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 - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, wage bills are increasing, supply chains are disrupted by pandemic , increasing energy prices, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, 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 -
Successful track record of launching new products
– Egyptian Cemex has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Egyptian Cemex has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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 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.
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.
Highly skilled collaborators
– Egyptian Cemex has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in CEMEX: Rewarding the Egyptian Retailers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Strong track record of project management
– Egyptian Cemex is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Egyptian Cemex is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by F. Asis Martinez-Jerez, Joshua Bellin, Carole A. Winkler can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
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.
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.
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.
Interest costs
– Compare to the competition, Egyptian Cemex has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Egyptian Cemex has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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.
Aligning sales with marketing
– It come across in the case study CEMEX: Rewarding the Egyptian Retailers that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case CEMEX: Rewarding the Egyptian Retailers can leverage the sales team experience to cultivate customer relationships as Egyptian Cemex is planning to shift buying processes online.
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.
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.
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 existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Egyptian Cemex supply chain. Even after few cautionary changes mentioned in the HBR case study - CEMEX: Rewarding the Egyptian Retailers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Egyptian Cemex vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Egyptian Cemex has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers 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 -
Buying journey improvements
– Egyptian Cemex can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CEMEX: Rewarding the Egyptian Retailers suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Egyptian Cemex to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Egyptian Cemex can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Egyptian Cemex can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Egyptian Cemex to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Egyptian Cemex to hire the very best people irrespective of their geographical location.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Egyptian Cemex in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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.
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 -
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Egyptian Cemex needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Egyptian Cemex.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CEMEX: Rewarding the Egyptian Retailers, Egyptian Cemex may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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.
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.
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.
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 .
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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Egyptian Cemex in the Sales & Marketing sector and impact the bottomline of the organization.
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.
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.
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.