CEMEX Case Study Guide Questions:

1. How did CEMEX fundamentally change the way it conducted its business?
   • CEMEX does its business thorough housing for the poor, instead of doing housing projects for the government or non-profit organization.
   • The company’s strategy emphasized improving profitability through efficient operations.
   • The company also shifted from selling products to selling complete solutions.
2. How does information systems contribute to CEMEX' competitive advantage?
   • Information systems contributes to CEMEX through continued innovation, high level of commitment to customer service and satisfaction, proven post-merger integration expertise, digital evolution (efficient production, distribution and delivery processes through sophisticated information systems), and the ability to identify high growth market opportunities in developing economics
3. What is social capital? How does CEMEX build social capital?
   • Social Capital refers to "the connections within and between social networks as well as connections among individual people." CEMEX built a social capital through launching an innovative experiment called Patrimonio Hoy. This experiment enables less fortunate people purchase building materials, improve their home, and pay for services.
4. How are is the low-income savings characteristics of Mexican society characterized?
   •  Low-income families in Mexico adopted a different kind of saving method.
   • One of the characteristics of the low-income savings of the Mexican society is that they do not have access to banks instead they have a Tanda System.
5. How are the enterpreneurial characteristics of the women in Mexican society tied to the CEMEX BOP strategy?
   •  Women are the key drivers of savings in families. In Mexican society, women are very entrepreneurial in nature, and they very actively participate in the tanda system. Patrimonio Hoy illustrated that 70% of those women who were saving were saving money in the tanda system to create homes for their families.
6. What did the CEMEX initial market research in Guadalajara discover?
   • CEMEX was gradually losing its stronghold in second-largest city in Mexico.
   • In the Guadalajara market research, the CEMEX found out that the price of the cement is cheaper than what they know - 22 pesos instead of 52 pesos.
   • The CEMEX team discovers that the cement consummation is replaced with the use of clay and limestone in the construction
7. What is the role of socios in the Patrimonio Hoy system? How important are they in the making the system successful?
   •  The socios get together and form groups, restricted to three (3) people.
   • It enforces CEMEX to implement payment discipline in small groups.
8. Why do you think it was important fo CEMEX to position itself as a complete solutions provider vs. just another product provider?
   • Patrimonio Hoy rewards their efforts on a commission basis.
9. How is the social capital of Patrimonio Hoy promoters related to economic capital?
   • Patrimonio Hoy rewards their efforts on a commission basis.
10. What, in brief, is the value of Patrimonio Hoy to a) it's promoter b) its socios & partners c) its suppliers and d) its distributors?
    • Promoters do it for a social cause to build social capital and it also earns money
    • Socios/Partners are offered a lot of propositions that will render their house making problems disappear.
    • Suppliers generate a steady demand for materials. Creating a consistent revenue stream and ensuring zero-risk collection of money.
    • Distributor effectively obtained a ‘push-pull’ strategy for cement sales compared to only drops to 12%.
11. What is patrimonio? Why is this important for the marketing efforts for the Patrimonio Hoy system?
    • Savings/Property today.
    • It enables less fortunate people to pay for services and building materials and upgrade their home which increases customers by being on the bottom of the pyramid.
12. How can Patrimonio Hoy offer a slightly higher price than its competitors and maintain a competitive edge?
    • Social capital gives CEMEX the trust and strong relationships with their customers
13. How does the concept of freezing prices encourage socios to do more business for Patrimonio Hoy?
    • It ensures a consistent and steady source of revenue in the pipeline for Patrimonio Hoy and the distributors.
    • The predictability of revenue has huge implications across the value chain from the suppliers to the end-customers.
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?
    • Patrimonio Hoy made use of social capital which helped them work with low income group properly.
    • The trust that exist between the two are strong because both of which have something in need from the other.
15. What is the role of peer/community pressure in the Patrimonio Hoy lending model?
    • Socios as a whole will pay a late fee of an additional 50% per late socio for some cases on the community.
16. How has Patrimonio Hoy changed the consumer behavior in Mexico?
    • It has changed the consumer behavior because of the savings and properties that people can achieve from CEMEX.
17. What are the challenges of the Patrimonio Hoy program?
    •  Customer retention is a huge problem because of virtue of the nature of the business.
18. What does Construmex take advantage of the existing remittance market between U.S.A and Mexico?
    • Construmex channels a large share of the remittance flows to CEMEX.
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?
    • Low-income families
    • Third world country - room for development in the society
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)
    1.  eCommerce
    2. SMS Retailing
    3. Online support
    4. Mobile Transaction
    5. Accounting System
    6. SMS Support
    7. Procurement System
    8. Money Remittance
    9. Payment System
    10. Inventory System