Case Exercises-Strategic Management

2.The Cemex Strategy

The problem with ready-mix concrete is that it's highly perishable; it begins to set when a truck is loaded, and the producer has only limited time to get it to its destination. In Mexico traffic, weather, and unpredictable construction labor make it incredibly hard to plan deliveries accurately. So a construction contractor might have concrete ready for delivery when the site isn't ready or, worse, expensive work crews at a standstill because the concrete hasn't arrived.

Cemex sold concrete by the cubic yard. But its customers tightly considered concrete a commodity product. What they value is that the right amount of concrete delivered just when it is needed. Realizing this, Cemex staffers studied how FedEx, pizza delivery companies, and ambulance squads worked. Eventually, they developed digital systems that allowed Cemex to adjust, in real time, where trucks were bound. Cemex then oriented its information, logistics, and delivery infrastructure in alignment with that, creating far-reaching changes in the company .They learned to optimize delivery patterns across a whole region; customers who unexpectedly needed concrete could be served, often by shipments that had unexpectedly been postponed by other customers.

Cemex can now deliver concrete within hours -- sometimes even minutes. It can accept unlimited change orders. It can help customers anticipate demand and cash-flow requirements. Cemex, once a regional company operating in Mexico, is now the third-largest ready-mix concrete business in the world, with plans to capture the number two spot.

3.FineCatering's Strategy

FineCatering is a highly profitable international food-service company. It is able to obtain premium prices from corporate and institutional clients by offering a level of customized service and responsiveness that competitors cannot match. The company seeks out only those clients that want superior food service and are willing to pay for it. For example, once domestic airlines became less interested in distinguishing themselves through their in-flight meals, FineCatering dropped that segment.

FineCatering uses its huge scale of operations and presence in multiple market segments (business, educational, healthcare, and correctional-system food service) to achieve a sizeable cost advantage in food purchases - an advantage that competitors cannot duplicate.