Cemex is a multinational company in Mexico, produce and manufacture building materials. The company is headquartered in San Pedro. The company manufactures and also distributes the cement, concrete (ready-mix) in more than 50 countries across the globe. It is considered as second biggest company in material industry, first in Lafarge Holcim (Cemex, 2020).
This article focuses on the VRIO analysis of Cemex. VRIO framework is an analytical tool which helps the company in availing competitive advantage for the company. There are four components of the framework, Value, rarity, imitability and organization.
Value
Value is the first component of the VRIO model. This deals with analysing the valuable resources and capabilities of the company. These valuable resources help the company in adding more value in the operations. Moreover, valuable resources help the company in availing more opportunities and mitigating the threats. Cemex is one of a big name in the industry. The competitive parity of Cemex exist because of valuable resources.
Cement s having high demand in USA, Asia, and Mexico as the demand of the construction is high there. Moreover, the product quality highly matters in case of Cemex. The expansion strategy of the company is highly valuable as it has acquired several other businesses in different countries (Taylor, 2019).
Rarity
Rarity is the second component of the VRIO analysis. The resources and capabilities that are available with the few or limited organization, it will be rare and unique. The rare and valuable resources together help the company in avoiding the threats to the company, but it will be for short run, as competitors will identify it and then imitate it.
Cemex has achieved temporary competitive advantage by making its resources rare and valuable. Cemex main product like Cement is a common commodity. The expansion strategy is also not that rare, but its financial performance is strong along with technological resources (Hernandez, 2015).
Imitability
Imitability is the third component of the VRIO framework. This component emphasis on acquiring the unique and hard to imitate resources and capabilities. This can be done by having costly resources or resources whose substitute are difficult to find. This component along with valuable and rare resources help in achieving competitive advantage.
Cemex has achieved unused competitive advantage because of easy to imitate products. The cement manufacturing process and products are not unique. The cement industry is highly competitive as all rivals following same process and techniques for manufacturing. Moreover, it is not a market leader which gives the company exclusivity (Taylor, 2019).
Organization
This is the last and fourth component of VRIO analysis. This along with other three components help the company in achieving sustained competitive advantage. This is the long-term advantage for the company. The Cemex’s organization strategy is unique. Through the four steps, Cemex uses the resources to shorten the integration process as less than five months.
Cemex incorporates the foreign firms’ value in running business operations. The managerial activities are disrupted because experts of other firms were aiding the acquired firm for integrating into Cemex. Cemex way helps the company in acquiring firms globally and in expansion (Hernandez, 2015).
Conclusion
Cemex is one of a main player in the cement industry. It is able to achieve competitive advantage and availing benefits from it, but it is necessary for the company to focus on making hard to imitate resources. The company should work on its product range like ceramics, foams, glasses, etc.
| V | R | I | O | ||
| Supply Chain | ✓ | ✓ | ✓ | Competitive Parity | |
| Bargaining power | ✓ | ✓ | Competitive Parity | ||
| Inventory management | ✓ | ✓ | Competitive Parity | ||
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Marketing | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Product quality | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Talented HR | ✓ | ✓ | Competitive parity |
References
- Cemex, 2020. About us. [Online], Available at: https://www.cemex.com/about-us/our-history, [Accessed on: 6th April, 2020].
- Hernandez, J. 2015. ANALYSIS OF CEMEX’S STRATEGIES AS DETERMINANTS FOR MARKET POWER. [Online], Available at: https://www.researchgate.net/publication/271020276_ANALYSIS_OF_CEMEX’S_STRATEGIES_AS_DETERMINANTS_FOR_MARKET_POWER, [Accessed on: 6th April, 2020].
- Taylor, J. 2019. Cemex analysis. [Online], Available at: https://www.essaytyping.com/cemex-analysis/, [Accessed on: 6th April, 2020].