INDIAN INSTITUTE OF MANAGEMENT

KOZHIKODE
Strategic & International HRM

One Page Analysis – CEMEX

Group IV

Mentored By Dr. Prantika Ray

Name Roll No Name Roll No

Prashant Narula EPGP 11 078 Lajwanti M EPGP 11 055
Sarika Talwar EPGP 11 105 Gunjan Kumar EPGP 11 042
Rakesh Mukundan EPGP 11 093 Mohanish Rao G EPGP 11 063
Ravi Turamari EPGP 11 095
CEMEX – MEXICO BASED COMPANY
September 2004

- Global Governance Model

- Acquisition announcement – RMC group
- Earlier Acquisitions were in 1992 – Spain, Latin America, Philippines and USA

Its recent acquisition was an underperforming asset owing to the inefficiency in

processes, structure and possibly a culture which was not aimed at being a leader.

Introduced the CEMEX WAY – Sharing Best Practices, streamline and improve
value chain – continued operations deploy strategic initiatives to improve further.

PMI – Stages

(I) Initial integration and planning

(II) Execution Step 1 – 100 day plan
(III) Execution Step 2 – Focus on implementation
(IV) Execution Step 1 – Business as usual at higher efficiency levels

CEMEX had acquired an underperforming asset, although larger was able to bring
about synergies and efficiencies

October 2006 – Acquires Rinker Group in Australia and US – well managed asset
and also more advanced technology and efficient processes

The problem statement is – Earlier the acquisition was to increase the company
manifold through operational efficiency and had CEMEX way was the approach to
improve. This acquisition on the other end was a company which was operating
more efficiently and hence the objective was to improve profitability for oneself
and CEMEX though the acquirer was also on the learning curve.

http://www.cemexnet.com/InvestorCenter/files/2006/CEMEX_ar2006.pdf
https://www.cemex.com/documents/20143/0/CXING07-4.pdf/95087a18-c2f5-
9879-9982-6325fd23751e

Reports provide YOY growth of CEMEX – 22% in 2006 – FCF

Reports provide YOY growth of CEMEX – (4)% in 2007 – FCF
Reports provide YOY growth of CEMEX – 01% in 2008 – FCF
Reports provide YOY growth of CEMEX – (54)% in 2009 – FCF
Reports provide YOY growth of CEMEX – (58)% in 2010 – FCF

Company has had steady decline in employees from a high of 56000 employees in
2005 to 46000 in 2010

2010 – It had a debt issue and decline in Sales

1- The over exposure on debt put tremendous risk for the company and
possibly the acquisition of Rinker Group as well, employees who were
directing almost were directed by an acquired company owing to their
better efficiencies and processes – Culture Crash
2-
a. Multi Skilling – Imperative as overall profitability is the approach
b. Cost Reduction – Over exposed debt, erosion of FCF
c. Talent Management – Integrate best from across
d. Process Improvement – Upgrade technology and continous
3- Global operations – focus on Multi Skilling, Cost reduction and talent
management, evaluate CEMEX way to making it a dynamic process of
global improvement but focused – with metrics. China and India are
booming spaces in 2010 and its important to evaluate its approach –
acquisition may not be the best way – overexposes them further
CEMEX - 'The value of our value generation is our people-our most valuable
asset. Accordingly we constantly and closely listen to our employees, continue
to boost their professional development and commitment and strengthen
their business culture through our ethical principles and our values'