Daniel Josef M. Aloroy                                                                                                2.19.08

ITETHIC                                                                                                                       O0B

 

Case Study on CEMEX: Innovation in Housing for the Poor

 

How did CEMEX fundamentally change the way it conducted its business?

 

            CEMEX changes the way it conducted its business through efficient operations. They shifted from selling products to selling complete solutions. They realized that they can generate more sales from the informal segment of their market and that is the do-it-yourself constructors who want to build their houses by themselves.

 

How does information systems contribute to CEMEX' competitive advantage?

 

            Information systems help CEMEX achieve their competitive advantage by its distribution infrastructure and centralized, computerized delivery network where the movements of the truck is monitored real time that enables the delivery time of cement and ready-mix to customers.

 

What is social capital? How does CEMEX build social capital?

 

            Social capital is the trust, reputation, and participation in the community. CEMEX engaged in housing loans and projects and built kiosks that enabled them to develop their relationship to the public closer.

 

How are the low-income savings characteristics of Mexican society characterized?

 

            The low-savings characteristics of Mexican society are characterized as different one from that of the middle- and upper-income families. This segment of the Mexican society form tandas who pool in money within their group as soon as they receive their paycheck. They give their shares of money once a week and utilize them in times of emergencies.

 

How are the enterpreneurial characteristics of the women in Mexican society tied to the CEMEX BOP strategy?

 

            Women in all over the world are very entrepreneurial in nature. They are the ones who usually save up the money they receive from the men. They should think of innovative ways on how to spend their money wisely for their needs and wants. 70 percent of the women in Mexican society save up for the construction of the house for their families. This is fit for the program of CEMEX, Patrimonio Hoy.

 

What did the CEMEX initial market research in Guadalajara discover?

 

            The team who studied the city of Guadalajara during the three-month period discovered that it was difficult for the people there to have a financial support because they are unable to access credit. Another, the families who had their houses built in Guadalajara hired unskilled masons that caused them to order the wrong amount of cement and other materials for construction.

 

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 a group, restricted to three people, making it easier to collect money and practice discipline among them. The socios help promote the system by their strong relationship with one another.

 

Why do you think it was important for CEMEX to position itself as a complete solutions provider vs. just another product provider?

 

            For me, it was important for CEMEX to position itself as a complete solutions provider instead of just product provider because in that way they can manifest social capital to their customers and make their interaction with them more powerful because of their project of loaning that enables the customers to develop savings practice.

 

How is the social capital of Patrimonio Hoy promoters related to economic capital?

 

            The social capital of Patrimonio Hoy promoters coincides with the distinct power and natural characteristics of women to be prudent, thrifty, and creative money spenders. They are the ones responsible for promoting the Patrimonio Hoy by converting their social capital into money.

 

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 – it enables them to earn more as they encourage more socios to enrol in the program

 

Socios/partners – it offers them better and more pleasant services that would be utilized by them as soon as possible

 

Suppliers – more sales for them because of high demands for materials in CEMEX

 

Distributors – they are engaged in the push-pull strategy for the cement sales

 

What is patrimonio? Why is this important for the marketing efforts for the Patrimonio Hoy system?

 

            For Mexicans, they believe in leaving something for their sons and the succeeding generations. That is what they call patrimonio. The idea of “save today” for their next generation motivates the people to enrol in the program since it would be beneficial not only for them but also to their children to have a decent place to live in.

 

How can Patrimonio Hoy offer a slightly higher price than its competitors and maintain a competitive edge?

 

            Through the social capital that they have already established beforehand, customers and distributors entrust Patriomonio Hoy their cement raw materials. Whatever price they have agreed on a certain item, that will be its cost all throughout the 70-week period of payments.

 

How does the concept of freezing prices encourage socios to do more business for Patrimonio Hoy?

 

            With the prices freezing, they are assured that they will be charged for the same price all throughout the payment cycle.

 

Intuitively, doing with business with a low income group would be riskier than traditional lending models but it is profitable for Patrimonio Hoy. Why?

 

            There are some factors that help Patrimonio Hoy earn instead of lose some in this case because, for example, a member of a socio had paid late for a certain week, they are all charged half of the actual payment per week. Aside from that, the deliveries will also be made one week later. It only shows that Patrimonio Hoy lives up to its commitment.

 

What is the role of peer/community pressure in the Patrimonio Hoy lending model?

 

            Its role can be seen in the word-of-mouth mechanism of spreading the word about the Patrimonio Hoy. If one experienced a feeling of satisfaction with them, he tends to tell it to his peers in the community.

 

How has Patrimonio Hoy changed the consumer behavior in Mexico?

 

            Patrimonio Hoy changed the way people conceive of business, money, trust, needs, and credibility. It helped consumers to think about alternatives or even the best choice for their short-term and long-term goals.

 

What are the challenges of the Patrimonio Hoy program?

 

            Some challenges of the Patrimonio Hoy program include customer retention because of the struggle in payment. Patrimonio Hoy was not able to make those socios retain and have them return for additional rooms. Socios cannot afford to pay the weekly payments.

 

What does Construmex take advantage of the existing remittance market between U.S.A and Mexico?

 

            Construmex take advantage by using the channel between Construmex and CEMEX. It is much safer and the flat rates are higher than any other remittance centers.

 

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?

 

            Mexican and Philippine market are common in their citizens’ classes. Some people are really having a hard time to find an organization which could offer loans to people who belong below the poverty line. Most of the Filipino citizens don’t have their respective decent residences.

 

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)

 

Inventory System

Human Resource Information System

Fleet Management System

Customer Relationship Management System

Supply Chain Management System

Integrated Website

Information Broker

Accounting System

Sales System

Document Management System

Mobile Ticketing System

 

Source: The Fortune At The Bottom Of The Pyramid(Prahalad, 2004)