Cemex’s Foreign Direct Investment

Case Discussion:
1. What is the value Cemex brings to a host economy? Can you see nay
potential drawbacks of inward investment by Cemex in an Economy?
 One of CEMEX's most notable assets is its superior use of information
technology, as well as the innovative way it produces and distributes
ready-made cement with minimal waste. This information technology is
transferred to firms that the company acquires. This has been refined with
each merger and acquisition that CEMEX has undertaken, and it has
played a significant role in their success.
 Cemex’s investment in foreign companies increases employment
opportunities for the host country.

2. Cemex has a strong preference for acquisitions over greenfield ventures

as an entry mode. Why?
 Acquisitions are a better option because the company in the host country
is already familiar with the demographics and market. Cemex only
needed to invest in information technology and conduct research and
development.
 CEMEX would have to start from scratch to acquire both customers and
employees in a greenfield venture. If the company does not perform well
in that region, there is a significant risk involved.

3. Why do you think Cemex decided to exit Indonesia after failing to gain
majority control of Semen Gresik? Why is majority control so important
to Cemex?
CEMEX only had a 25 percent stake in Semen Gresik. It did not have
complete control, so CEMEX's business model and techniques would
have been exposed and vulnerable to extortion.

4. Why do you think politicians in Indonesia tried to block CEMEX’s

attempt to gain majority control over Semen Gresik? Do you think
Indonesia’s best interests were served by limiting CEMEX’s FDI in the
country?
Indonesian politicians were concerned about CEMEX gaining control of
the cement market. Their interests were in domestic businesses and

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 protecting their economy by not allowing foreign companies to compete
with domestic businesses.
No, Indonesia would have benefited greatly from CEMEX's entry.

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