Reynaldo Marasigan IT-ETHICS February 19, 2008
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CEMEX.doc
CEMEX INNOVATION IN HOUSING FOR THE POOR
- How did CEMEX fundamentally change the way it conducted its business?
Ø The company strategy emphasized improving profitability through efficient operations. The company also shifter from selling products to selling complete solutions. With this new strategy CEMEX has established a very strong brand and has managed to translate it into extraordinary profits from a commodity-driven business.
- How does information systems contribute to CEMEX' competitive advantage?
Ø The company has invested considerably in information technology over the years to boost productively and manage its operations more efficiently. CEMEX takes pride in its operations and was recently the winner of the CIO-100 from the IDG’s CIO magazine. The company has gained a significant competitive cost advantage over its competitors by setting up an excellent distribution infrastructure and centralized, computerized delivery network in which every moment of every truck is monitored in real time, enabling on-time delivery of cement and ready-mix to customers. The operation in Guadalajara boasts a 97.63% on-time delivery of cement.
- What is social capital? How does CEMEX build social capital?
Ø Social capital means…. CEMEX build its social capital by means of savings.
- How are is the low-income savings characteristics of Mexican society characterized?
Ø Low-income families in Mexico follow a different savings method from that of middle- and upper-income families. Because low-income families don’t receive regular pay checks and don’t receive any government subsidies or grants, they don’t have access to banks and credit. Within a community, neighbours, families, and friends get together and form tandas or pools. The members of the tanda pool in money as and when they receive paychecks and if they have any money left to save.
- How are the entrepreneurial characteristics of the women in Mexican society tied to the CEMEX BOP strategy?
Ø Women are the key drivers of savings in families. In Mexican society, women are very entrepreneurial in nature, and they very actively participate in the tanda system. Women are responsible for any savings in the family. Research conducted by the Patrimonio Hoy team revealed that 70% of those women who were saving were saving money in the tanda system to construct homes for their families.
- What did the CEMEX initial market research in Guadalajara discover?
Ø They realized that financing was the most important and most difficult challenge to overcome for low-income customers. Unless the poor obtain access to credit, it would be difficult to sell the idea of constructing a complete house in the near future. The Second challenge was most families employed local semiskilled or unskilled masons who built rooms without planning. The lack of technical expertise resulted in a lot of raw material waste.
- What is the role of socios in the Patrimonio Hoy system? How important are they in the making the system successful/ y?
Ø Socios are the one who will build the trust with the people. Socios are the actual customers who enrol in Patrimonio Hoy. The Socios get together and form a group, restricted to three people. The reason for such a small group size is that it is easier to enforce payment discipline in a smaller group, and the group tends to form stronger relationships to help each other out during emergency.
- Why do you think it was important for CEMEX to position itself as a complete solutions provider vs. just another product provider?
Ø Because this package of product of CEMEX can give them higher revenue and customers also CEMEX can satisfy more their customers by giving the complete solutions. It will also enable them in sustainable growth strategy and it innovation. Patrimonio Holy System can give customers service as what they want without the hassle of changing suppliers.
- How is the social capital of Patrimonio Hoy promoters related to economic capital?
Ø Patrimonies make sure that their services and products are consumable by the low income market. Their products has the same prices whether of use the cost effective solution to customers.
- What, in brief, is the value of Patrimonio Hoy to a) its promoter b) its socios & partners c) its suppliers and d) its distributors?
Ø a) Patrimonio Hoy offers small-scale promotional events such as fee waiver for the first instalment or a few instalments for new enrolees, a raffle event wherein a socio relieves a room essential for free and free “back-to-school” items for new enrolees.
b.) The socios can easily collect payments
c.) When the program originally started only one-tenth of the distributors qualified under the rigorous selection process.
d.) They took care of their suppliers due to only small number are capable for the supply.
- What is patrimonio? Why is this important for the marketing efforts for the Patrimonio Hoy system?
Ø The objective of Patrimonio Hoy is not only to serve a social cause, but also make it a profitable, self sustainable business. Patrimonio Hoy also recognizes that volume is very important for it to be a success and hence has based revenues on a per transaction basis.
- How can Patrimonio Hoy offer a slightly higher price than its competitors and maintain a competitive edge?
Ø The Patrimonio offers higher price because it gives the same value like other same products. They conduct a study that publishes prices among competitors and calcu;lates an avenge price for each calendar month. The socio sign up in a particular month enjoy the same prices through 70-week payment cycle.
- How does the concept of freezing prices encourage socios to do more business for Patrimonio Hoy?
Ø It became helpful and can attract more socios. Then the distributors can have more chance to accommodate more customers And gain more profit.
- Intuitively, doing with business with a low income group would be riskier than traditional lending models but it is profitable for Patrimonio Hoy. Why?
Ø Yes it is indeed, that this low income group as market is a risk, but the number of this low income group is high. The fact that they still have income and at the same time they can be able to acquire such good is a strong point on making them as primary market. Also the huge rate of success can be attributed ti three important factors of the low income markets this are group commitment, social capital and penalty fee structure.
- What is the role of peer/community pressure in the Patrimonio Hoy lending model?
Ø When a group of 3 socios walks into a cell and completes an application, the only commitment they are expected to make is the regular payment of 360 pesos per week per group on time. If for any reason one of the team members doesn’t turn in his or her payment portion on time, the group as a whole will pay a late fee of an additional 50% per late socio.
- How has Patrimonio Hoy changed the consumer behavior in Mexico?
Ø The consumer change their mindset that they cannot acquire this kind of services but their income, yet as what CEMEX do and show them how will it works then the customers can be given such ability and opportunity to buy.
- What are the challenges of the Patrimonio Hoy program?
Ø The biggest challenge of Patrimonio Hoy is to retain those customers for a longer period of time and motivate them to return for additional rooms or other expansions. In many cases, the socios cannot afford weekly payments for raw materials and mason fee for constructions at the same time.
- What does Construmex take advantage of the existing remittance market between U.S.A and Mexico?
Ø Patrimonio Hoy has helped CEMEX gain a good understanding of the low income population. It has helped CEMX clear the misconception it originally had about the por, and ralize they could indeed form a good and profitable segment.
- 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?
Ø Philippines has this major number of bottom of the pyramid sectors. Almost more than half of the population are low income sector thus the Mexican market and is also the same as Philippine market.
- 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)
Ø Customer Relation Management System
Ø Human resource Management System
Ø Accounting System
Ø Sales and Inventory System
Ø Requisition and retailing system
Ø Mobile transaction
Ø Document Management System.
Ø E-commerce
Ø Enterprise Management System
Ø Transaction Processing System
Ø Decision Support System
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