Le groupe ArcelorMittal vs Severstal, stratégie (document en anglais)

ArcelorMittal Vs Severstal

Strategy

MBA PT2

By Louise Fourquet and Benoît Charles IBOVI

Under the supervision of Michel Rudniansky

TABLE OF CONTENT

1 GENERAL OVERVIEW 3

2 EXTERNAL ANALYZIS 4

2.1 INDIA AND CHINA THE KEY DRIVERS 4

2.2 THE COMPETITION 5

2.3 PORTER’S 5 FORCE ANALYSIS : INDIA KEY DRIVERS 6

2.3.1 Buyer’s low to moderate 6

2.3.2 Supply moderate to high 6

2.3.3 Internal rivalry 6

2.3.4 Substitutes low 6

2.3.5 Threats of new entrants 6

2.1 ARCELORMITTAL: PESTEL ANALYSIS 8

2.1.1 Political and legislative analysis 8

2.1.2 Economical analysis 8

2.1.3 Social analysis 8

2.1.4 Technical analysis 8

2.1.5 Environmental analysis 9

2.2 SWOT ANALYSIS 9

2.2.1 STRENGHT 9

2.2.2 WEAKNESS 9

2.2.3 OPPORTUNITIES 9

2.2.4 THREATS 9

3 THE M&A STRATEGY IN THE INDUSTRY 10

4 POSSIBLE EXIT STRATEGIES 11

1 INTRODUCTION

ArcelorMittal as leading company is facing challenging environment due to European crisis, downturn of steel demand in traditional market, volatility of raw material cost and so on.

In this challenging context China and India show some opportunities in term of demand, while European markets show slowdown of steel demand.

For every companies surviving in this global market, mean to seize growth opportunities and to face the threat of market (Aging population, Climate change regulation, labor law in US…), In addition the industry show that Western countries still hold strong asset (technology, business efficiency,..), the know-how, the technologies and the asset…

To face fragmentation, M&A strategies were implemented , this strategies show some limit and deserve to be adjust for coping with current state of environment and as well as the main trends.

This report diagnoses ArcelorMittal Group (by using strategic tools 5 Force Porte’s, PESTEL, SWOT) and proposes some strategic options:

 short term: relocation in emerging markets, "domestication" of industry

 Medium term: government support to go through temporary crisis (Russia, France)

 Long term: investment on integration and on green tech, to keep the business global

), apply to ArcdlorMittal case.

The last chapter will be devoted for comparing SEVERSTAL versus ARCELORMITTAL.

2 EXTERNAL ANALYZIS

2.1 INDIA AND CHINA THE KEY DRIVERS

Steel is an alloy compound iron and small amounts of carbon. Its applications cover construction, energy, shipping and automotive market. Although market and competition are globalized (since 1980) different type of environment exists.

• Rewarding one is where success is possible because it attracts foreign investment and knows rapid growth (China, Eastern Europe, Russia and South America...). India has emerged as the fourth largest producer of steel in the world and with rapid growth in foreign direct investment (FDI).

The capacity and production is set to surge higher. India's per capita steel consumption is estimated to have grown to 55 kg but still lags behind world average of 206 kg and China's 427 kg. None market is dominated by a major player. So there is as potential for investment.

• hostile one Western European, with strong competition and expensive workforce

• The emerging markets of Africa, the Middle East and Asia are the main importing markets for steel.

The major players in the industry are ArcelorMittal the largest producer. Followed by Japanese Nippon steel in second place.

2.2 THE COMPETITION

The industry was changing rapidly with the dominant steel producers based in the US, Japan and Germany now under attack from new players in South Korea, Russia and India.

The industry has experienced a cycle of global consolidation and fragmentation, and opportunistic short-term counterattack strategies

2.3 PORTER’S 5 FORCE ANALYSIS : INDIA KEY DRIVERS

The issue is to study the attractiveness of USA, China and European Market

2.3.1 Buyer’s low to moderate

 Demand is high and currently OutSpace supply

 Buyers buying in large scale possess strong negotiating power

2.3.2 Supply moderate to high

 The cooking coal supplier have considerable power

 Sufficient iron ore is available but the price is set according to international benchmark

2.3.3 Internal rivalry

 Currently

...