The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy
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 (B) - Industrial Strategy" 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, increasing transportation and logistics costs, geopolitical disruptions, increasing commodity prices, wage bills are increasing,
increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy
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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy | 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 (B) - Industrial Strategy Harvard Business Review case study are -
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.
Ability to lead change in Strategy & Execution field
– Steel Takeover is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Steel Takeover in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Steel Takeover is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Martin Flash, Story Jonathan, James Burnham can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Steel Takeover is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Steel Takeover is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 (B) - Industrial Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Steel Takeover has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Steel Takeover has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy 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.
Cross disciplinary teams
– Horizontal connected teams at the Steel Takeover are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
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.
Weaknesses The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy | 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 (B) - Industrial Strategy are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy, is just above the industry average. Steel Takeover needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Steel Takeover has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Steel Takeover even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Steel Takeover supply chain. Even after few cautionary changes mentioned in the HBR case study - The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Steel Takeover vulnerable to further global disruptions in South East Asia.
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.
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 (B) - Industrial Strategy, 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.
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.
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 cash cycle compare to competitors
Steel Takeover has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
Slow to strategic competitive environment developments
– As The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy HBR case study mentions - Steel Takeover takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy 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 (B) - Industrial Strategy can leverage the sales team experience to cultivate customer relationships as Steel Takeover is planning to shift buying processes online.
Opportunities The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy | 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 (B) - Industrial Strategy are -
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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Steel Takeover can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
Using analytics as competitive advantage
– Steel Takeover has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Steel Takeover to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Loyalty marketing
– Steel Takeover has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Steel Takeover to increase its market reach. Steel Takeover will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Steel Takeover can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy 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 (B) - Industrial Strategy are -
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.
Increasing wage structure of Steel Takeover
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Steel Takeover.
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.
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.
Shortening product life cycle
– it is one of the major threat that Steel Takeover is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Steel Takeover has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Steel Takeover needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
Stagnating economy with rate increase
– Steel Takeover can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Steel Takeover demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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 (B) - Industrial Strategy, 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 .
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.
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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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 (B) - Industrial Strategy 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.
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