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 …show more content…
When Cemex has entered the market, it had been promised a majority position in Semen Gresik in 2001. However thanks to the efforts of various special interest groups, permission was never granted. Whether the decision to pull was in the best interests of the country is difficult to say. Certainly it would seem that Semen Gresik could learn from Cemex, and utilize its knowledge to improve its own operations. However, allowing a foreign company to control an industry that is necessary to a country could be detrimental to the nation.
1. Which theoretical explanation (or explanations) of FDI best explains CEMEX’s FDI? 1. Internalization theory best explains CEMEX’s FDI because CEMEX entered into many countries and bought domestic cement businesses instead of licensing. CEMEX has a great system and needs to protect it from competitors. 2. What value does CEMEX bring to a host economy? Can you see any potential drawbacks of inward investment by CEMEX in an economy? 2. The value is that CEMEX has a “Midas touch” that transforms a cement business into a thriving business. This brings great stimulation to the host economy and also helps in the construction field, which in turn helps to build cities and civilization. No, CEMEX would do well to invest inwardly, yet, CEMEX is better at acquisitioning businesses. 3. CEMEX has a strong preference for acquisitions over greenfield ventures as an entry mode.