Cemex - Building a Global Latina

Introduction

Globally, CEMEX Inc. has been ranked as one of the largest companies dealing with cement manufacturing; a ranking which has been based on its ability of producing a capacity exceeding 70 million metric tons (Donald, 2008). Through the subsidiaries which it has maintained in its operation in various the global continents, CEMEX has been able to engage its activities in producing, distributing sale together with the marketing of cement and concrete that is readily mixed, clinker and aggregates. This article provides a comprehensive analysis of this company which is also marked to be as the world's major cement marketer together with playing a leading role when it comes to the white cement production.

Part 1: Case Update/Current Status Report

During the year 2000, CEMEX recorded the first strongest ever financial performance which was clearly portrayed in the operating results; making a turning point for this company. This healthy performance has been attributed to the company essence; the major element through which the CEMEX has been able to differentiate itself from the competitors. The marketing environment that CEMEX operates is actually ranked as the world most demanding together with being the most unstable environment in the market. This is also a reflection of the framework of analysis in the company which is agile; the process through which it has been able to capitalize on the opportunities of investment that are strategic as the company continues to rise (Lorenzo, 2000).

During the period of the last ten years, CEMEX has been faced by various challenges, which it has anyway overcame, making it to produce 20 percent EBITDA (operating cash flow) in terms of dollars when compounded annually. During the year 2000, CEMEX was able to generate operating free cash flow amounting to US$950 million; the money that was available for more investments, reducing its level of debts, and making sure that it was able to have the stocks repurchased. This achievement has been based on the company's focus on the market together with the resources that have been used efficiently and innovatively. In addition, CEMEX has even more importantly been able to achieve a high generation of cash together with growth through the portfolio assets diversification into the markets through which the company has been able to produce margins that are high; characterized with stability. Basically, there is an incorporation of a more complex approach when selecting and analyzing the investment types. Even with the changes in the industrial dynamics, CEMEX is able to execute its model of business in such a way that it can have preparedness of taking advantage of the opportunities in the business through which more value will be created for the company stakeholders.

For instance, consider the fact that during a few years ago, there was a limitation in the large size global cement industrial investments according to Portland Cement Association (2009); which was based on the fact that Russia was facing a downturn in the economy. However, as CEMEX finished its preparations in the acquisition of the United States Southdown, it marked a main investment by the standards of the company not forgetting the standards of the industry.

Therefore, given the strategy incorporated by CEMEX it the operations, it has been able to proudly incorporate Southdown into its business model. Through this step, the company has been provided with a stable and firm free cash flow source through which it has been able to complement the existing operations' healthy growth together with ensuring that it is able to record a growth geographically. This also has an effect on the company's free cash flow and cash earnings. This implies that through this strategy of acquisition, CEMEX has been able to increase its flexibility financially, coupled with the improvement of the high growth balanced portfolio and market development; which has been an even more firm platform through which growth has been realized.

In addition, CEMEX has incorporated into its operations the strategy of diversification through which it has been able to ensure that profitable and stable growth is continually delivered. This is in each of the essence which is inclusive of the ability of thriving in not only the world most demanding environment in the market but also characterized with dynamism.

Part 2: The external environment

The external markets that CEMEX bases its operations on are characterized with having populations that are younger coupled with high requirements of infrastructure and through these external environments, CEMEX has continually offered upside potential that has been labeled as outstanding. The market, which has influenced the growth of CEMEX, has not been necessarily the home market for this company which from the beginning has been on the trend towards expanding its market boundary beyond the domestic level. This has been marked by the GDP in Mexico which has recorded a growth trend of more than 5 % annually; a growth that has been attributed to the increasing consumption at the private level and also at the commercial level. In the domestic market (CEMEX Mexico), the growth has been market with a cement volume growth of 6 percent, a growth that has been more attributed to the informal sector than the formal sector. This has been followed by a trend of emergence of new markets as a result of the increase in the cement demand, all as a result of a more reliable system financially coupled with the home financing resurgence.

United States market: This CEMEX cement market is a developed market that has maintained a positive and healthy growth on annual basis. However in this market, there is a strong expectation of the cement market demand maintaining a continuous path of growth. As a result of the Southdown combination with CEMEX, what has resulted in a company with strong positions strategically, established in the regions of southeast, Midwest, south-central together with southwest (Donald, 2008). In these market regions, what has historically been maintained is trend of high rate of growth coupled with ensuring that the cash flow for the company is dependable and robust in the future.

In the area of Arizona and California, the market has recorded a continuous growth for the last ten years which has been marked by the increase in the volume of cement sales together with the ready mix volume, in comparison to the period before. This growth is mostly influenced by the projects of public work together with the infrastructure and the projects of housing; to a lesser extent.

Dominican Republic/ Venezuela: The cement volume in this area has also recorded an increase in the comparison to the period before the last ten years. The market

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