André Da Silva Rodrigo Robles Katerina Barka GROUP 3 Cemex’s Foreign Direct Investment

 Overview  Success factors  FDI Model  CEMEX in Indonesia  Recommendations  Conclusions

 CEMEX S.A. de C.V. is the world's largest building materials supplier and third largest cement producer.  Founded in Mexico in 1906, based in Monterrey, Mexico, the company operates in 50 countries around the world.  Employing approximately people worldwide.  The basic competitors of CEMEX are the Holcim of Switzerland and the Lafarge Group of France.  The company has had revenues of 21.6 Billion and a net profit of 2.4 billion in 2008.

 High Technology Infrastructure  Low costs  Superior customer service  Close integration with distributors  Commodity  differentiation  Emerging markets  Strong marketing campaigns  B2B and B2C

 Preference for acquisitions  Emerging markets (Latin America, Indonesia, Egypt, Philippines…)  Acquire inefficient companies  Horizontal Foreign Direct Investment  Mature markets to gain market share (RMC of Great Britain)

AdvantagesDisadvantages Transfer of know-howExponential growth New technologyComplex operations Increase competitivenessMulticultural challenges Increase tradeLoss of ownership (Venezuela)

 High infrastructure investment (equipment, land…)  Local know-how and contacts  High speed access to resources  Transform inefficient to efficient companies  Avoid barriers to entry

Why CEMEX left Indonesia?  PPP didn’t work out as intended  Government failed to fulfill majority agreement.  Government + FMI + CEMEX = conflict of interests  Local interests: politicians and unions

Why majority control is so important?  Stability  Control the direction of the company  Protect business model  differentiation: customer service  Protect intellectual property rights

 Indonesia’s best interests were served?  Absolutely NOT  Free trade is affected  No competition  monopolies  Investments dropped significantly after CEMEX left  Corruption: Government should be a regulator of national assets

 Expand The Global Centers for Technology and Innovation to Asia and Latin America)  Look up for Brownfield operations in China  Demand for cement in China is expected to advance 5.4% annually  Cement consumed in China will amount to 44% of global demand  China will remain the world's largest national consumer of cement by a large margin  Chinese construction market is booming and will continue to be over the next decade.

 High expenditures in research and technology but help to differentiate product/service  FDI is a key element to expand operations and increase revenues  Challenges  Find the right country  Make a precise risk assessment  FDI can transform a local company into a worldwide leader in the industry

 htpp:// htpp://   