CEMEX Case Study

1.) How did CEMEX fundamentally change the way it conducted its business?
>It changed from providing products to providing complete solutions, emphasizing on efficiency of their operations.

2.) How does information contribute to CEMEX' competitive advantage?
>It increases the efficiency of their production, distribution and delivery processes.

3.) What is social capital? How does CEMEX build social capital?
>Social capital refers to the value created from social interactions within the marketplace (good will, friendship, loyalty, etc). CEMEX builds this through Patrimonio Hoy, a socially responsible business venture that allows low-income Mexicans to procure building materials and services for their homes.

4.) How is the low-income characteristics of Mexican society characterized?
>Low-income Mexican societies do not have bank accounts or credit accounts, instead opting to help each other by pooling their savings together (tandas) and sharing them evenly.

5.) How are the entrepreneural characteristics of the women in Mexican society tied to CEMEX' BOP strategy?
>The women were the ones who handled the money. They handled the family's savings and actively participated in the tandas. For CEMEX, they are the ones they have to cater to since they were the ones who usually allocated the money in their families.

6.) What did the CEMEX initial market research in Guadalajara discover?
>They discovered that handling money was the most difficult challenge for them the families there. Since they lack the financial capabilities to apply for credit, they are unable to build their own houses. With regards to construction, the low-income families there employ poorly skilled and ill-equipped construction workers to do the job. They also lacked the necessary materials to build most of the time, leaving the families to cover for that expense as well.

7.) What is the role of socios in the Patrimonio Hoy system? How important were they to making the system successful?
>Socios were the actual customers who partake in the Patrimonio Hoy system. Their commitment to the system is integral to gaining social capital.

8.) Why do you think it was important for CEMEX to position itself as a complete solutions provider vs just another product provider?
>Low-income families were having trouble getting building materials and the associated materials when they had to acquire them separately. It was easier and cheaper in the long run to get the whole package from CEMEX rather than acquire the materials and services serparately. It's also easier to build rapport between CEMEX and the people with that since the families only needed to go to one place, thus gaining both income and social capital.

9.) How is the social capital of Patrimonio Hoy promoters related to economic capital?
>Promoters are the ones pulling in more socios to conduct business with the Patrimonio Hoy system. The number of promoters (who received commission) are dependent on the number of socios. The better social capital they build up with the socios, the more socios willing to enroll thus earning more profit.

10.) What, in brief, is the value of Patrimonio Hoy to a) its promoters b) its socios and patners c) its suppliers and d) its distributors?
a) They build social capital, yet they gain a commission at the same time through a points system.
b) They have access to materials on credit (getting them in advance), building takes less time, the service they get (from builders to customer service) is top-notch, scholarships and even training for those who wish to learn masonry.
c) While they have a slightly lower profit margin, the constant demand from their customers offsets the difference.

11.) What is patrimonio? Why is this important for the marketing efforts of Patrimonio Hoy system?
>Patrimonio Hoy translates to "savings today".
>This is important because it enables poor people to save up for their own homes or build it themselves. Their concept of giving the poor a chance to have a proper home attracts a lot of potential socios and generates a lot of social capital.

12.) How can Patrimonio Hoy offer a slightly higher price than its competitors and maintain a competitive edge?
>The added services that CEMEX pads on is more than enough to offset the higher price.

13.) How does the concept of freezing prices encourage socios to do more business for the Patrimonio Hoy?
>If a particular material is being sold at a set price, this price does not change. Thus, socios can sell materials with a set premium since competitors are more likely to have higher prices.

14.) Intuitively, doing business for a low-income group would be riskier than traditional lending models but it is profitable for Patrimonio Hoy. Why?
>The Patrimonio Hoy has a generally low-risk business model thanks to the commitment of its workers, a high generation of social capital and a solid penatly fee structure.

15.) What is the role of peer/community pressure in the Patrimonio Hoy lending model?
>In a cell of socios, they are required to produce value as a collective. If one of them does not deliver, the entire group suffers in the long and short term.

16.) How has Patrimonio Hoy changed consumer behavior in Mexico?
>Mexican consumers are now hopeful that they can build a better lives, not only for themselves but also for their community as a whole.

17.) What are the challenges of the Patrimonio Hoy program?
>Costumer retention is a big problem due to their inability to pay for the regular payments at consistently. Socios usually have to wait a long period of time to pay for their materials until they begin building their homes or learn masonry. The probability of costumers to build a new structure after their initial success is low.

18.) How does Costrumex take advantage of the remittance market between USA and Mexico?
>Costrumex allows Mexicans living in the US to remit directly to cement and building material companies in order for these companies to deliver the materials to the site of their future homes in Mexico.

19.) CEMEX Philippines is exploring the possibility of replicating the Patrimonio Hoy system in the Philippines. What are the parallels between the Mexican and Philippine market?
>One would be the difficult government. The Philippine government is also corrupt. CEMEX would do well to learn from their experience with the Mexican government and apply those learnings to the Philippine governement.
>Another parallel would be the number of low-income (low to no income) families in the country. Majority of the Philippine population does not have a stable source of income and many families are either squatters or homeless.

20.) As an IT practitioner looking at the CEMEX business model, what IT-driven systems can you propose to make CEMEX more competitive (10-15)?
>Supply-chain management system
>Customer Relationship management system
>Fleet management system for transferring of goods
>Accounting system for the tracking of the payment of socios
>HRIS for the tracking of hiring of socios
>Marketing IS for crunching the numbers of their market research