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Case Title:

Cemex’s Cost of ‘Globalised’ Growth – The Cash Crunch?

Publication Year : 2010

Authors: Vivek.M.V, Saradhi Kumar Gonela and Dr. Nagendra V chowdary

Industry: Manufacturing

Region:Mexico

Case Code: GGL0054

Teaching Note: Available

Structured Assignment: Not Available

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Abstract:
Cemex has an enviable past, a struggling present and an uncertain future. This case study is primarily useful for analysing the costs associated with globalisation and debating over the possible alternatives for a company caught in financial troubles after committing significant amount of debt on global expansion.

The company boasts of a century-old history and has weathered many a storm in an unfriendly Mexican business environment. Every time a problem hit Cemex, it emerged stronger, altering its course and deftly building business. When global business environment was accepting globalisation and leverage as a viable option for growth – Cemex opted for both. And with times gone worse following the US Financial Crisis (2008), it is facing the heat of acute cash crunch. With all options of generating cash from operations going dry, the company is contemplating on disposing assets at distressed value to meet the impending debts in the short-term. Needless to say, it is trying with all its might to restructure its debts to get some breathing space. This case can be used for analysing the nature of the construction industry and the scope for construction-related companies to go global. Given the nature of the construction industry and Cemex’ modest roots in ‘diversification’, this case can be used effectively in International Business course and Competitive Strategy course.

Pedagogical Objectives:

  • To understand the feasibility of different industries going global
  • To debate on the merits and demerits of Cemex transforming itself from a highly diversified firm to a single business firm
  • To analyse and contrast Cemex’s globalisation moves vis-ŕ-vis Lafarge and Holcim and understand the timing and scales in this industry while going global
  • To critically analyse Cemex’ growth strategies and discuss and debate on the unintended consequences (both positive and negative)
  • To explore various options for resolving Cemex' acute cash crunch and evaluate those options.

Contents:

  • Cemex under Zambrano – Cementing its Position
  • Cemex's Globalisation Moves: Growing Through Acquisitions
  • The Globalisation and Post-merger Integration: The Cemex Way

Keywords : Going Global, Globalization, MNCs, TNCs, Global Strategies, Global Expansion Strategies, Emerging Giants, Emerging Giants From Emerging Economies, Emerging Giants Going Global, CEMEX, Growth Strategies, Organic Vs Inorganic Growth Strategies, Related Vs Unrelated Diversification, Mergers & Acquisition, Value Creation at Cemex, Cement Industry, Leverage, Highly Leveraged Firms, The Cost of Going Global

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