Cemex Vs Lafarge

Introduction

The purpose of this paper is to compare and contrast Cemex with Lafarge. These two organizations operate in a cement industry; nonetheless, both the organizations compete against each other. According to different sources, it can be stated that Cemex operates through three segments: cement, ready-mix concrete and aggregates. The cement segment generates its revenues by selling cement to individual customers, institutions and construction markets throughout the world. The segment produces different varieties of cement such as gray ordinary Portland cement, white Portland cement, masonry or mortar, oil-well cement and blended cement.

On the other hand Lafarge expanded its presence in the Czech Republic by investing in the Cizkovicke Cementarna in 1991. The company entered the Chinese market in 1994. In the following year, it acquired a 75% stake in Kujawy and expanded into Poland. In 1997, Lafarge acquired Redland and entered the roofing market besides adding aggregates and concretes to its product portfolio. Lafarge entered Indonesia and the Philippines in 1998. In the same year, the company acquired a cement plant in Seattle from Holnam.

Competitive Strategies of Cemex

Geographic Diversification

Cemex's global network enables it to optimize its worldwide production capacity by balancing supply and demand throughout its regional markets. In addition, the company has a diversified revenue stream from these geographies. In FY2010, the company generated 41.3% of its revenues from North America, 33.7% from Europe, 9.9% from the Central and South America and the Caribbean, 7.7% from Africa and Middle East and 3.7% each from Asia and other countries (Ramsaran, 2004, 109-117). The geographic diversity of the company's market portfolio helped Cemex to offset the declines in US and Spain. The wide geographical reach aids the company in catering to different emerging markets. A diversified portfolio helps the company reduce its dependency and mitigate risk across all geographies.

Operations Strategy

Cemex has undertaken various initiatives with respect to cost cutting in the recent years. These initiatives were taken in the various areas, including headcount, capacity, and a general reduction in global operating expenses. Cemex decreased its global headcount by approximately 24%, from 61,545 employees in FY2007 to 46,533 employees in FY2010. With respect to capacity, the company made a significant temporary reduction at its production units starting from FY2009. Furthermore, in 2010, the company made temporary capacity adjustments and rationalizations at its Barrington cement plant, where the production of cement was shut down.

Additionally, the company closed approximately 5% of its ready-mix concrete plants. Also in January 2010, Cemex closed its Davenport cement plant based in northern California. This helped the company to streamline its functioning and eliminate redundancies resulting in substantial cost savings (Awazu, Baloh, Desouza, Wecht, Kim, Jha, 2009, 88-97). Reduction in the plant capacity allows Cemex to align itself to the market demand which decreased significantly after the global economic recession in 2008. Reduced capacity also helps the company to avoid additional cost arising from unused resources. Besides this, implementation of management information systems would lead to efficient functioning of the company in the long ...