Case Study Description of CEMEX: Rewarding the Egyptian Retailers
CEMEX has pursued an aggressive decommoditization strategy focused on its relationship with small Egyptian retailers. In particular, the strategic role and effectiveness of the Rewards Program, a tournament that rewarded the sales performance of the retailers, was called into question by Assiut Cement's management based on the results of its first two rounds.
Authors :: F. Asis Martinez-Jerez, Joshua Bellin, Carole A. Winkler
Swot Analysis of "CEMEX: Rewarding the Egyptian Retailers" written by F. Asis Martinez-Jerez, Joshua Bellin, Carole A. Winkler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Egyptian Cemex facing as an external strategic factors. Some of the topics covered in CEMEX: Rewarding the Egyptian Retailers case study are - Strategic Management Strategies, Motivating people, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the CEMEX: Rewarding the Egyptian Retailers casestudy better are - – supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, central banks are concerned over increasing inflation,
challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of CEMEX: Rewarding the Egyptian Retailers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CEMEX: Rewarding the Egyptian Retailers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Egyptian Cemex, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Egyptian Cemex operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of CEMEX: Rewarding the Egyptian Retailers can be done for the following purposes –
1. Strategic planning using facts provided in CEMEX: Rewarding the Egyptian Retailers case study
2. Improving business portfolio management of Egyptian Cemex
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Egyptian Cemex
Strengths CEMEX: Rewarding the Egyptian Retailers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Egyptian Cemex in CEMEX: Rewarding the Egyptian Retailers Harvard Business Review case study are -
Organizational Resilience of Egyptian Cemex
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Egyptian Cemex does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Egyptian Cemex has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CEMEX: Rewarding the Egyptian Retailers Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Egyptian Cemex in the sector have low bargaining power. CEMEX: Rewarding the Egyptian Retailers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Egyptian Cemex to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Egyptian Cemex is one of the leading recruiters in the industry. Managers in the CEMEX: Rewarding the Egyptian Retailers are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the CEMEX: Rewarding the Egyptian Retailers Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Egyptian Cemex in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Egyptian Cemex is one of the most innovative firm in sector. Manager in CEMEX: Rewarding the Egyptian Retailers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Egyptian Cemex has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Egyptian Cemex to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Egyptian Cemex is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Egyptian Cemex is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CEMEX: Rewarding the Egyptian Retailers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Egyptian Cemex has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study CEMEX: Rewarding the Egyptian Retailers - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Egyptian Cemex has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Sales & Marketing industry
– CEMEX: Rewarding the Egyptian Retailers firm has clearly differentiated products in the market place. This has enabled Egyptian Cemex to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Egyptian Cemex to invest into research and development (R&D) and innovation.
Weaknesses CEMEX: Rewarding the Egyptian Retailers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CEMEX: Rewarding the Egyptian Retailers are -
High cash cycle compare to competitors
Egyptian Cemex has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– After analyzing the HBR case study CEMEX: Rewarding the Egyptian Retailers, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the CEMEX: Rewarding the Egyptian Retailers HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Egyptian Cemex has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CEMEX: Rewarding the Egyptian Retailers, is just above the industry average. Egyptian Cemex needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Egyptian Cemex has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - CEMEX: Rewarding the Egyptian Retailers should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Egyptian Cemex, firm in the HBR case study CEMEX: Rewarding the Egyptian Retailers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Asis Martinez-Jerez, Joshua Bellin, Carole A. Winkler suggests that, Egyptian Cemex is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Egyptian Cemex needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Egyptian Cemex has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Egyptian Cemex even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Egyptian Cemex products
– To increase the profitability and margins on the products, Egyptian Cemex needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Egyptian Cemex is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Egyptian Cemex needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Egyptian Cemex to focus more on services rather than just following the product oriented approach.
Opportunities CEMEX: Rewarding the Egyptian Retailers | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study CEMEX: Rewarding the Egyptian Retailers are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Egyptian Cemex to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Egyptian Cemex can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Egyptian Cemex can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Egyptian Cemex has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study CEMEX: Rewarding the Egyptian Retailers - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Egyptian Cemex to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Egyptian Cemex can use these opportunities to build new business models that can help the communities that Egyptian Cemex operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Egyptian Cemex has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Creating value in data economy
– The success of analytics program of Egyptian Cemex has opened avenues for new revenue streams for the organization in the industry. This can help Egyptian Cemex to build a more holistic ecosystem as suggested in the CEMEX: Rewarding the Egyptian Retailers case study. Egyptian Cemex can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Egyptian Cemex can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Egyptian Cemex is facing challenges because of the dominance of functional experts in the organization. CEMEX: Rewarding the Egyptian Retailers case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Egyptian Cemex to increase its market reach. Egyptian Cemex will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at Egyptian Cemex can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Egyptian Cemex can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, CEMEX: Rewarding the Egyptian Retailers, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Egyptian Cemex can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats CEMEX: Rewarding the Egyptian Retailers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CEMEX: Rewarding the Egyptian Retailers are -
Increasing wage structure of Egyptian Cemex
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Egyptian Cemex.
Stagnating economy with rate increase
– Egyptian Cemex can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Egyptian Cemex can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Egyptian Cemex has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Egyptian Cemex needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Egyptian Cemex in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Egyptian Cemex demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Egyptian Cemex will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Egyptian Cemex high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Egyptian Cemex is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Egyptian Cemex can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study CEMEX: Rewarding the Egyptian Retailers .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Egyptian Cemex needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Egyptian Cemex can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Egyptian Cemex with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of CEMEX: Rewarding the Egyptian Retailers Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study CEMEX: Rewarding the Egyptian Retailers needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study CEMEX: Rewarding the Egyptian Retailers is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study CEMEX: Rewarding the Egyptian Retailers is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of CEMEX: Rewarding the Egyptian Retailers is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Egyptian Cemex needs to make to build a sustainable competitive advantage.