Foreign Direct Investment

a). Which theoretical explanation, or explanation, of FDI best explains Cemex's FDI?

For the internalization theory best way to explains CEMEX’s FDI because CEMEX entered into many countries and bought domestic cement businesses as a replacement for of licensing. CEMEX has a great system and requires protecting it from competitors.

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?

The value is that CEMEX has a “Midas touch” that converts a cement business into a successful business. This can brings great stimulation to the host economy and also helps in the construction field, which in turn helps to build cities and civilization. No, CEMEX would do well to invest privately; however, CEMEX is better at acquisitioning businesses.

c). Cemex has a strong preference for acquisitions over greenfield ventures as an entry mode. Why?

For acquisitions are solid because the business in the host economy already knows the demographics and the market. CEMEX just has to make the business better along with research. A greenfield venture would prove risky and not cost effective.

d). Why is majority control so important to Cemex?

A licensing is very risky. CEMEX only have a 25% push with Semen Gresik. It did not have total control and the systems of CEMEX would be exposed and vulnerable to be stolen. CEMEX has a great system and does not want anyone interfering.

References

Hill, Charles W.L.. Global Business Today. 7. VitalSource Bookshelf. McGraw-Hill Learning Solutions, 2012, Monday, July 23, 2012.

Search | CEMEX. (n.d.). CEMEX | Building the future. Retrieved July 24, 2012, from http://www.cemex.com/Search.aspx?q=foreign+direct+investment