Fahad Bin Sultan University

College of Business & Management

Tabuk kingdom of Saudi Arabia

Business Plan for Saudi Cement & CEMEX

A Final Graduation Project
Submitted in partial fulfillment of the requirement for
the Degree of
Master in Business Executive
EMBA 690

Global Entrepreneurship Project

Prepared by:
Zainab Abduallah Abu Ammah 201428007
Alguharh Abdualatif Almade 201438001
Eatemad Ali AhmadAllot 201428007
Najla ghrasan al zahrani 201518016
Amal Mohmmad Al Hemwan 201518022
Project supervisor:
Rami Aljbour, Ph.D.

Tabuk, kingdom of Saudi Arabia

Fall 2016-2017
Global Entrepreneurship Project

Fahad Bin Sultan University

College of business & management
Business Plan for Saudi Cement & CEMEX
A Final Graduation Project
Submitted in partial fulfillment of the requirement for
the Degree of
Master in Business Executive
Prepared by:
Zainab Abduallah Abu Ammah 201428007
Alguharh Abdualatif Almade 201438001
Eatemad Ali Ahmad Allot 201428007
Najla ghrasan al zahrani 201518016
Amal Mohmmad Al Hemwan 201518022
Project supervisor:
Rami Aljbour, Ph.D.

Tabuk, kingdom of Saudi Arabia

Fall 2016-2017

Fahad Bin Sultan University

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Global Entrepreneurship Project

College of business & management

We are, Zainab Abu Ammah, Alguharh Abdualatif

Almade, Eatemad Ali Ahmad Allot, Najla ghrasan al
zahrani and Amal Mohmmad Al Hemwan the undersigned,
herby certify that the work presented in this document is
fully my own work, and that it was prepared without any
external help, safe that mentioned in the
Acknowledgment, and that is void of plagiarism.

I also agree to place this document at the university

library, and allow the public to inspect it and use it with
due reference.

ACKNOWLEDGMENTS

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Global Entrepreneurship Project

Thanks God for and many thanks for the countless blessing, we felt thankfully for
the health and well-being God grant our to finish this research and complete our
studies and achieve our we had great thanks to Dr, Rami Aljbour made great effort
in supervising that graduation project we also direct our thanks to the committee
which negotiated with our project and to all those who support our.

To Human Teacher and knowledge source our Prophet Muhammad (Peace be upon
him)
To our first and true love our mothers
To all our beloved sisters and brother
To all families and friends
To those who paved the road for our, to reach the peak of science and knowledge.

Zainab Abduallah Abu Ammah

Alguharh Abdualatif Almade
Eatemad Ali Ahmad Allot
Najla ghrasan al zahrani
Amal Mohmmad Al Hemwan

Table of Contact

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Figure Page
Executive Summary 6
Introduction of CEMEX and Saudi Cement 7
History of CEMEX and Saudi Cement 8
Product line of CEMEX and Saudi Cement 12
Financial analysis of CEMEX and Saudi Cement 16
Non-financial analysis of CEMEX and Saudi Cement 21
SWOT Analysis CEMEX Company 26
Saudi Cement Company SWOT analysis 30
Investors potentials 36
Conclusion 38
References 40

CEMEX and Saudi Cement

Executive Summary

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Global Entrepreneurship Project

CHAPTER ONE

Introduction of CEMEX and Saudi Cement

The research is focused on comparing two international construction companies, the Saudi

Cement Company and Cemex. The two companies are among the leading cement factories as per

Global Cement Directory 2016. The two companies are among the leading cement factories as

per Global Cement Directory (GCD)2016 , and among the leading in their capacities, supplies,

demand, economic condition, and market access.

According to the statistics by the USGS Mineral Program reports released in 2013, the cement

industry has been increasing due to high demand in many countries as China, Brazil, Saudi

Arabia, India, Veitnam ,and parts of Europe. The growth in cement demand in most of the

countries has accounted for the growth in market share in the two companies, Saudi Cement Co.

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and Cemex (Verbeke, 2013). Therefore, this research will provide an analysis of the similarities

and difference in the two companies focusing on factors such as product line, financial status,

non-financial situation, SWOT analysis, and investors potential. Due to the rapid growth of the

companies and supply of similar products around the globe, the two companies have a strong

completion in some areas such as India, Middle East, and parts of Europe.

CHAPTER TWO

History of CEMEX and Saudi Cement

Cemex is an international company that produces building materials such as cement. It

was founded in 1906 in Mexico South America. In 1976, it went public. Due to its efficient

corporate responsibility and production of building materials, the business expanded and started

exporting its products in its neighboring countries such as United States, Brazil, and Argentina.

The main products of the company comprised of aggregates, cement, and ready-mix concrete. As

a result, the company internationalized its supplies and services to other countries such as Asia,

Mediterranean, Mexico, Northern Europe, Caribbean , Central and South America.

Sales Distribution

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Currently, the company has expanded its branches to over 50 countries and supplies its

building materials in over 100 countries around the world. Cemex is well known in provision of

reliable services to its customers and also production of quality products. According to its annual

report 2015, the company was rated the third across the world for global supply of ready-mix

concrete and quality cement. The approach of the company towards business and marketing is

based on its mission statement that states Cemex places high value on creativity, flexibility,

sustainability, efficiency and innovation. Currently, the company has recorded $14.98 billion

and has over 44, 000 employees around the world. The significant growth in the company can be

associated with its acquisition of the other organization within the industry. Although it offers

several products, the major product is cement where it bags and brands its product on different

branches near the areas. Cemex works in collaboration of other industries around that world that

provides services such as commercial construction, housing, institutional, industrial construction,

as well as public infrastructure development. However, as part of global support in building and

construction, the company has faced several challenges. The Unites States financial and political

crisis affected the company , changes in the chain of supplies and production in many companies

including Cemex. During that period, though it was the main cement supplier in United States ,it

faced heavy leverage debts. As a result, the company faced a lot of losses within its markets thus

forced to take a loan in a move to avoid bankruptcy. However, due to its substantial management
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strategy, it remained in the market and changed its business strategies to focus on other countries

with potential such as China. Its strategic production puts its dynamics as an opportunity in the

future. Due to the increasing population, technology, and innovation, there is a likelihood of

having expansion and creation of new cities to accommodate the growing population especially

in the commercial areas. This indicates that there would be an increased demand for cement and

concrete to build such infrastructure. This opportunity places the business strategy of Cemex in

as advantageous circle being one of the top cement and concrete producer in the world.

On the other hand, Saudi Cement Company (SCC) was founded in 1955 in Saudi Arabia.

The company produces cement and its products. The business strategy is based on the two

Joint Stock operating ,the Ain Dar Founder and Al Hofuf , Al Hofuf was the first to be ,it was

founded in 1961,both are located in Eastern province in Saudi Arabia. These two establishments

are the main producers of the cement and its products.

The management focus on constant improvement of the kilns with the latest upgrade in

1997 to make the total production of clinkers produce 7,825 tons within a day.

SCC assimilated Saudi Bahraini Cement Company (SBC) as part of its expansion in 1992. As a

result a new company (SBC) had been established in 1981 at Ain Dar in Saudi Arabia accounting

for production of 6,000 clinkers within one day in four kilns. SBC had been operating on its own

until 1992 when it merged with Saudi Cement to form Saudi-Bahraini Cement Company in

1992.

In 2003, the demand for cement increased to about 22.7 million tons from 20.8 million recorded

in 2002. However, the company had increased the output with production of surplus cement in

2003 as compared to 2002. As result, the management in the company decided to make a venture

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by exporting the surplus to some countries like Bahrain and other countries ,depending on the

recorded 2.3% increase.

In 2003, the marketing team decided to reduce the exports out and increase the sales in Saudi

Arabia. The strategy leads the company to raise its sales in 2002-2003 financial year.

Comparison

Cemex and Saudi Arabia shows some similarities and differences in the business

operation. Some of the main similarities that can be identified from the business operation is

their product. The two companies are the main producers of cement in their respective countries.

Cemex is seen as the top producer of building and construction materials and services including

cement in Mexico and in America. Similarly, Saudi Arabia Cement Company is the leading

production of cement and clinker in Saudi Arabia, and both has ventured its business operation

in the neighboring countries. Both companies record profits in the field of specialization. Both

organizations focus more on exports that making its business strategy one of the significant

operation in the neighboring countries. Both companies also serves various customer segments

such as block factories, building and construction, building companies and such related

companies. However, there are certain differences in the operation of the companies. For

instance, the location is different Cemex is located in the west in Mexico while SCC is in the

Middle East. The products are also different. Cemex major products are building and

construction services and supplies while SCC principle supplies are cement and clinker.

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CHAPTER THREE

Product line of CEMEX and Saudi Cement

Cemex offers various services and products that solve issues surrounding building and

construction. The main products for the company are ready-made concrete, aggregates, and

cement which are the delivered independently or accompanied by services. All in all, cement is

the main product by Cemex due to its demand and use in most of the construction. As matter of

fact, cement is the main product used in most of the major construction around the world due to

its durability and strength. For instance, most of the buildings in Mexico are constructed by the

use of Cemex cement. Cemex also produces aggregates that account for 15% of the total sales of

the company by 2015. The product comprises of geological materials that are strong and

important in the construction. The company produces aggregates that are composed of

manufactured sand, crushed stones, recycled concrete and sand. The product is important and

used in the construction of railways, sand traps, bridges, roads, and drainage systems. Aggregates

are importantly needed growing cities and urban areas. The company also produces concrete

accounting for 40% of the total sales for the company as per 2015 financial report. The company

manufactures concrete through mixing water, cement, sand, aggregates, and other admixtures.
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Cemex through its principle approach in production of efficient, sustainable and innovative

products manufactures durable products to ensure sustainable engineering thus manufacturing

efficient and more reliable products.

Finally, the company also majors in provision of services to its customers. The services

are supported and determined by the preferences of the customers around the world. The

company through its experienced team of engineers provides its customers with exclusive

building designs and delivery of building solution thus providing sustainable building. Some of

the major focus of the designs is greenhouse production, and sustainable housing. Among the

remarkable services provided by the company is the building of Latin Americas wind farm. The

company also offers other services such as trading services, financing services, provision of

mobile solution and services centers that allow easy product movement, services focused on

inventory management.

On the other hand, Saudi Cement main products are cement and linker. Unlike in the case

of Cemex, the company offer services. Its operations are dedicated towards domestic distribution

of the two products and exportation through the King Abdulazizz Seasport located in Damman.

The facility is responspible for the exportation of both clinker and cement through flexible

operations and strategy to outsmart the stiff competition. The operation of exportation between

the two main plants is carried out through railways. The company does not major in the

expansion of export facilities unlike the case of Cemex Company that focus on expansion of the

market, services, and products. Saudi Cement products are transported through rail which is

thought to be cheaper as compared to road transport. However, the company also produces some

extra by products that are useful in the construction. For instance, coal fly ash, silica fume, slag,

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and rice hull ash can be used in making concrete that is quite expensive and extremely durable as

compared to ordinary concrete.

Therefore, there is a huge difference with the products that both companies provide.

Cemex is all focused towards building a framework of products and services while on the other

hand Saudi Cement is more focused towards products. Cemex build its market in different

countries merging its operations to over 50 countries while Saudi Cement business export does

not cover a wide area. The by-products of the manufacture of cement for both companies are

profitable and widely used in making more expensive and durable concrete that enhance the

business operations hence increasing sale. Basically, Cemex and Saudi Cement product line is

similar. This is because the core product is cement with recognition in their primary countries.

Saudi Cement is the popular cement manufacturing company in Saudi Arabia and neighboring

countries such as Bahrain while Cemex hold largest markets in Mexico and rated the third in the

world. Therefore, both companies seek similar market and although their business is in different

region, their products are similar and thus they can be competitive if placed together.

Distribution and marketing in Saudi Cement is focused on raising the regional and local

share markets. Unlike in the case of Cemex, Saudi Cement has only four major clients without

long-term contracts. The management within the company does not believe in long-term contract

since they are against the interest of buyers and the company due the cyclical form of through

which cement factory takes. As stated earlier, the company focuses on exports more than any

other form of business; however the exports are not marginalized like Cemex business strategy.

The company exports are typically localized within the neighboring countries such as Qatar and

Bahrain. On further shipments, the company exports its products to European and African

countries. The market share in Cemex is different since the company is more marginalized and

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has expanded its services to other countries across the world. The country operation are not only

in America but also in countries in Asia, Europe, Africa, and India. This makes the company

more competitive and strategized as compared to Saudi Arabia.

Both companies have also faced tough challenges in running their business. For example,

Cemex was greatly affected by the financial crisis in America. The recession decreased its shares

significantly and made the company to lose huge shares in the country where industrialization

was growing at fast rate. In response to the crisis, the company had to focus on venturing in other

countries that had potential for growth such as China and parts of Europe. On the other hand,

Saudi Cement Company was greatly affected by export ban which left Bahrain as the only

market unaffected since it had received a waiver for the export ban. Therefore, although the the

ban affected the company there were some improvement in the total exports of clinker and

cement with stock totaling to 497,000 tons compared to 138, 000 tons recorded the previous year.

In terms of competition, Cemex has the largest market share in America especially in

countries such as Mexico and Brazil. The companys competition is not as great in such countries

as compared to the other countries. Similarly, Saudi Cement is the strongest and largest cement

manufacturing company in Saudi Arabia in terms of export capacities and production. The major

proximity on the dominance in market can be attributed towards the its dominance in sea port

that facilitate its export capabilities. Another benefit for the companys dominance in competition

can be attributed towards the location. Saudi Cement is located along the Eastern province. The

area has many construction projects in the industrial city and also oil sector around Jubail.

Another strategy that keeps the company along the competitive edges is its ability and capacity

to have large production of cement that covers the market during the downturns. These strategies

are also used in the Cemex only that Cemex depends on different factors such as services and

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products that are diverse and able to maintain the market for long-term.

CHAPTER FOUR

Financial analysis of CEMEX and Saudi Cement

Both companies have an exclusive sales and profits from the business operation

domestically and across the borders. For instance, in Saudi Arabia, the overall revenues from the

cement increased from 13.5% to 20.5% in 2007. Within the same year, the Saudi Cement

company revenue rose to SR268 in 2015 an increase of about 32% from 2006. Among the total

accounted exports, one fifth represented the cement export. The domestic sales took 80% of the

overall operating revenue with exports taking 20%. However, export ban affected the sales in

SCC lowering the export sales by 6.8%. However, during the same period, the domestic sales

increased by approximately 1% since the company focused more on the local sales during that

period. At the same time the operating cost also grew by 25.5% during the same period when

sales revenue hit 17% growth (Niblock & Malik, 2007). The increase in sales revenue was

attribute to the sales of other by-products of cement production. However, operating cost

increased due to increased cost of imported inputs used in the productions such as materials that

the company uses in treatment of high silica and bauxite. Increased cost of freight also

contributed towards the increased operating cost. In 2015, total cost of operations within the

company per its financial year report totaled SR494 million (36% of sales revenue). However,

depreciation cost increases the cost to 545 of the total revenues. In 2007, Saudi Cement

Company recorded slow net income growth by approximately 7.6% as compared to the previous

year that had average of 16.3% net income growth. Sales-to fixed assets in SCC by the year 2015

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showed efficiency in property, plant, and equipment utilization in a ratio of 1.4. In profitability,

the company has recorded a flat margin recorded in a period of five years. Due to the swelling

debts, cash equivalents, and decreasing cash, Saudi Cement Company recorded severe liquidity

from 2007 to 2014. For instance, the short-term debt was recorded at SR977 million by the end

of 2008.

Valuation of both companies can be based on relative valuation approach and discounted

cash flow. This is because through the use of discounted cash flow, analysis it would be the

appropriate way of calculating the fair value to evaluate the share price (Saudi Cement Ltd,

2016). On the other hand through the use of relative value we can incorporate the market

conditions. Die to the changes in the economy and population growth in Middle East, valuation

of net income for the company is expected to grow in the next few years. The demand for cement

is high both in Saudi Arabia and countries where cement is exported such as Qatar due to

population growth and urbanization. Therefore, it is projected that the sales will grow. The rate

limiting factor for output of cement production and clinker is expected to be limited by slow

growth of the company. The management has been slow in expansion of the design production

capacity. Thus there is a likelihood of flat output once the production hits its full capacity. This

would leave room for competition since net growth is determined by the level of demand and the

production rate. One of the positive outcomes that already is taking effect and more is expected

from the Saudi Cement production is the expansion of the two parent plants thus capability of

meeting the growing demand locally and other countries that rely on the products. The expansion

of the plants and opening of other areas towards economic growth is expected to improve the net

cash flow. Improvement in the net cash flow would ensure that the company attain its annual

profitability and be able to compensate its shareholders without affecting the normal operations.

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Relative valuation is calculated to determine the value of the company in comparison

with the other competing cement factories within the region. An analysis of the this magnitude

shows significant growth of the company in reference to price and earning ration as well as price

to book value ratio. The main point or the rationale of using this form of valuation is determine

the earning power which stands as the main indicator of investment value within a business and

thus investors focus on such value to determine whether they can invest in the company. The

main competitors of Saudi Cement to calculate the ratio are Yamama Cement, Arab Cement,

Southern Cement, and Qassim Cement. The valuation of these companies places Saudi Cement

in position three showing significant market share and thus investors can have confident

investing in the company.

In comparison of the financial analysis presented above and that of Cemex shows

different dynamics bases on net growth, net income, relative valuation, profitability and threats

facing the company. Unlike the Saudi Cement, Cemex more internationalized and its profitability

is based on diversity of products and services. The company faced by a major challenge during

the global recession and U.S. financial crisis. This was because during such period the company

had invested more in Mexico, United States, and Europe (Cemex Ltd, 2016). These countries

were greatly hit by the financial crisis as well as the global recession thus exposing the company

into risk of declaring bankruptcy. However, the management in Cemex got lucky once it invested

Rinker, an Australian company. The acquisition of Rinker came before the recession. Therefore,

both companies faced a challenge where Saudi Cement was affected by the export ban while

Cemex was affected by the global recession and financial crisis in its main operational countries.

Cemex, being in operation in many countries could still export its products but it had

undergone significant debt venturing in countries like U.S. Another advantage that favored

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CEMEX was increased revenue imposed by NAFTA region where there was high demand for its

products. For instance, there was high sales in ready-mix and high domestic cement in Mexico

that supported residential development and public infrastructure. There were also high sales of

concrete in United States thus consolidating Rinker operations in U.S. The company net profit

during the crisis was also supported by significant sales of the products in Caribbean and Central

and South America. The companies had also invested and were getting increased revenues in

Europe due to the increased prices of products such as cement and ready-made concrete in

countries such as Germany, Spain, United Kingdom, and France. At the same time most of the

countries through which the company was operational had increased infrastructure and

constructions of cities. Poland and Croatia were also providing ready market for the same

products. Therefore, although both companies faced similar challenges in lowered sales, Cemex

had significant investments that would support its net profit and sustain its business operation.

The company had also ventured in different businesses and thus there were no incurrence of

liquidation or employee turnover to sustain its operation. Instead, the management focused on

the markets that were not affected by the crisis. Another difference that made Cemex balance its

profits and business operations is utilizations of several products and services. From 2013, the

company has made tremendous improvement in its strategic and financial situation. This could

be attributed towards the recovery of the almost collapsing markets and record substantial

increase in sales.

The company is also improving the financial challenge thus struggling to regain its

market share, capital, and gaining financial flexibility through reduction of debts. The debts had

subjected the company below the investment grade; however, from 2013 financial year the

company has focused more on low credits and leverages to save its dragging financial situation.

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CHAPTER FIVE

Non-financial analysis of CEMEX and Saudi Cement

Non-financial analysis would focus on impacts of cultural values and key performance

indicators that shape the business operations in both Cemex and Saudi Cement Company. Cemex

is focused towards innovation and sustainability of the products and offering authentic services

to the customers. The main control for this is based on responsible and sustainable leadership
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that insists on the principle of walk the walk unlike the common idea of talk the talk.

Sustainability within the company is secure by efficient business conducts and well established

code of ethics (Epstein & Buhovac, 2014). The code of ethics with the company stars with its

leadership strategy that regard confidentiality, conflicts of interest, external stakeholders,

effective and efficient environment, legal and financial compliance, workplace safety and health,

and protection of the company assets. Operational key indicators are guided by the principle that

due to the effects of global warming, increased temperature and climatic changes, the

environment has been affected significantly increasing the risk of drought. The effects have also

affected water resources, biodiversity, agriculture, and health around the world. Therefore, this

factors push for rapid need to expand cities and also commitment to build new ones. This would

help in improving the standards in the cities and supporting the already devastated environment.

Therefore, the company is focused towards having efficient structure that are sustainable

building new infrastructure, buildings, and societies that are more efficient to support the

growing population. The company also focuses on reduction and control of carbon dioxide

emission from the manufacture of cement (The Economist, 2015). The manufacture of cement

leads to emission of greenhouse gases and thus the company is focused towards having a

sustainable emission of such gases.

Therefore, it could be explained that the company changes its model of sustainability into

business strategy. These ideas are important in meeting the greatest business concern and

utilizing the resources to ensure efficient environmental factors. Therefore, the sustainability for

the model focuses on managing the footprint, engaging the stakeholders, and improving value

creation. In enhancing the value of the products, the company focuses on delivering high-

performing products, innovative services and products, and employing strategies that focus on

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improving business and having profitable well managed carbon economy. In management of the

footprint ensures reduced net impact and minimizing operations in the communities. Finally,

Cemex engages engage stakeholders through commitment towards and competence of social

benefits (Robles, Wiese, & Torres-Baumgarten, 2014).

Key performance Indicators could be measured through variety of factors. For instance,

the water preservation and energy efficient services are some of the core focus of sustainable

campaign. Cemex main products are efficient and well assessed, evaluated and monitored before

distribution. These products are approved through the set standards to ensure sustainability and

efficiency in their duties. The economic rate is valued by the rate of demand and sales of the

main products. For instance according to the statistics provided in the consistent annual reports

presented by the company, Cement stands as the main product with high or increased sales

followed by ready-made concrete in like 90% of the markets. This shows that stability of cement

product in holding the sales in the company. On other case social indicators are factors such as

employee cover from fatalities in the consequent years. The employees are evaluated and

assessed according to the level of satisfaction. This factor tests the eligibility of the company

towards employee management. Basically, social indicators are factors such as employee

turnover, sickness, and frequency of missing duties. Cemex scores high in term s of social figure

and thus it ensures sustainability in the human resource which guarantee their satisfaction. The

company has sustainable development in management and public policy. The company has

efficient method of evaluating the sustainable growth and assessment of the future strategies.

This comprises of substantial team of managers from all department and executive committee

that reviews the over performance metrics, prioritize initiatives, encourage management models,

operate towards encouraging and supporting the approach and vision of the company. After

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evaluation the results are focused towards updating the vision of the company in all branches,

involving the stakeholders in the management strategy and evaluating areas that need changes

and improvement.

Cemex also involve regulators and government in the communication of the core

business policies and changes that can affect the stakeholders as well as the company. In

response and management of the strategic policy the company has elaborative public affair that

varies according to different countries where the business is being run. For instance, the

European countries regulate its trading and emission strategies. Cemex build close relationship

with the government and regulators who shape such factors such as emission, environmental

sustainability, and business growth. Another example is Venezuela government that presented an

opportunity to nationalize its cement instead of importing from a company such as Cemex. The

company took the chance to have a conversation with the government to reach an agreement that

would allow the company to work within its markets. Other issues concern factors such as

climatic sustainability and issues concerning global warming. Most the countries have strong

emphasis on the climatic sustainability, how to handle issues concerning emission, waste

products, and sustainable construction. These are issues that Cemex has been focusing in its

fiscal year to manage sustainable environment and collaboration with the respective countries in

management of any form of issues arising.

On the other had Saudi Cement faces similar challenges in maintenance of sustainable

environment. However, the country is located in area with different type of environment as

compared to Cemex. Most of the countries through which Saudi Cement operates are deserts. For

instance, Bahrain and Qatar (Hanieh, 2016). Therefore, less is regarded on climatic change in

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such area. However, issues regarding greenhouse gas emission are much prioritized to avoid

emission of poisonous gases.

The products and services in both companies are monitored by the managers within the

system. For instance, in Cemex and Saudi Cement, the top most level within the field of

management is that of senior management that is involved in a number of top-level activities.

The use of resources of a company is determined at this level. Goals and objectives of an

organization are set and determine at the very same level. The direction to be followed by a

company is determined at the senior level of management. The middle-level management comes

in second after the senior management level (Afuah, 2004).

At this level, the most crucial role involves meeting the goals and objectives that have

been set at the senior management level. The middle-level management level has a more

interactive platform with the employees. It is involved in ensuring that the employees of the

various departments get to meet their targets and their departmental goals. The middle-level

management sector has another important role in setting goals specific to certain areas in a

business. For instance, they can be involved in the determination of goals in the productions of

goods in a given day or month.

Supervisory management is the lowest level within the ranks of management. At this

level of management, the main role is to ensure that the day-to-day operations and processes of a

company are run efficiently. The smooth and effective running of a business is conducted at the

supervisory level. The physical production of goods and services in a company are conducted

and run at the supervisory management level (Collis and Hussey, 2013).

The differentiation of the various levels of management in both cement companies is

based on the tasks performed at each level, the various roles that are played and accomplished

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and the skills and knowledge that are required for each and every activity within that level. At the

heart of all the various levels of management and their efficient running lies effective

communication processes. There is a need to establish the various platforms that allow for timely

and effective communication lines.

CHAPTER SIX

SWOT Analysis CEMEX Company

Strengths

Cemex enjoys balanced sales. Due to its expansion to different part of the world, the company

has potential sales which supports its revenue, maintains profits, and covers the shareholders. For

instance, the country have venture in markets in Mexico, U.S., Brazil, China, India, Australia,

Africa, Caribbean, and Europe. These countries provide stable market and helps the company

from collapsing during challenges like global recession or financial crisis like the one

experienced

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The company has internationalized its operations. The operations of Cemex are diverse and have

substantial distribution of its products in many parts off the world. This makes the company

strong in its operations and stabilizing its financial situation. For instance, although the company

has not invested significantly in Asian countries such China, the demand for cement and ready-

made concrete is high in such area and thus provides a corporate advantage and markets for

operations.

The company has a vertical integration model of running business. Vertical integration model

provides a ground for growth since the company has full-scale mining facilities, well-structured

terminals, and distribution around the globe. It also has diversified products and services that are

innovative, sustainable, and integrated to satisfy customer needs. The distribution centers are

widely set around the world.

Cemex products are world-class and of high quality. Cemex is rated third in the production of

ready-made concrete and cement globally. It is also a world leader in distribution of clinker and

cement. The company also has high rating in production of high quality products that are

accepted in the society where it operates.

Weaknesses

Effects of policies and regulation in some of the countries it operates. Most of the countries

under operation have regulation, laws, and policies that hinder the operation of Cemex. For

instance, the Mexican government provide high deficits for housing and construction. The

government used to impose strong rules that govern uses of soils, availability of lands in the

country, and water supplies. The Mexican government recently has been taking a forefront in

changing the dynamic and having low housing deficit. The Idea is based on having well

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regulated and coordinated understanding between the city governments, state, and federal

government in regard to land licenses and authorization.

The United States dominated debt has negative impact on the financial performance of the

company. Cemex does not generate enough $ U.S revenue to meet the obligations of the US

debt. This factor places the company under serious financial issues.

Weather presents another challenge for the company operations. During the cold weather in

regions such as North America and Europe the company experience great loss since supply,

housing and construction are altered. This makes the company to lose significant amount of

revenue. Also during the rainy season in tropical countries, the operation of the company are

altered thus experiencing loses. The most significant period when the company makes losses is

during the winter in North America.

Opportunities

Cemex has long-term growth markets around the globe. Cemex Company unlike in the case of

Saudi Cement is exposed to markets with potential growth. For instance, a country like China

AND European countries is stable countries that are expanding in fast rate. Therefore, such

countries are ready markets for the company

Cemex is surrounded by positive demographics in the countries of venture. For instance, Europe,

U.S, China, and Mexico have growing population that would demand housing and construction

services in the near future. The growing diversity in population are potential customers for the

company.

Cemex has the potential to interact with the other joint industries to provide a wide an elaborate

business that would provide the clients with efficient ready market.

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Expansion of the business to other countries such as Rinker has provided the company with

opportunities in expanding its sales, distribution, and supply of its products. Acquisition of

Rinker strengthened its financial stability and improved the cash flow volatility in Australia.

Availability of policies and regulation in some countries are beneficial to the operations of the

company. For example, review of Mexican housing law, Obamas fiscal stimulus package, and

reduction of housing deficit in Mexico. These regulations and policies favor the operations of the

company in creation of opportunities like opening of public works hence improvement of

building and construction industry, provision of housing laws that favor companys operations

and substantial operation that provide potential for growth in sales.

Another important opportunity for the company is the agreement between Mexico and U.S to cut

off import tariffs from $26 per ton to $2 per ton. This improves the rate of export thus ease in

supply of construction materials across the border.

Threats

Stiff competition is one of the major threats facing Cemex Company. Cemex faces stiff

competition from other cement and construction players such as Lafarge and Holcim. The two

companies dominate in the supply of similar products and services in the major countries of

operation.

Venezuelan government bid to nationalize its local cement manufacture. The government of

Venezuela threated to have full control of cement manufacture and supply in the country. If the

proposal is enacted, Cemex would lose its market thus loss.

Political instability in some countries under operation is another threat that lowers sales in the

country.

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Fear of financial crisis and global recession is another problem that affects the company since the

problem lowers the sales and affects profitability.

Saudi Cement Company SWOT analysis

Strength

Saudi Cement Company has sustainable sales network and existing distribution. Being the best

company in Saudi Arabia, the company has gained trust and market for the distribution of its

products in Saudi Arabia and its neighboring countries such as Bahrain and Qatar.

The company also benefits from monetary assistance provided locally. This funds assist the

company in expanding its business structures and its plants. It also assists in exporting its

products to new markets.

The company has skilled workers and management focused on its two plants and provision of

quality products. Unlike Cemex, which has distributed networks of businesses around the globe.

Location of Saudi Cement is favorable for marketing its product with strong and available ready

market that has not yet been exploited. For instance, parts of Middle East have the potential for

building and construction since the economy of the area is growing in a fast rate.

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Weakness

Saudi Cement brand portfolio is facing challenges due to emerging of other companies providing

similar products and offering same services. The brand is also faced by the challenge of poor

marketing strategy that should focus on expanding the business to other places.

Export ban affected net growth in Saudi Arabia thus limiting the countries that would have

increased the sales.

Opportunities

The company has the potential to expand its global business to cover wider markets. This is due

to the increasing demand of cement and aggregates for the construction of buildings, cities,

bridges, and industries.

The company also has the potential to acquire other companies from different countries hence

expanding its business to a more potential areas around the world. For instance, by acquiring or

collaborating with affiliate companies would increase the market and ensure financial stability in

case of any potential threat in its operations.

The company can also acquire loans and fund the growth.

The steady growth of the business guarantees efficient distribution of the products thus

increasing demand for the cement in countries of operation. This indicates that in the foreseeable

future the company has the potential to grow in products and also venture in other factors such as

service delivery to the people. Thus, Saudi Cement should place its operations strategically to

maximize its opportunities for the benefit of the employees, shareholders, and community.

Threats

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Saudi Cement has had slow growth in the market due to various factors such as export

ban, stringent policies and regulation in countries under operation, and technological problems.

As a result the growth rate has been slow only focused towards expanding the two plants instead

of marginalizing its market to various countries like in the case of Cemex.

Fluctuations of the prices of cement in countries under operation has been a major threat. For

instance some countries including is local operational capital Saudi Arabia has had political and

social struggles that results into violence. This stagnates business operation making the company

to undergo losses due to insufficient funds and systems of operation. Saudi Arabia is a good

example of country faced with various insecurities thus affecting the housing and construction.

Prices of the products have been fluctuating due to poor economy caused by the political

instability. This affects the company significantly since unlike Cemex, the company operates in

few countries that are closely located and thus insecurity affects such countries.

Government regulations has been another threat that has affected the sales of the company. For

instance, some government are fully pushing for national supply of cement. In other countries,

cement export has been banned thus affect the companys revenues. Raising cost of the available

raw materials such as silica and brexute is another threat that forces the company to register

loses. However, the most significant threat is the tight competition faced by the company from

other key players within the region such as Yamama Cement (Ali, 2015). These companies have

invested heavily in similar products thus exposing the business operations of the company into

jeopardy. Finally cash flow has been a major threat within the company since unlike Cemex

some of the countries under operation have growing economy that affects the company

significantly.

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In comparison, both companies have similar SWOT challenges. The companies have

ventured its operations in various countries that have different economic status. This has affected

the companies significantly due to changes in business dynamics, operations, and government

regulation. The economy in the countries also differ and thus this present a significant threat to

both companies. However, Cemex has a potential cash flow due its corporate strategy in

venturing in majority of the countries thus providing an advantage to the business operations.

This stabilizes its financial data, business divisions, structure, and key operations across the

globe. On the other side, Saudi Cement operations are focused mainly on the same region thus

presenting a common threat of financial instability in case of financial crisis. It operations are

mainly centered on the two plants in Saudi Arabia. Both companies face stiff completion from

other major players in the field. Currently, the demand for cement, aggregate, ready-made

concrete, and building and construction service are increase due to the growing economy and

population growth. This situation paces the two companies with opportunity to expand its

business operations to meet the growing demand. However, political and social struggles in most

of the countries under operation has put the company in spotlight, lowering the production rate

and hence reduced sales (Tradeship Publications Ltd, 2015). The effects of poor economy due to

financial crisis and recession also affects the business operation of both companies. Cemex

Company was the most affected during the financial crisis in United States leading to mass debts

and putting company at risk of being declared bankrupt. This are some of the differences and

similarities that the two company experience in the running of its operation. However there are

some factors within the management within the companies that are of significant use. In both

Cemex and Saudi Cement, there are several levels of leadership. Governance is the initial level

of leadership where the company monitors and protects all its resources and assets effectively,

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while identifying the role of business managers as well as boards to emphasis on the all interests

of the stakeholders. Organizational structure of Cemex for instance comprises of Board of

Directors which is a governance system pivotal body and to which company management is

wholly entrusted. Statutory Auditors Board who are entrusted with supervisory functions and

external auditors entrusted with accounts legal auditing. Two other committees (Risk and Audit

committee and Nomination and Compensation) with consulting and advisory functions have

been created within the Directors board.

Cemex and Saudi Cement regards transparency. The companies provides appropriate

information regarding its schedules, products as well as services. For example, Saudi cement has

achieved this by making sure that all corporate and business activities are conducted in a

transparent, fair and honest style, in good-faith and in full acquiescence with the competition

defense rules. The company does not make any form of contributions whether indirect of direct,

to political parties, committees, political unions and organizations and movements, their

candidates and representatives, expect for those offered by precise regulations.

Cemex has a conclusive and fair trading services that involves with distributors,

shareholder as well as suppliers. Cemex has corporate relations model which has focused on

ensuring optimal management and harmonization relations for many years with employers

associations, public bodies and trade unions in line with company policies. SAIPEM and

organizations trade unions entered into debate the year 2014 to launch a corporate relation

protocol recognizing negotiation, dialogue and communication centrality, aim was to have a

conclusive protocol ready by 2015.

Both companies treat with respect its services and products. Each project and services

within the two companies and especially Cemex quality management systems applied so as to

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produce goods, provide quality services and carry-out all activities at maximum safety

conditions. Cemex applies Quality Measurement Systems according to relevant standards as well

as corporate guidelines.

The two companies also have well-structured systems of human resource that upholds

professional and personal employment to all worker in more ethical manner. Both cement

industries have developed human resources competencies and skills and also improved both HR

management and work environment systems. For instance, Cemex has over 46,000 employees

5% representing women.

Finally, the environment Protection is focused to safeguard as well as reinstate the ecological

status and uphold sustainable development with service, processes, and products among other

activities. SAIPEM continually monitors several HSE indicators and periodically reviews its

objectives in processes so as to gain continuous improvement in capabilities and processes.

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CHAPTER SEVEN

Investors potentials

Business management offers a number of advantages to an organization and thus makes it

crucial in the business world. Most people underestimate the importance and significance of

business management in the world of business. Labor, capital, and raw materials are the most

crucial entities in the business world as they result in the production of goods and services. These

are the factors that draw the shareholders and investors to invest in a business. Therefore in the

business scenario, Cemex and Saudi Cement are stringent in having an elaborate business

management that draws the interest of investors. However, these entities are rather worthless if

proper management is not used. The acquisition and attainment of maximum profits and

productivity with the least efforts and risk are the main purposes of management. Businesses and

enterprises often involve the use of groups and teams to attain the production of various goods.

The world of business is always in a state of change and dynamism. Globalization is a

contemporary phenomenon that has immense impacts and influence on business. New entrants

into the world market are being recorded each and every other day. The upside of the

globalization effect is that there is an increased market for a companys products and services.

However, a number of disadvantages do arise from the same globalization. New risks and

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challenges are being faced in the world of business, indicating the importance that business

management plays in the ever-changing business world.

Management has been described as driving force in the business world. The inclusion of a global

aspect into the business world has resulted in the increase of competition. The need for efficiency

and a better capability of management have in effect also increased. Business management

allows for the organization of activities in a way that guarantees efficiency and achievement of

objectives.

Part of the management process involves the optimal use of resources in an organization

or an enterprise. Resources are found in both physical and human dimensions and often bring

about obstacles when being used. Management offers the platform through which an optimal

utilization of both human and physical resources in a way that guarantees efficiency and

effectiveness. Wastages are often unavoidable in business owing to the numerous processes that

have to be run in the production of goods and services. Management comes in handy in reducing

the wastages incurred within an organization. Assets and profits are the main goals of an

enterprise and to attain the profits. Competitive strength is an important component in the

business world, especially in the growth.

Equipment, money and employees make up the three most important resources of any

given business. These are the factors that determine the legibility and make both Cemex and

Saudi the one of the best companies in the region despite the financial crisis. Investors feel

confident and the companies remain on top in terms of investors and expansion. However, the

idea of having wastages in business brings about losses in the company in the long run.

Management is the only platform that can be employed to ensure that wastages and losses are

eliminated entirely or reduced.

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CHAPTER EIGHT

Conclusion

In conclusion, Cemex and Saudi Cement are two companies that are different in location

and profitability. The companies have substantial profits with each hold large share of investors

and financial stability. The company deals with cement, aggregates, ready-made concretes and

building and construction services. They both have global recognition due to there brand

standards. Its customer perceptions of quality, innovation, service, value, and trust have seen its

products rise in demand across the nations. Their strong relationship with its suppliers has also

promoted the sale of its products.

Bothe companies have strong employee policies that promote an environment free from

harassment, discrimination, and victimization. This is one of its active issues towards global

citizenship where the employment policies involve hiring different people of different races who

are treated equally in all fields. For instance, the company doesnt select on their employees and

anyone can work anywhere provided they are within the companys jurisdiction.

In order for a company to be successful, it must have the best efficient and effective

marketing department. Cemex and Saudi Cement have a chain of marketing strategies which

includes the consideration of market orientation that is a core factor in defining the customer

needs. With a precise analysis of its Strengths, weaknesses, opportunities, and threats, the

companies have been able to access its position in terms of what it can offer and the customer
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expectations. This has made it strategize on improving its weakness to gain a competitive

advantage. They also have improved the global issues on environmental conservation. Ranging

from zero waste campaigns to the use of sustainable cement and building and construction

materials. They have ensured the reduction of carbon footprint in all its operations, supply chain

and products and strategized on waste recycling. All this have created a friendly environment and

global health improvement. If all companies would strategize on the control of its industrial

emissions like the Cemex, then the world would have moved a step further in dealing with global

warming.

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References

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Cemex Ltd. (2016, December 21). Cemex. Retrieved from Cemex: http://www.cemex.com/

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Hanieh, A. (2016). Capitalism and Class in the Gulf Arab States. New York: Springer.

Niblock, T., & Malik, M. (2007). The Political Economy of Saudi Arabia. London: Routledge.

Robles, F., Wiese, N., & Torres-Baumgarten, G. (2014). Business in Emerging Latin America. London:

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https://saudicement.com.sa/

Spulber, D. F. (2007). Global Competitive Strategy. Cambridge: Cambridge University Press.

The Economist. (2015). Business Strategy: A guide to effective decision-making. New York:

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Verbeke, A. (2013). International Business Strategy. Cambridge: Cambridge University Press.

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