As the research confirms, CEMEX has been one of the leading players in the market. The company has been working in an efficient manner and has been able to attain profitable results in the recent times. As the case confirms, CEMEX and Rinker are planning to form a merger and acquisition therefore, the different aspects of the study need to be considered before making the final decision (Venkataraman, pp. 23).
In this regard, CEMEX being the leader and a larger firm, it has to ensure that the acquisition shall be a beneficial one for the company and that Rinker shall be able to sustain the standards and performance of the company in the most efficient manner.
In this regard, Rinker Group shall offer the increased amount of sustainability and exposure within the United States market which has actually been experiencing a decline and a downturn in the construction and the housing sectors.
This downturn within the country has had adverse effect on Rinker US operations making it actually quite difficult to attain the goal of decreasing the acquisition related leverage. Therefore, the decision has to be made in this regard where a win-win situation has to be identified for both the parties (Lloret, pp. 425).
Question 02: What is CEMEX’s formulaic process for executing an acquisition? How would that work in the Rinker proposed deal?The formulaic process that is used by CEMEX for the execution of the acquisition shall requite the M&A strategy development. The idea of this concept is to identify the ways and methods of integrating the concept of execution and strategic decision making where the decision making shall remain with CEMEX because it being the market leader and has a better reputation in the market. The overall situation therefore needs to be in the direction of making sure that the deal proposed by Rinker Group is accepted as per the terms and conditions of CEMEX (Vargas-Hernández, pp. 10).
Question 03: What negotiation issues (including valuation issues) may arise in establishing the final price?As the research confirms, if CEMEX does look to shed off the physical assets on the ground it is rather unlikely that the company will choose to do so within the US market being a major player there. It is number one organization in Mexico and third in the United States and also well positioned in Central American region (Vargas-Hernández, pp. 10).
Since CEMEX has more than 43% of its total capacity outside US therefore the price should be low to gauge in the market attention and to bring in more customers. The company has quite a few cement plants within the EU that are working quite efficiently. The result therefore shall be to integrate a price that is efficient and nominal at the same time (Lloret, pp. 422).
Question 04: What synergies and merger issues are likely to arise and where will the synergies come from?The major merger issue that shall become with the current merger is that the two companies are quite contrasting to one another. The two firms operate in different markets and have different customer base and responses. In such a situation, the most evident difference of the merger shall be the customer understanding and market awareness (Hernández, pp. 02).
The organizations shall need to understand the cultural differences also which are likely to be more evident and prominent since the customers are different and quite unique. Along with this, the synergies that shall come along with the two companies working together is that the management will have the opportunity to work with low cost product manufacturing cost and it shall help the successful integration of the customers in the local market in the most effective manner (Venkataraman, pp. 27).
Question 05: What type of post – merger integration issues do you expect? How would you plan to mitigate them?The major issue that shall be faced after the deal is locked and is final is the fact that the two managements are entirely different and have different thought process. Therefore, the major issue after the post-merger will be the cultural differences between the two companies.
Along with this, another obstacle of the post-merger is the fact that the sales of the two companies are entirely different to one another. In order to sustain in the market the organizations shall require competency and understand ability to interact with clients and other stakeholders (Hernández, pp. 02).
To mitigate the effect, the most important recommendation for the two companies shall be to hire trainers from either side who can blend in the differences between the two companies or makes they interact with one another (Venkataraman, 21).
Finally, it can be said that both companies need to take up certain departments and work accordingly. This will help in better decision making and execution of strategies.
Question 06: Would you recommend this deal?I will recommend the management of CEMEX to actually accept the deal. This will help the organization to help in better execution of strategies and it shall help increase the profit margins of the two companies to a large extent. Therefore, the recommended solution is to go for the deal (Lloret, pp. 420).
ReferencesVenkataraman, S., et al. “Taking a Mexican Company Global—The CEMEX Way.” Darden Business Publishing Cases(2017): 1-27.
Lloret, Antonio. “Modeling corporate sustainability strategy.” Journal of Business Research 69.2 (2016): 418-425.
Hernández, J. G. V. “Analysis of Cemex’s Strategies as Determinants for Market Power.” J Glob Econ 3.133 (2015): 2.
Vargas-Hernández, José, José Satsumi López-Morales, and Cinthia Zuleima Pavón Villegas. “Analysis of CEMEX’s Strategies as Determinants for Market Power.” (2015).
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