Reread the Management Focus on Cemex and then answer the following questions: a) Which theoretical explanation, or explanations, of FDI best explains Cemex’s FDI? b) What is the value that Cemex brings to the host economy? Can you see any potential drawbacks of inward investment by Cemex in an economy?

Complete Question:

Mexico's largest cement manufacturer, Cemex, has become a global powerhouse in the cement and construction industry.It currently controls 60 percent of the cement industry in Mexico (Hill 2009).Cemex's success is a result of a combination of efficient technology such as radio transmitters, satellites, and computer hardware that allow the company to anticipate changes in supply and demand and reduce waste.  

Cemex's success is also a result of an attempt to dominate the industry by acquiring and buying out competitors worldwide in order to expand.  

Reread the Management Focus on Cemex and then answer the following questions:

a) Which theoretical explanation, or explanations, of FDI best explains Cemex’s FDI?

b) What is the value that Cemex brings to the host economy? Can you see any potential drawbacks of inward investment by Cemex in an economy?

Explanation:

a) I think Cemex's philosophy of internalisation perfectly illustrates that, instead of licensing it took the initiative to penetrate other markets, Cemex has acquired in-house cement firms and has become a global powerhouse.  The text book discusses that companies often choose foreign direct investment as a policy to penetrate foreign markets, rather than authorising (Hill 2008). The internalisation principle. The state-of - the-art technologies Cemex employs would not make selling the company's "technological know-how" the best way to protect it (Hill 2009).

b) Cemex, the world's third largest cement firm, has 60% control over the powerhouse in Mexico.  

The focus of Cemex is on the efficient production and service of the consumer. Sales receivers, as are consumers, have been paid. Such competitive advantages are the main benefits that Cemex gives to host countries. Cemex acquires companies, and then moves technologies, management and marketing skills to new units and improves their performance. Several purchased businesses were taken back to full production and the work opportunities in the host country were improved.