Emerging Markets and Globalization - CEMEX - Case Study Example

Emerging Markets and Globalisation Student’s Name Course Instructor Institutional Affiliation City Date Emerging Markets and Globalization The world of business is changing with the aid of globalization, technology and enlightenment. We are currently having three types of markets namely; developing markets, advanced markets and finally the emerging markets. The advanced or developed markets are the markets that have already established themselves in the international market and they are the world market leaders. The developing markets are the markets that are still in their beginning stage and they are mostly found in the third world countries where development is taking place at a slow rate due to the poor economy. The emerging markets are the markets that have established themselves beyond the national or local level and are below but close to the international level of marketing. Globalization, on the other hand, is termed as the process by which various cultures, societies and regional economies join through a global network of political ideas through trade, transport, and communication (Clark and Knowles, 2003). Globalization on a huge level impacted nations on the social, political and economic grounds. Globalization presents both threats and opportunities to emerging markets worldwide. As organizations are moving from national to international level, the managers have a lot to grasp from the interaction between home and the host nation divergence ion the achievement of success. The paper will give an analysis of the threats and opportunities that globalization creates for decision-makers using CEMEX as an example of a multinational corporation from an emerging market. The paper will also highlight what international managers can learn from the interaction between home and host country in the achievement of success. The International legal system has transformed greatly and it has impacted the world of business in the globalized world. There are very many emerging multinational corporations across the globe that are taking advantage of globalization to thrive. The markets are characterized by rapidly improving industry in that they are extending their companies to other countries through the use of multilateral and bilateral agreements (Ramamurti and Singh, 2009, 43). The competition in the emerging market is said to be moderate but it is increasing as corporations establish themselves and demand increases. The trade volume in the emerging markets is high while the trade barriers are rapidly liberalizing. The inward FDI is rated to be moderate to high. Emerging markets lies between the advanced markets and the developing markets in that they have not yet reached the level of the advanced markets and they are beyond the level of the developing markets. China, Turkey, India, Indonesia, and Brazil are among the countries where emerging markets are found. As for research conducted in 2013, it shows that the countries that are associated with emerging markets, their infrastructure is moderate but increasing as the economy goes up, they have achieved much economic liberalization when it comes to the regulatory environment (Cavusgil, et al. 2014, 35). The major sector of focus for most emerging markets countries is manufacturing while a few are focusing on services and the median age of the citizens of such countries is estimated to be 32 years. Emerging markets are facing competitions from other emerging markets as well as advanced markets that are raising their standards with fear of being overtaken by the emerging markets. The emerging markets are also facing challenges just as other markets across the globe and the only thing that can save an emerging corporation from failing is understanding the world market, the rules and regulations set in accordance to businesses and the available untouched opportunities in the market. Success in emerging market is not easy if the management team is not ready to take risks and use strategic schemes in running the business. CEMEX serves as a good example of an MNC (Multinational Corporation) from the emerging markets. CEMEX is a corporation known for production and supply of cement across the globe. The organization is based in Mexico which is part of the Latin America. The company has three major competitors; Holcim from Switzerland, Lafaege from France, and HeidelbergCement from Germany (Ghemawat and Matthews, 2000, 35). The rise in some competitors depicts a characteristic of an emerging market. Infrastructure in Mexico is close to fully developed and the trade volume of CEMEX is high showing that CEMEX perfectly suits the class of emerging markets. The fact that the organization extends in different nations qualifies it to be a multinational corporation (MNC). The organization has been in the market for a long time but it is currently on the level of emerging markets. The company has extended its branches in four different continents and focusing their sales in the developing countries. The reason for venturing the business in the third world countries is the fact that the countries are in the race to improving the infrastructure that uses cement to construct. The organization is ahead of its competitors due to the use of Information Technology (IT) to conduct the business as well as identifying the available opportunities (Lessard and Lucea, 2008, 89). The organization has faced challenges with time such as economic crisis in Mexico in 1982 that forced the government to liberalize economy and attract new investors from foreign nations and at the same time, the European firms wanted part of the Mexican market. The Asian economic crisis impacted the construction sector that is connected to CEMEX. The organization has also gone through the FDI policies in different countries and foreign competition restriction. The challenges that CEMEX has faced are in most cases as a result of globalization. CEMEX is still establishing itself in the globalized world before it gets into the developed market. Although CEMEX possess more competitive advantages over its competitors, there is fear of not succeeding if it enters into the advanced market level. The company CEO Lorenzo Zambrano says that the organization has been able to venture into the developed countries through acquisition as a way of expanding the business and adding on its competitive advantages. The company is known to make a lot of profits annually. Globalization which is defined as the process by which cultures, societies and regional economies are connected to each other through a global network of political notions through trade, communication and transportation, has changed the face of the world. It can also be termed as the transition process between the traditional modes of doing things locally to the modern way of doing things together as a globe. Globalization has been in existence for quite some time its only that it had not made major impacts as it has currently done. Globalization has impacted countries politically, economically and socially. It has brought both advantages and disadvantages in the world where businesses are finding both threats and opportunities as a result of the globalization of the world. It is through globalization that people can move from one country to another and at the same time, conduct businesses in any country as long as the international policies are adhered to. Since the start of globalization, a lot has changed in all the three markets,developed or advanced markets, emerging markets and the developing markets. It is through globalization that workers have been receiving low wages while the employer companies earn higher profits, there is rural to urban migration in developing countries and low-interest rates and low inflation despite the strong growth in economies (Cavusgil, et al. 2014, 28). Rural to urban migration exist in developing countries as the folks are in search of daily living and decent lives in the urban centers. The first threat posed by globalization on decision-makers is competition. Competition is increasing both locally and international wise where companies are forced to improve on customer satisfaction and quality and standards of their products or services. The competition can be grounded on technological adaptation, quick production, target market, quick response and price and cost of products and services and many other factors (Bird and Stevens, 2003, 400). Globalization has enabled the foreign trade where companies with branded products that forces the other companies to up their game. Although this is a disadvantage to many companies, CEMEX has benefited from the competition in that it has been able to brand its product and compete well in the emerging market. It has also been able to buy other companies as a way of expanding. In 2000, it bought the second largest cement company in America (Southdown Cement) and in 2001, it managed to purchase Saburi cement from Thai. The two companies were failing due to increased competition brought in by globalization. The competing emerging market in the cement industry is forced to brand their items and reduce the cost of production so as to meet the demands of the competing market. Globalization has brought in the know how technology. It is through globalization that the growth in technology is able to spread and the world nations are becoming enlightened. The developing countries are able to use the technology to conduct their daily activities including business (Czinkota, Ronkainen and Moffett, 2002). Globalization of technology gives the emerging markets an opportunity to explore the market very well using the current technology. Apart from search of the market, companies can manage and control the activities of the branch companies while still in the home country. CEMEX uses technology to monitor the activities taking place in all the branches. The employees are allowed to use their laptops at work, but they have to use a specific model that is approved by the company. On top of that, CEMEX has been provided with a technological opportunity of being in the new IT of cloud computing where they are storing data on the internet. CEMEX and other emerging markets can market their products or services online depending on the target group. The online marketing that is as a result of globalization provides an opportunity for many emerging markets decision-makers that will aid in growth and extension of the company. New business opportunities are emerging with globalization. Globalization has set on discovering new opportunities that are yet to be exploited. Entrepreneurs can identify the unutilized opportunities across the globe since globalization allows nations to venture into any nation for business matters (Czinkota and Ronkainen, 2005, 120). Following the international legal system that comprises of the civil law and the common law that allows nations to socialize regarding trade, transportation and communication, investors from different nations are finding their way to invest in host countries. It is through globalization that businesses can extend their companies in other nations where a market opportunity arises. Thanks to the multilateral and bilateral agreements that have enhanced trade among the nations in the globalized world. Although the decision-maker must understand the national laws that exist in a country before venturing to conduct any form of business, globalization has made things to be much easier than they were before. International managers can discover a lot of necessary information in achieving success from the interplay that happens between home and host countries. The first lesson is that before getting into the host country, the manager must understand the terms and conditions of setting up business in tat country. Not all terms and conditions are favorable for investing in other countries. Thus the managers must have a clear understanding of the same. This also goes to the companies that are using cloud computing. As technology grows and the world becomes more globalized, things are made easier by cloud computing. For such companies, the managers must take their time to understand and settle the jurisdictions in host countries. The second lesson is that the managers have to learn the culture of the host country as well as that of the home country. By doing this, the managers will be able to realize the available opportunities as well as tastes and preferences of the target group. Some businesses cannot thrive well in some countries due to their culture hence the need to find out the culture of the host country (Cavusgil, et al. 2014, 87). International managers should also realize that taking the organization a step ahead from one level to another does not guarantee success. Although the business might have shown some progress and potential from the previous level, it may fail in the new level as it lacks the required effort and energy to compete in the new market. For example, an organization might have done well to an emerging market due to its competitive advantages over other emerging organizations, but on reaching to the advanced market, the organization stagnates and fails to grow further. This gives managers a lesson that they should analyze the performance of the organization in both the home and host country before pulling the move of advancing the business. Getting to know what other larger organizations are doing to survive the harsh competition is also important as it gives a headlight on what should be done (Zahra, et al. 2009, 120). The international managers should be aware of the effect of globalization in each country. By doing this, running the business will be easy and success will bring itself. This can only be achieved by venturing in countries that have benefited most out of globalization. Such countries are likely to welcome new investors and entrepreneurs as a way of improving their economic status. Since globalization has brought with it the art of enlightenment more so in the third world countries, many nations are accepting foreigners to conduct businesses for the benefits they are gaining (Kumar and Liu, 2005, 50). International managers set examples for other managers and hence getting things right will help other organizations to grow through strategised management. He managers also learn that as organizations extend to host nations, more departments are required, and social responsibilities are expected to be met such as hiring workers from the host country instead of importing employees from home country. Also, managers should learn of the threats that hinder the success of businesses in the host countries so as to use the hindrances to formulate strategies for overcoming them so as to achieve success. In conclusion, the world of business is becoming more interesting as globalization has taken over to make things much easier. The current business world has three markets namely the advanced market, emerging markets and developing markets. Most of the multinational corporations are in the emerging market where they are competing to get to the advanced level. Emerging markets are characterized by increasing competition, high trade volumes and rapidly liberalizing trade barriers and many others (Bekaert and Harvey, 1997, 47). CEMEX, a multinational corporation that is based in Mexico is an example of an emerging market. The organization has spread to four continents across the globe and majoring its sales in the developing world where the demand for cement is high. The organization faces competition and other challenges that an emerging organization faces. Through globalization, the organization has been able to expand and buy other cement companies that are failing. Through the SWOT analysis of the organization, CEMEX has competitive advantages over its competitor that have helped it to maintain its status I the world. The business is yet to get to the developed level of marketing for fear of failure. Globalization has brought both advantages and disadvantages in the international business. Competition, business opportunities, free trade and many other things are as a result of globalization. Keen international managers have a lot to discover from the interaction between the home and the host nation in success achievement. Legal requirements, demand, taste and preferences, competing firms and the available threats that hinder the growth of an organization in a host country are among the lessons that international managers can learn. References Bekaert, G. and Harvey, C.R., 1997. Emerging equity market volatility. Journal of Financial economics, 43(1), pp.29-77. Bird, A. and Stevens, M.J., 2003. Toward an emergent global culture and the effects of globalization on obsolescing national cultures. Journal of International Management, 9(4), pp.395-407. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia. Clark, T. and Knowles, L.L., 2003. Global myopia: globalization theory in international business. Journal of International Management, 9(4), pp.361-372. Czinkota, M.R. and Ronkainen, I.A., 2005. 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