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 commodity prices, there is increasing trade war between United States & China, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google,
wage bills are increasing, increasing energy prices, 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 -
Operational resilience
– The operational resilience strategy in the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy 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.
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.
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 (B) - Industrial Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Diverse revenue streams
– Steel Takeover is present in almost all the verticals within the industry. This has provided firm in The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
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.
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 (B) - Industrial Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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 -
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.
Need for greater diversity
– Steel Takeover has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Steel Takeover has relatively successful track record of launching new products.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy, in the dynamic environment Steel Takeover has struggled to respond to the nimble upstart competition. Steel Takeover has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
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.
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 -
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 (B) - Industrial Strategy 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Steel Takeover to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Steel Takeover to hire the very best people irrespective of their geographical location.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Steel Takeover can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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.
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.
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.
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.
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 -
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.
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 (B) - Industrial Strategy .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Steel Takeover in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Steel Takeover needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 .
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.
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.
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.
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.
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.
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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