The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

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

Topics :: Strategy & Execution

Tags :: Financial markets, Government, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing household debt because of falling income levels, wage bills are increasing, cloud computing is disrupting traditional business models, increasing energy prices, increasing transportation and logistics costs, geopolitical disruptions, talent flight as more people leaving formal jobs, etc

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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.

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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

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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 -

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.

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.

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.

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.

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.

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.

High brand equity

– Steel Takeover has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Steel Takeover to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

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.

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.

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.

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.

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.

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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 -

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.

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.

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.

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.

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.

High operating costs

– Compare to the competitors, firm in the HBR case study The Takeover of Arcelor by Mittal Steel: Change in a Mature Global Industry (B) - Industrial Strategy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Steel Takeover 's lucrative customers.

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 (B) - Industrial Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

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.

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.

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.

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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 -

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.

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 (B) - Industrial Strategy case study. Steel Takeover can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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.

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.

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.

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.

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.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Steel Takeover to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

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.

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.

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.

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.

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.

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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 -

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.

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.

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.

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.

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.

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 .

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.

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.

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.

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.

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.

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.

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.

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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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