Other people’s answer, please give me a response according the answer. Just one paragraph.
a. Which theoretical explanation, or explanations, of FDI best explains CEMEX’s FDI?
CEMEX’s utilized acquisitions as their FDI form. The textbook notes that “Cemex believed that it could create significant value by acquiring inefficient cement companies in other markets and transferring it’s skills in customer service, marketing, information technology, and production management to those units.” The textbook goes on to say that Cemex worked to acquire established cement makers in other countries. The very definition of an acquisition approach to FDI is buying up existing companies in a new market, which is what CEMEX did.
CEMEX used the internalization theory for FDI. They primarily did so because of their perceived strength of management, marketing, production and IT as it relates to production. CEMEX believed they were a leader in providing low cost cement with high rates of customer service as a result of their radically different IT system that matched consumer demand and production. By applying the knowledge and established best practices they possessed as a company to a new company in a foreign market, they achieved profit. In addition, other FDI strategies, like exporting and licensing, did not align with CEMEX business model or corporate culture.