Strategic Management

 

It can be observed that in the last 10 years, the entry of the two powerful steel manufacturers of the world has changed the poor consequences of the steel industry. The two global giant steel manufacturers are Severstal and Evraz entered the market during the starting of the new millennium. These two companies are Russian steel manufacturers, which has exported 30 million tonnes in 2005. They brought the instant revolution in the steel industry (Daly and Zhang, 2020). Simultaneously, there are also few Chinese producers, which have fuelled up the increasing growth of the steel industry all over the globe. Within the few years of the entry in the market, the Chinese steel manufacturers have also invented a new production system and facilities from 2003 through 2005. That has increased the capacity of production by 30 per cent in a single accounting year. It can be noticed that since the 1990s, there has been an increased steel production capacity after 25 years. With the evolution of time, the production capacity of the Chinese steel manufacturing companies grew by 25% in 2006 and became the third-largest exporter of steel after Russia and Japan (Daly and Zhang, 2020).

On the other hand, it can be understood that the least positive forces for the steel producers are substitutes in the industry. This is a kind of threat to the manufacturers because it can be partially replaced by aluminium and ceramics.

Question 2

“Explain the acquisition strategies of players such as Mittal, Tata and Nucor”

It can be noticed with the evolution and advancement of the steel manufacturing industry, Mittal, Tata and Nucor are becoming the giant manufacturing corporations all around the globe. During the year 2006, the Mittal steel paid around “$35 billion” for acquiring the European steel company Arcelor (Global Steel Industry, 2020). In this manner, the company has been able to create the best steel in the world. On the other hand, Tata acquired Anglo-Dutch steel organization Corus for an amount of $13 billion. Simultaneously, Nucor has also bought several weaker steel manufacturing organizations for stabilizing the production capability of the large firms (Tale of two acquisitions, 2020).

Question 3

“In the future, what might change to make the steel industry less attractive or more attractive?”

It can be noted that in the recent times, the World Steel Association (WSO) has projected that according to the global demand of the steel, the production will hit the target of 1735 million tonnes, where all the companies will be an evidence of 1.3 per cent rise within one financial year. Alongside, the demand for steel will also grow at a rate of 1% that will hit the target of 1752 million tonnes (Global Steel Industry, 2020). In this manner, it can be expected that there will be a huge growth in the steel manufacturing industry in future years.

References

Daly, T. and Zhang, M., 2020. China 2019 Crude Steel Output Jumps 8.3%, Sets Second Straight Annual Record. [online] U.S. Available at: [Accessed 17 March 2020].

Global Steel Industry, 2020. Global Steel Industry: Challenges And Opportunities. [online] Newsroom.posco.com. Available at: [Accessed 17 March 2020].

Tale of two acquisitions, 2020. Tale Of Two Acquisitions: Mittal Steel's Acquisition Of Arcelor And Tata Steel's Acquisition Of Corus. [online] The Economic Times. Available at: [Accessed 17 March 2020].

 

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