CEMEX Case Study Discussion I will show u a picture where has some questions. Please answer it.And I will show u another people’s answer, please give me a

CEMEX Case Study Discussion I will show u a picture where has some questions. Please answer it.And I will show u another people’s answer, please give me a response according to his answer.So, here are two parts. first you need to answer the questions. second u need to give a response.Please do not copy, all of the answers must be from your own ideas. Other people’s answer, please give me a response according the answer. Just one paragraph.
a.
Which theoretical explanation, or explanations, of FDI best explains CEMEX’s FDI?
CEMEX’s utilized acquisitions as their FDI form. The textbook notes that “Cemex believed that
it could create significant value by acquiring inefficient cement companies in other markets and
transferring it’s skills in customer service, marketing, information technology, and production
management to those units.” The textbook goes on to say that Cemex worked to acquire
established cement makers in other countries. The very definition of an acquisition approach to
FDI is buying up existing companies in a new market, which is what CEMEX did.
CEMEX used the internalization theory for FDI. They primarily did so because of their
perceived strength of management, marketing, production and IT as it relates to production.
CEMEX believed they were a leader in providing low cost cement with high rates of customer
service as a result of their radically different IT system that matched consumer demand and
production. By applying the knowledge and established best practices they possessed as a
company to a new company in a foreign market, they achieved profit. In addition, other FDI
strategies, like exporting and licensing, did not align with CEMEX business model or corporate
culture.
b.
What is the value that CEMEX brings to a host economy? Can you see any potential
drawbacks of inward investment by CEMEX in an economy?
The benefits CEMEX brings to a host country includes resource-transfer effects and economic
growth. Resource-transfer effects includes things like technology spillover, which can stimulate
economic growth. With CEMEX bringing their IT solutions to a host country, there would
logically be technology spillover as employees gain additional training and education. Economic
growth would occur from the increased tax revenue to the host country.
Potential drawbacks of inward investment by CEMEX in a host country economy include
elimination of jobs and the exploitation of the labor pool. Sometimes when an acquisition occurs,
jobs are eliminated. This would have a negative effect on the host country’s economy. The
exploitations of the labor can occur in developing countries that do not have clear or enforced
labor laws. Employees can quickly become overworked and under paid without government
regulation and inspection.
c.CEMEX has a strong preference for acquisitions over greenfield ventures as an entry mode.
Why?
Acquisitions can be executed much faster than establishing a new company from the ground up
in a greenfield investment. The faster a company gets into a new market, the faster they acquire
that company’s market share, resources, brand and local market knowledge. Building a factory
would be required for CEMEX in a new country, which would be expensive and time
consuming. Acquiring these assets in an acquisition is a much more cost-effective plan.
Additionally, acquisitions largely reduce market entry barriers in new, unknown markets.
4. Read the Management Focus on Cemex, and then answer
the following questions:
a. Which theoretical explanation, or explanations, of FDI
best explains Cemex’s FDI?
b. What is the value that Cemex brings to a host
economy? Can you see any potential drawbacks of
inward investment by Cemex in an economy?
c. Cemex has a strong preference for acquisitions over
greenfield ventures as an entry mode. Why?

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