additionally acquire it in from a provider based on the average person product or services this means to the operation. Moreover, “it could have a significant impact on a business unit’s situation in its industry regarding cost, differentiation apa format lab report, and other strategic concerns, the vertical scope of the organization is an important concern in corporate strategy”. (Anonymous, 2010)

To be the virtually all recommended and efficient building materials company worldwide, CEMEX must ensure they have a good financial performance for the business enterprise. Thus, they began to pursue its aggressive growth technique trough vertical integration strategy, which can be defined in terms of:

Direction of Vertical Integration

CEMEX adopted both onward and backward integration. For example, in the tertiary sector where CEMEX apply the ahead integration that expand on the demand area by distributing its natural material and finished merchandise to customers for development of structures, bridges and transfer links; where they put their buyer first.

“Their Construrama distributor network has grown into the most significant construction materials chain in Latin America, where it offers their customer uniform merchandise quality, reliable client provider, and ease”. (Charles nd) Therefore, providing services to business and customers will “brings the organization closer to its markets and allows more flexibility for it to make contact directly with its customers”. (Slack N et al, 2002)

CEMEX’s backward integration is seen in the principal activity which involves extracting recycleables from land and ocean. Where it expands its approach on the supply part of the network that “allowing the organization to take control of its suppliers, often to gain cost advantage preventing competitors gaining control of crucial suppliers” (Slack N et al, 2002)

Extent of Vertical Integration

Not all organization chooses to integrate a long way away from their original part of network. However based on the case study, some large organization like CEMEX is quite vertically integrated. For instance, CEMEX is associated with extraction, processing and use of raw material from the planet earth in addition to manufacture finished merchandise and construction activities. In addition, it operates to distribute and its own goods and offer service to business and consumers, e.g. retail, financing and transport. This has made their path fully operate from raw materials before end network of method, which is all owned by CEMEX.

Balance among Stages

CEMEX have a complete balanced network relationship, which one stage produce for the next level in the network is totally satisfied certain requirements. It has full balanced networks which include the virtue of simplicity and it allows every stage to focus on the requirement for another stage. For example, extracting process of raw material has to participate in the government’s Regional Nutrients Plan, where quantity needed is specified to make sure a fair balance in the united states. On top of that, “dredged aggregates are essential for the future development and will help to replenish Britain’s seashores and guard the coastline from erosion.” (Anonymous, 2009)

Perceived Benefits of Vertical Integration

Diagram 1: Positive aspects perceived by CEMEX (Self-made, 2010)

Secure Dependable Delivery

Fundamental reason for CEMEX to obtained RMC through backwards integration, because “RMC’S strong posture in cement, aggregates and ready-mixed concrete will increase CEMEX existing procedure in these areas and, coupled with their global presence in cement products, enhance their leading position in the global building-materials market”. (Markley, 2004) Moreover, it can help CEMEX to create options in new marketplaces for cement merchandise; which in addition, it provides additional geographic income diversity and strengthen industry position in developed marketplaces.

Engaging an activity in-house is preferable to outsource, because it helps secure dependable delivery of input resources. For example, CEMEX involved in extracting raw material, is to make sure to have long-term source rather than having an insufficient supply market which cannot satisfy the organization.

Reduce Cost

The acquiring of RMC by CEMEX, help the organization to reduce cost via less expense is needed to acquire raw material from provider because they can extract the raw materials by themselves. For instance, if CEMEX did not takeover RMC and RMC raise the price according to the market price, thus CEMEX have to pay more for the raw material they need. When CEMEX takeover RMC, it can control the pricing for the material, so the bargaining for the supplier is low and allowing for CEMEX to have significantly more capital to place on their Research and Development.

Improve Product and Program Quality

Moreover, it helps them to protected their expert and technological advantage to prevent the competitors obtaining the understanding of product and service. Moreover, they have total authority over the product quality control in the development process of making cement which will keep their product top quality to be consistent. So, it helps the organization to provide better product and program to buyers which will lead to increase of market show.

Disadvantages of Vertical Integration

Diagram 2: Disadvantages faced by CEMEX (Self-made, 2010)

Loss of Volume Flexibility

Heavily integrated corporation like CEMEX extract natural material themselves to make cements, signifies that it has a large proportion of their price are fixed expense. When CEMEX seriously invested to possess a in-house operation that they can perform everything themselves, CEMEX will loss of volume flexibility. This means, when they have a higher level of fixed cost, any reduction in produce of merchandise or activity can certainly cause the business operation’s economics either near or below the break-even point. Thus, if CEMEX cannot keep up with the volume produce it’ll impact the profitability and protection cost of the operation.

Distract from Core Business

CEMEX will become distracted from their key business which is furnish cement, ready-mix merchandise and aggregates to client. However, after they acquired RMC they tend to focus even more on extracting the recycleables such as for example gravel and sand. Therefore, it has a tendency that will cause them to distract from concentrating of provide cement considerably more towards the extracting method. Additionally, when they are distracted from main business it will also impact profitability of the organization’s sales revenue.

Lack of Innovation

CEMEX has vertically integrated, means they have invested in the processes and systems that is needed to produce its product. Therefore, this may lead CEMEX’s industry to a inclination to lag of adoption of innovative technologies from competitors. Even so, “there is a considerable body of evidence to suggest that clients and suppliers are a major source of innovation”. (Slack et al, 2010) As a result, when CEMEX acquired their supplier it helps prevent them to have new information on new innovation of technology.

Critically assess CEMEX’s area decision, which give a stability between its competitiveness in building materials industry against its dedication towards environmental, legal and sociable concerns.

To run a successful, competitive corporation that collaborates with issues like environmental, legal and cultural concern to create a positive impact to the world. Group like CEMEX UK should have taken these issues really because it will affect the corporations course towards what they want to achieve. These elements will be even more discussed below.

For example, in the principal activities where CEMEX chooses to extract raw materials from land and sea; its plans will need to have a proper approach to extract, restore and after-care and attention of sites. While, the extracting of sand and gravel web form sea bed by dredging; dredged aggregates are vital for future years development. Hence, CEMEX UK really helps to replenish Britain’s beaches and shield the coastline from erosion.

Environmental

CEMEX as a setting up material industry not merely satisfied the essential wants of shelter and infrastructure, CEMEX also crafted its global environmental strategy where is allows them to manage their impacts biodiversity round the sites; its help the business to become more competitive among the rivals.

Due to these environmental aspect, CEMEX need to select a location which is near the raw material and ensure that it will not close to the urban area where it will affect

the environment of the town. Thus, the majority of its ready-mixed concrete vegetation are located near quarries to ensure fast supply to save lots of time and expense. CEMEX is committed to use the rail to transport their material so that you can lessen the emission review the journey by highway. Despite global recessionary conditions, CEMEX likewise have made a concerted effort to maintain their environmental expenditure and there know about the decision of location which has an impact on the neighborhood environment. This could be seen in the table 1 below:

Sustainable approach adopted by CEMEX

Effect from action

Committed to make use of rail to move aggregates compare to road

Produce 5 instances lesser of carbon emissions

Uses water transportation via sea, rivers, conveyors & underground pipelines.

Help minimize carbon footprint

Committed to the utilization of alternative fuels such as for example chipped tyres and cured household waste to heat the kilns.

Helps to reduce emissions of CO2.

Table 1: Sustainable method of environmental problems by CEMEX (Self-made, 2010)

Hence, by adopting and having in charge on the impacts that will affect the local environment, in ’09 2009″the amount of key environmental incidents dropped by 68%”. (CEMEX, 2009) so, this would make CEMEX to be more competitive in business since it has commitment towards the surroundings.

Legal

Legal factor is related to the legal environment in which an organization operates in a nation. Different region has their private legal concern factors, thus it will affect CEMEX’s location decision to use their business in a specific country. For instance, UK government regulates the marine dredging to minimize the impact on environment. Thus, CEMEX have a choice of certainly not operate in UK but, CEMEX choose operates in UK, so they possess help replenish Britain’s seashores and safeguard the coastline from erosion in order to comply with the rule of UK government.

Moreover, CEMEX UK locates its plants near to where the recycleables will be, as CEMEX located its nationwide supply network more than 500 location. CEMEX aim to locate quarrying and production felicities in most appropriate location not merely to meet the market needs. It also complied with the united kingdom Government’s objective to reduce the trucks applied to road wherever possible to reduce the carbon emission. Consequently, CEMEX UK committed this by using ocean, rivers, conveyers and underground pipelines to move their products.

Social

Social concern for the community is taken critically by CEMEX. Whatever operation blog CEMEX does will have an effect on the community around them. A cement firm like CEMEX it should locate its industry which is less population, so that it can minimize the affect of environmental pollution that will directly affect human’s overall health. Hence, CEMEX need to consider every factor that may have an impact on the health’s of the city before it locates its vegetation.

For case in point, CEMEX should locates its vegetation near to it raw material and ensure the place it less in inhabitants; therefore the people around the town will not be influenced by the sound pollution and air pollution due to the industry. Additionally, CEMEX also committed to use of choice fuels from chipped tyres. This will advantage CEMEX by having a low cost energy efficient gasoline and reduce emission; as well as benefiting the city by less waste which will goes to landfill, provide a safe method of disposing household waste materials and save fossil fuels for near future generation.

Compare and contrast the effectiveness of CEMEX’s sustainable method of operating its organization against an electronic product manufacturing market of your decision.

Samsung Vs CEMEX Vertical Integration

Samsung is an electronic group which creates innovative products and cutting-edge technology for people to see it worldwide. Samsung has got vertically integrated its operation that includes parts and finished merchandise. “Eight years after beginning procedure in Mexico, the Samsung Group inaugurated Samsung Tijuana Park, a vertically integrated development site that symbolizes total investments for US$ 200 million”. (Anonymous, 1996) Therefore, Samsung has adopted a backwards vertical integration making them not the same as CEMEX as CEMEX used both onward and backward integration. The comparison of Samsung’s and CEMEX’s vertical integration can be seen in Table below:

Integration Strategy

Samsung

CEMEX

Direction of Vertical Integration

Only adopted backwards integration

Adopted both ahead and backward integration

Extent of Vertical Integration

Produce its own component and finished goods of electronic goods

Extract its raw materials for cement making procedure and ready-mix cement product.

Hence, the similarity of both agencies can be that they deliberately decide to integrate backwards to the degree of involving themselves in the processing, producing and manufacturing their individual product.

Balance among Stages

They don’t have a balance of built-in technique, because they focus even more on backwards integration.

They have a harmony of integrated approach of backward and forward integration

Table 1: Compare the potency of Samsung and CEMEX. (Self-made, 2010)

Both Samsung and CEMEX include different sustainable way to operate its organization. As Samsung is an electronic product manufacture market, whereas CEMEX can be cement merchandise manufacture industry. As a result, they approach business in a different way but both also make an effort to adhere to few issues below to minimize the negative effect toward both business and the world.

Environmental

Samsung and CEMEX make sure that throughout their manufacturing process it will decrease the impacts towards environment. Table 1 below will illustrate how both companies possesses approached and complied with the environmental issues.

Samsung

Effect

CEMEX

Effect

Global Green Management System

Complied with safety regulation

Control internal maintenance standards

Committed to apply rail to move aggregates compare to road

Produce 5 situations lesser of carbon emissions

Product Stewardship throughout the lifecycle

Ensure product are safe and much less burden to environment

E.g.: use and disposal of product

Uses water transfer via sea, rivers, conveyors & underground pipelines.

Help minimize carbon footprint

Clean and Green Procedure – utilize optimal eco-friendly production technologies

Helps minimize the consumption of energy and natural recourses

Reduce greenhouse gas emission

Committed to the application of alternative fuels such as for example chipped tyres and treated household waste to heating the kilns.

Helps to lessen emissions of CO2.

Table 1: (Self-made, 2010)

Information Source: http://www.samsung.com/us/aboutsamsung/sustainability/environment/environment.html

Legal persuasive essays examples

Different country has their very own legal concern factors, consequently it’ll affect an organization’s area decision to operate their business in a particular country. Even so, Samsung and CEMEX both comply with the rules that is needed to follow in a different way as a way to kept businesses to come to be sustainable enough to contend with competitors. The table 1 below shows how both organizations comply with the rules in different ways.

Samsung

CEMEX

Compete reasonably, abiding by fair-trade regulation according to international benchmarks and national laws.

CEMEX in UK really helps to replenish Britain’s seashores and protect the coastline from erosion to comply with the UK government rules.

Organization will not permit the acceptance of money, products, entertainment or share supplies from external celebrations concerned to violate good trade.

Complied with UK Government’s objective to lessen the trucks used on road to reduce carbon emission

Table 1: different method of how Samsung and CEMEX complied to legal issues.

Information Source: http://www.samsungsmd.com/CyberAudit/eng/conduct02.html

Social

Most organization will significantly have concern on interpersonal to bring maximum benefit to the community. Therefore, CEMEX have adopted other ways such as for example lowering the produce of harmful to minimize the influence towards human’s health by the use of sea transport rather than truck which will produceC02. CEMEX likewise benefit the city by lessens the wastes to landfill, which give a safe method of disposing household waste.

Diagram 3: Social problems concern by Samsung

Source:http://www.samsung.com/us/aboutsamsung/sustainability/socialcontribution/socialcontribution.html

In contrast, based on diagram above Samsung 3 priority is to aid the young students by supporting them to have hoped for education such as motive them to become listed on essay contest about digital technology’s impression. Samsung also help children from low-income families giving “Youth Education course Sponsorship” and funding to help young technology in countries like Kenya, Egypt and Republic of South Africa. Moreover, they enhance healthy families such as for example having Anti-obesity program in partnership with European Olympic committees.

Conclusion

As a bottom line, CEMEX is usually a vertically included in both ahead and backward integration. Consequently, being vertically integrated quite often might bring an edge but also disadvantage towards the organization; which based about how they approaches it. Additionally, to be sustainable plenty of in such competitive business community, organization should not just being vertically integrated they should also have a significant concern on environmental concerns, legal and social issues before locating the industry. This can be seen in Samsung and CEMEX where they have got the concern for conditions that will affect the business and community. Therefore, if these concerns are taken seriously it has a win-win problem for both firm and the city.References

Online Resources

Markley R, 2004, “Cemex to obtain for $5.8 Billion”, online, retrieved 1st August 2010, from http://rockproducts.com/mag/rock_cemex_acquire_rmc/

QuickMBA, 2010, “strategic Supervision: Vertical Integration”, online, retrieved 28th July 2010, from http://www.quickmba.com/strategy/vertical-integration/

Samsung, 1996, “Samsung: Hottest News – Samsung Opens Integrated Plant in Tijuana”, online 10th August from http://www.samsung.com/us/news/newsRead.do?news_seq=18&page=1

Tatum M., 2010, “Wise Geek: What is Vertical Integration”, online, retrieved 28th July 2010, from http://www.wisegeek.com/what-is-vertical-integration.htm

Thetimes100, 2010, “THE DAYS 100: Sectors of Industry”, online, retrieved 30th July 2010, from http://www.thetimes100.co.uk/downloads/cemex/cemex_14_full.pdf

Book

Slack N. and Lewis M., 2002, “Operation Approach: Supply Network Marriage – Vertical Integration”, Gosport, Prentice-Hall, pg. 187

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