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CEMEX and Its Acquisition-Based Growth Strategy

CEMEX and Its Mergers and Acquisitions

Mergers and acquisitions refer to transactions in which operating units, organizational resources, or ownership are transferred or consolidated with other entities. However, the top three reasons why about 50-60% of organizations fail to achieve shareholder value from these growth strategies include; integration difficulties, inability to achieve synergy, and managers’ increased focus on the acquisition process (Hanson et al., 2016). Acquisitions and mergers involve integrating two disparate organizations with differentiated corporate cultures, values, and operation strategies. Therefore, most organizations encounter issues with linking critical system controls, building effective working relationships, and effectively dealing with weaknesses in both firms.

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Additionally, organizations can suffer from limitations due to their inability to achieve synergy. Synergy is when assets are more productive when used together than separately. Unfortunately, most systems have complex components, making it difficult to adopt streamlined processes and integration. Finally, most organizations fail to achieve shareholder value from their growth strategies because managers overly focus on the acquisition process, ending up spending valuable time and energy on managing acquisitions and ensuring success (Hanson et al., 2016). Managers in organizations play a crucial role in steering initiatives in the right direction. Therefore, a manager who pays less attention to other organizational needs might not achieve the desired business goals for the organization. However, paying attention to core business needs while evaluating acquisitions based on organizational demands can comprehensively enable managers to address issues.

Five Major Components of the CEMEX Way

The five major components of the CEMEX way include efficiently and effectively managing their global knowledge base, identifying best market practices and disseminating the information to individuals in the organization, standardizing business processes, implementing information and online-based technologies, and encouraging unique innovations. CEMEX gained the upper hand over its competitors by standardizing all its business processes and maximizing interoperability at all levels of the organization (Lessard & Reavis, 2016). Additionally, CEMEX is well known for its innovative initiatives, especially in marketing and operations. Therefore, the organization leveraged its innovative capabilities to ensure sustainable and continuous business development. As a result, most of its business growth initiatives realize success by applying these qualities throughout the firm.

One of the main reasons CEMEX is successful in its growth and expansion initiatives is its effective communication process. Before the organization embarks on any merger or acquisition initiatives, it communicates to its investors and local authorities to analyze the viability of the business interest. Additionally, CEMEX promptly identifies change agents immediately after acquisition to lead the new organization into adopting its practices and reconciling with the CEMEX way (Lessard & Reavis, 2016). Moreover, CEMEX occasionally welcomes ideas from its staff and spearheads innovation by encouraging others to adopt the best practices for seamless integration. Therefore, the organization is successful because of its high levels of control, effective communication, and inclusion.

What Other Companies Can Learn From the CEMEX Way

Over the years, CEMEX has thrived because it enhances its technological capabilities, thus improving its internalization and competitive processes. However, the organization counters several issues in the global market because of its unique flexibility. CEMEX bases most of its business initiatives on shared knowledge and the ability to implement project decisions promptly. As a result, organizations that focus on risk aversion can note the potential advantages of occasionally taking risks using evidence-based information from the CEMEX way. Similarly, organizations should focus on solutions to encourage innovation, sharing of information, and collaboration for the best outcomes.

References

Hanson, D., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Competitiveness and globalisation. Cengage AU.

Lessard, D. R., & Reavis, C. (2016). Cemex: Globalization “the CEMEX way.” Web.

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StudyCorgi. (2022, October 28). CEMEX and Its Acquisition-Based Growth Strategy. Retrieved from https://studycorgi.com/cemex-and-its-acquisition-based-growth-strategy/

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