Submitted by: Erika Lorenzo

Case study on CEMEX: Innovation in housing for the poor
1. How did CEMEX fundamentally change the way it conducted its
The companys strategy emphasized improving profitabi!ity through
efficient operations" The company a!so shifted from se!!ing products to se!!ing
comp!ete so!utions" #y this$ CEMEX has estab!ished a very strong brand
managed to trans!ate it into e%traordinary profits from a commodity&driven
2. How does information systems contribute to CEMEX' competitie
The company has invested considerab!y in information techno!ogy over
the years to boost productive!y and manage its operations more efficient!y"
CEMEX takes pride in its operations and 'as recent!y the 'inner of the CI(&)**
from the I+,s CI( magazine" The company has gained a significant competitive
cost advantage over its competitors by setting up an e%ce!!ent distribution
infrastructure and centra!ized$ computerized de!ivery net'ork in 'hich every
moment of every truck is monitored in rea! time$ enab!ing on&time de!ivery of
cement and ready&mi% to customers" The operation in ,uada!a-ara boasts a
./"012 on&time de!ivery of cement"
!. "hat is social capital? How does CEMEX build social capital?
Socia! capita! describes the pattern and intensity of net'orks among
peop!e and the shared va!ues 'hich arise from those net'orks" 3hi!e definitions
of socia! capita! vary$ the main aspects are citizenship$ neighbor!iness$ trust and
shared va!ues$ community invo!vement$ vo!unteering$ socia! net'orks and civic
participation" 4http:55'''"statistics"gov"uk5socia!capita!56 CEMEX bui!d socia!
capita! by supporting !o'&income housing in Me%ico"
#. How are the low$income saings characteristics of Me%ican society
Lo'&income fami!ies in Me%ico fo!!o' a different savings method from that
of midd!e& and upper&income fami!ies" #ecause !o'&income fami!ies dont receive
regu!ar paychecks and dont receive any government subsidies or grants$ they
dont have access to banks and credit" 3ithin a community$ neighbors$ fami!ies$
and friends get together and form tandas or poo!s" The members of the tanda
poo! in money as and 'hen they receive paychecks and if they have any money
!eft to save"
'. How are the entrepreneurial characteristics of the women in Me%ican
society tied to the CEMEX ()* strategy?
3omen are the key drivers of savings in fami!ies" In Me%ican society$
'omen are very entrepreneuria! in nature$ and they very active!y participate in
the tanda system" 3omen are responsib!e for any savings in the fami!y"
7esearch conducted by the 8atrimonio 9oy team revea!ed that /*2 of those
'omen 'ho 'ere saving 'ere saving money in the tanda system to construct
homes for their fami!ies"
+. "hat did the CEMEX initial mar,et research in -uadala.ara discoer?
They rea!ized that financing 'as the most important and most difficu!t
cha!!enge to overcome for !o'&income customers" :n!ess the poor obtain access
to credit$ it 'ou!d be difficu!t to se!! the idea of constructing a comp!ete house in
the near future" ;!so$ most fami!ies emp!oyed !oca! semiski!!ed or unski!!ed
masons 'ho bui!t rooms 'ithout p!anning" The !ack of technica! e%pertise
resu!ted in a !ot of ra' materia! 'aste"
/. "hat is the role of socios in the *atrimonio Hoy system? How important
are they in the ma,ing the system successful?
Socios are the actua! customers 'ho enro!! in 8atrimonio 9oy" The Socios
get together and form a group$ restricted to three peop!e" The reason for such a
sma!! group size is that it is easier to enforce payment discip!ine in a sma!!er
group$ and the group tends to form stronger re!ationships to he!p each other out
during emergency"
0. "hy do you thin, it was important for CEMEX to position itself as a
complete solutions provider s. .ust another product proider?
#y having it as a comp!ete so!ution provider at !o' cost$ it 'i!! attract the
ma-ority of the peop!e in demographics in Me%ico$ that is$ the !o'&income market"
Customers 'i!! a!so prefer their products more than other competitors"
1. How is the social capital of *atrimonio Hoy promoters related to
economic capital?
In 8atrimonio 9oys approach$ the prices of the ra' materia!s are frozen
throughout the payment period regard!ess of 'hatever happens to the economy"
12. "hat3 in brief3 is the alue of *atrimonio Hoy to a4 its promoter b4 its
socios 5 partners c4 its suppliers and d4 its distributors?
a6 8romoters do it for a socia! cause to bui!d socia! capita! and to earn
money by making a !iving out of it"
b6 8atrimonio 9oy he!ps the poor bui!d homes that might have been a
distant dream other'ise" #y offering such va!ue&added services$
8atrimonio 9oy has been successfu! in earning the trust of the socios"
c6 +istributors operated on )<2 average margin from the sa!e of bui!ding
materia!s" 8atrimonio 9oy has effective!y created a pu!! for cement$ and
CEMEX on the supp!y side pushes it$ enab!ing the push&pu!! strategy for
cement sa!es"
11. "hat is Patrimonio? "hy is this important for the mar,eting efforts for
the *atrimonio Hoy system?
The 'ord 8atrimonio is a Spanish 'ord that means =an inheritance or
!egacy> The Me%ican peop!e be!ieve in !eaving something behind for the ne%t
generation thats 'hy 8atrimonio 9oy program tries to convey the message by
motivating the pub!ic to =save today>"
12. How can *atrimonio Hoy offer a slightly higher price than its
competitors and maintain a competitie edge?
To ensure that the materia!s$ inc!uding cement$ are reasonab!y priced$
8atrimonio 9oy conducts a market study that pub!ishes prices of competitors and
ca!cu!ates an average price for each ca!endar month" The socios 'ho sign up in
a particu!ar month en-oy the same prices through the /*&'eek payment cyc!e"
1!. How does the concept of free&ing prices encourage socios to do more
business for *atrimonio Hoy?
In any business$ it is preferab!e to conduct a transaction if the price is
stab!e and doesnt change over time"
1#. 6ntuitiely3 doing with business with a low income group would be
ris,ier than traditional lending models but it is profitable for *atrimonio
Hoy. "hy?
The huge rate of success can be attributed to three important factors:
group commitment$ socia! capita!$ and the pena!ty fee structure"
1'. "hat is the role of peer7community pressure in the *atrimonio Hoy
lending model?
3hen a group of 1 socios 'a!ks into a ce!! and comp!etes an app!ication$
the on!y commitment they are e%pected to make is the regu!ar payment of 10*
pesos per 'eek per group on time" If for any reason one of the team members
doesnt turn in his or her payment portion on time$ the group as a 'ho!e 'i!! pay a
!ate fee of an additiona! <*2 per !ate socio"
1+. How has *atrimonio Hoy changed the consumer behaior in Me%ico?
#y offering a comp!ete and comprehensive so!ution for housing$
8atrimonio 9oy has made it difficu!t for consumers to !et go of this opportunity$
and has fundamenta!!y changed consumer behavior$ even if on a sma!! sca!e"
1/. "hat are the challenges of the *atrimonio Hoy program?
There are t'o cha!!enges in 8atrimonio 9oy program" ?irst$ the customer
retention is a huge prob!em because of after a room is done$ the probabi!ity of
customers returning to bui!d another is not )**2" Last!y$ the socios cannot afford
'eek!y payments for ra' materia!s and mason fee for construction at the same
10. "hat does Construme% ta,e adantage of the e%isting remittance
mar,et between 8.9.: and Me%ico?
;ccording to the genera! manager of Construme%$ the @ua!ity of service
provided in the :S as 'e!! as Me%ico is critica! for generating trust and
acceptance" #ecause of this$ Construme% carefu!!y se!ects distributors for its
program" These distributors are typica!!y kno'n to the beneficiaries and hence
he!p in bui!ding trust 'ith the c!iente!e" They are happy to 'ork 'ith Construme%
because this means more business for them"
11. CEMEX *hilippines is e%ploring the possibility of replicating the
*atrimonio Hoy system in the *hilippines. "hat are the parallels
between the Me%ican and the *hilippine mar,et?
#oth 8hi!ippines and Me%ico have ma-ority of the residents being at the
bottom of the pyramid" ;nd ?i!ipinos$ Like Me%icans$ a!so send money to home"
22. :s an 6; practitioner loo,ing at the Construme% business model3 what
6;$drien systems can you propose to ma,e CEMEX more competitie?
<name 12$1'4
)" e&commerce
A" payment gate'ay
1" shopping cart
B" mobi!e retai!
<" manufacturing system
0" f!eet management system
/" customer service system
C" human resource system
." re@uisition and procurement system
)*" inventory system

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