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The theory that best explains Cemex's foreign direct investment (FDI) activity is that of internalization due to limitations of licensing or also known as the market imperfection approach. Cemex wanted to expand horizontally because it wanted to reduce its reliance on its home market and provide some stability in the demand for their product.
Also, they saw opportunities abroad and it could provide their service, which required building very personal relationships with the distributors and the builders themselves. Lastly they had spent a lot of time working on their information technology system that allowed them to control their supply and it was part of their competitive advantage. Due to their unique business model, they would not be able to get the same value by licensing their business thus they had to internalize the business abroad and directly set up business abroad.
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