David Lemuel E. Garcia                                                                                             2/21/2008

10564721

BS-IM

CEMEX Case Study Guide Questions:

1.    How did CEMEX fundamentally change the way it conducted its business?

- CEMEX improved profitability by efficient operations. They shifted from selling products to selling complete solutions. With this kind of strategy, CEMEX has established a very strong brand and has managed to translate it into extraordinary profits from a commodity-driven business.

2.    How does information systems contribute to CEMEX' competitive advantage?

- Continued innovation

- High level of commitment to customer and service satisfaction is being achieved

- Post merger integration expertise

- Digital evolution: Efficient production, distribution, and delivery process through sophisticated information systems

- Ability to identify high-growth market opportunities in developing economies with the use of information systems

3.    What is social capital? How does CEMEX build social capital?

- Social capital refers to the connections within and between social networks. It was being established by CEMEX through their Patrimonio Hoy system which enables poor people to pay for services and building materials to upgrade their homes. This was established through that system because they made a connection from different types and classes of people and created a bigger connection that made them build their social capital.

4.    How is the low-income savings characteristics of Mexican society characterized?

- The Mexican society with low-income savings doesn’t have access to any government subsidies or grants, and they doesn’t have any access to banks and credit lines therefore they formed “tandas” or “pools” by establishing connections from their neighbors, friends, and relatives. The problem with this system is that it was so big that the management wasn’t really successful which caused a lot of problems and made a lot of people to abandon this system and find other ways in acquiring money.

5.    How are the enterpreneurial characteristics of the women in Mexican society tied to the CEMEX BOP strategy?

-  Women are the key driver of saving in families. The women are the ones that actively participate in the “tanda” system. The research conducted by the Patrimonio Hoy showed that those women who participate in the tanda that save up money use the money saved for constructing their homes for their families. In general for the Mexican society, it is the women who manage the expenses for their families.

6.    What did the CEMEX initial market research in Guadalajara discover?

- They discovered that for every 100 pesos that were being spent on construction raw material, 52 pesos were spent just for the cement. A possibility of growth for CEMEX was then being found here in Guadalajara.

7.    What is the role of socios in the Patrimonio Hoy system? How important are they in the making the system successful?

- The socios are the actual customers who enroll in the Patrimonio Hoy. They form a small group of 3 people in order for them be enforced easily in payment discipline and for them to have stronger relationships with each other for helping each other out in case of emergency.

8.    Why do you think it was important for CEMEX to position itself as a complete solutions provider vs. just another product provider?

- They decided to position their selves as a complete solutions provider for them to tap into the huge low-income market and besides, if they try to sell just cement, it wouldn’t take too long before the competitors to enter the arena.

9.    How is the social capital of Patrimonio Hoy promoters related to economic capital?

- By having a high social capital, the economic capital would be balanced with it thus helping the system obtain a certain amount that would exceed the expected income and give them more profit.

10.  What, in brief, is the value of Patrimonio Hoy to a) its promoters b) its socios & partners c) its suppliers and d) its distributors?

- a) They contribute by building the social capital for Patrimonio Hoy, they are the ones who identify the prospective customers for the system.

- b) It reduced the cost of Patrimonio Hoy as high as 30 percent, and the reduction time reached as high as 60 to 70 percent.

- c) It has given the best supply for Patrimonio Hoy and it always has the available materials that the Patrimonio Hoy needs whenever they ask something.

- d) The continuous push-pull of both supplies and the demand within the system has made them get a better average margin than the usual however, the continuous demand made the margin a little higher but it’s because the normal rate of demand was already high.

  11. What is patrimonio? Why is this important for the marketing efforts for the Patrimonio Hoy system?

            - patrimonio means savings/property. Profitability is ofcourse still a part of a business, property is one of the most important because they consider those who need and they market their product in a way that most fits the chosen market.

  12. How can Patrimonio Hoy offer a slightly higher price than its competitors and maintain a competitive edge?

            - They can do it by adjusting minimally and still maintain the same quality that they offer to their market. They can also automate some processes to reduce employee costs.

  13. How does the concept of freezing prices encourage socios to do more business for Patrimonio Hoy?

            - It has made the socios to be in tact with the system and do business with them without thinking about the changes that might occur in the coming years or months as the budgeted money won’t be enough.

  14. Intuitively, doing with business with a low income group would be riskier than traditional lending models but it is profitable for Patrimonio Hoy. Why?

            - Having a very large amount of social capital and offering a low price, it would still come up that by gathering every single peso that you can profit, it’ll be more enough to give you the ROI that you need.

  15. What is the role of peer/community pressure in the Patrimonio Hoy lending model?

            - The weekly payment per group was the only thing that they need to do and if one fails to pay, the group would them pay a fine of 50% per late socio.

  16. How has Patrimonio Hoy changed the consumer behavior in Mexico?

            - it has changed the way consumers think about how they can purchase with their low income. It made the people think that even with their low income rate, they can be part of a bigger industry and increase their state of living by acquiring commodities.

  17. What are the challengs of the Patrimonio Hoy program?

            -Customer retention is one huge problem of Patrimonio Hoy, mostly, the percentage that the customer would come back after their house has been done was almost in  100 percent which is bad.

  18. What does Construmex take advantage of the existing remittance market between U.S.A and Mexico?

            - Both of them take advantage over their distributors for their program.

  19. CEMEX Philippines is exploring the possibility of replicating the Patrimonio Hoy system in the Philippines. What are the parallels between the Mexican and the Philippine market?

            - There are a lot of low-income types of people who are here in the Philippines which is the same as those who are in Mexico.

  20. As an IT practitioner looking at the Construmex business model, what IT-driven systems can you propose to make CEMEX more competitive? (name 10-15)

- Customer Relation Management System 

- Human resource Management System

- Accounting System

- Sales and Inventory System 

- Requisition and retailing system

- Mobile transaction 

- Document Management System.

- Web-Based Business (E-Commerce)

- Enterprise Management System

- Transaction Processing System 

- Decision Support System