The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A)
There are two cases. Both concern the six-month battle in 2006 to create the steel group, Arcelor Mittal, by far the largest steel company in the world, combining as it did the two largest companies. The takeover was of interest because it was the focus of three bitter debates: shareholder interests versus stakeholder interests, European champions versus global champions and the merits of either, and financial strategy versus industrial strategy The first case concentrates essentially on the political, financial and environmental issues (all in the wide sense) of the takeover. The second case looks more deeply at the specifically steel (and hence industrial) issues.
Authors :: Martin Flash, Story Jonathan, James Burnham
Swot Analysis of "The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A)" written by Martin Flash, Story Jonathan, James Burnham includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Steel Takeover facing as an external strategic factors. Some of the topics covered in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) case study are - Strategic Management Strategies, Financial markets, Government and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) casestudy better are - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, technology disruption,
there is backlash against globalization, increasing energy prices, etc
Introduction to SWOT Analysis of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Steel Takeover, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Steel Takeover operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) can be done for the following purposes –
1. Strategic planning using facts provided in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) case study
2. Improving business portfolio management of Steel Takeover
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Steel Takeover
Strengths The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Steel Takeover in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Steel Takeover digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Steel Takeover has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Steel Takeover in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Steel Takeover has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Steel Takeover is one of the leading recruiters in the industry. Managers in the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Steel Takeover is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Steel Takeover has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Steel Takeover has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Steel Takeover in the sector have low bargaining power. The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Steel Takeover to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Steel Takeover has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) firm has clearly differentiated products in the market place. This has enabled Steel Takeover to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Steel Takeover to invest into research and development (R&D) and innovation.
Innovation driven organization
– Steel Takeover is one of the most innovative firm in sector. Manager in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Steel Takeover
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Steel Takeover does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) are -
Skills based hiring
– The stress on hiring functional specialists at Steel Takeover has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Steel Takeover, firm in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Steel Takeover is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Steel Takeover has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Steel Takeover products
– To increase the profitability and margins on the products, Steel Takeover needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Steel Takeover is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Steel Takeover needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Steel Takeover to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Martin Flash, Story Jonathan, James Burnham suggests that, Steel Takeover is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Capital Spending Reduction
– Even during the low interest decade, Steel Takeover has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) can leverage the sales team experience to cultivate customer relationships as Steel Takeover is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Steel Takeover needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A), it seems that the employees of Steel Takeover don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Steel Takeover in the consumer business. Now Steel Takeover can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Steel Takeover can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Steel Takeover can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Steel Takeover can use these opportunities to build new business models that can help the communities that Steel Takeover operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Steel Takeover can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Steel Takeover can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Steel Takeover can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Steel Takeover can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Steel Takeover in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Buying journey improvements
– Steel Takeover can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Steel Takeover can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Steel Takeover is facing challenges because of the dominance of functional experts in the organization. The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Steel Takeover has opened avenues for new revenue streams for the organization in the industry. This can help Steel Takeover to build a more holistic ecosystem as suggested in the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) case study. Steel Takeover can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Steel Takeover can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) are -
Environmental challenges
– Steel Takeover needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Steel Takeover can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Steel Takeover can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Steel Takeover needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A), Steel Takeover may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Steel Takeover.
High dependence on third party suppliers
– Steel Takeover high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Steel Takeover will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Steel Takeover can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Steel Takeover in the Strategy & Execution sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Steel Takeover business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Steel Takeover with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Steel Takeover needs to make to build a sustainable competitive advantage.
