Politics of Indonesia

Cemex has a stronger preference for acquisition over greenfield ventures as an entry mode. Why? Cemex believed that it could create significant value by acquiring inefficient cement companies in other markets and transferring it skills in customer service marketing information and technology and production management to those units . Also they want to be a unique company in worlwide.

Therefore they need to purchase all the competitor companies and converted their sysytem to them. d.Why do you think that Cemex decided to exit Indonesia after failing to gain majority control of Semen Gresik? Why is majority control is so important for Cemex? Cemex entered Indonesia in 1998 as part of IMF sponsored privazation program by purchasing 25 stake in goverment owned Indonesia cement maker Semen Gresik. At the same time, Indoneisa promised Cemex to acquire majority stake in 2001. However the country never granted the permission. Indonesia worried about local assets were going to foreign hands.

Therefore, they didnt keep their promise. So, Cemex decided to drawback from Indonesiao. Because they want to capture all Cemex companies around the world. They dont want to purchase some stake from other companies. e. Why do you think that politicians in Indonesia tried to block Cemex attemp to gain majaority control over Semen Gresik. Do you think that Indonesia’s best interest were served by limiting Cemex FDI in the country? Cemex bought a 25.5% stake in Semen Gresik and the right to take majority control of the company by 2001.

But the Indonesian government — which owns 51% of Semen Gresik — has refused to allow Cemex to complete the deal and take majority control of the firm due to lobbying and threats of social unrest spread by local politicians who oppose Cemex’s plans. Cemex had earlier announced plans to pursue an international arbitration claim against Indonesia. Such a claim could force Indonesia to pay Cemex as much as $500 million in compensation and damages because of the government’s failure to honou.