The Steel War: Mittal vs. Arcelor SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of The Steel War: Mittal vs. Arcelor
This case describes the hostile takeover bid by Mittal steel for Arcelor steel in what turned out to be one of the most acrimonious takeovers in European history. The battle began in January 2006 and lasted six months. From the outset, Arcelor's management resisted Mittal's deal using every possible defense involving politicians, bankers and public relations advisors, among others. There was even a proposed merger with a Russian company in a desperate effort to avoid the hostile takeover bid. Finally, on 25 June 2006, after the fierce battle that included allegations of racism and much animosity, Arcelor heeded its shareholders' wishes and accepted the bid. The initial offer was 18.6 billion and the final price paid by Mittal was 26.9 billion. During the six months, Mittal's share price had increased by almost 25%, with Arcelor's more than doubling.
Swot Analysis of "The Steel War: Mittal vs. Arcelor" written by Anne-Marie Carrick, Ingo Walter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arcelor Mittal facing as an external strategic factors. Some of the topics covered in The Steel War: Mittal vs. Arcelor case study are - Strategic Management Strategies, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The Steel War: Mittal vs. Arcelor casestudy better are - – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, increasing energy prices, technology disruption, talent flight as more people leaving formal jobs, geopolitical disruptions,
wage bills are increasing, there is backlash against globalization, etc
Introduction to SWOT Analysis of The Steel War: Mittal vs. Arcelor
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Steel War: Mittal vs. Arcelor case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arcelor Mittal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arcelor Mittal 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 Steel War: Mittal vs. Arcelor can be done for the following purposes –
1. Strategic planning using facts provided in The Steel War: Mittal vs. Arcelor case study
2. Improving business portfolio management of Arcelor Mittal
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Arcelor Mittal
Strengths The Steel War: Mittal vs. Arcelor | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arcelor Mittal in The Steel War: Mittal vs. Arcelor Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Arcelor Mittal 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.
Organizational Resilience of Arcelor Mittal
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arcelor Mittal does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Arcelor Mittal is one of the most innovative firm in sector. Manager in The Steel War: Mittal vs. Arcelor Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the The Steel War: Mittal vs. Arcelor 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
– Arcelor Mittal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arcelor Mittal 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.
Training and development
– Arcelor Mittal has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Steel War: Mittal vs. Arcelor 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.
Analytics focus
– Arcelor Mittal 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 Anne-Marie Carrick, Ingo Walter 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.
Highly skilled collaborators
– Arcelor Mittal 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 Steel War: Mittal vs. Arcelor HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Arcelor Mittal 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.
Effective Research and Development (R&D)
– Arcelor Mittal 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 Steel War: Mittal vs. Arcelor - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Arcelor Mittal 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 Arcelor Mittal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Arcelor Mittal in the sector have low bargaining power. The Steel War: Mittal vs. Arcelor has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arcelor Mittal to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses The Steel War: Mittal vs. Arcelor | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Steel War: Mittal vs. Arcelor are -
Increasing silos among functional specialists
– The organizational structure of Arcelor Mittal is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Arcelor Mittal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arcelor Mittal to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Anne-Marie Carrick, Ingo Walter suggests that, Arcelor Mittal 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.
High operating costs
– Compare to the competitors, firm in the HBR case study The Steel War: Mittal vs. Arcelor 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 Arcelor Mittal 's lucrative customers.
Need for greater diversity
– Arcelor Mittal 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.
High cash cycle compare to competitors
Arcelor Mittal 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Steel War: Mittal vs. Arcelor 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 Arcelor Mittal has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study The Steel War: Mittal vs. Arcelor, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arcelor Mittal is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Steel War: Mittal vs. Arcelor can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study The Steel War: Mittal vs. Arcelor 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 Steel War: Mittal vs. Arcelor can leverage the sales team experience to cultivate customer relationships as Arcelor Mittal is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Steel War: Mittal vs. Arcelor, it seems that the employees of Arcelor Mittal 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.
Lack of clear differentiation of Arcelor Mittal products
– To increase the profitability and margins on the products, Arcelor Mittal needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities The Steel War: Mittal vs. Arcelor | 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 Steel War: Mittal vs. Arcelor are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Arcelor Mittal 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.
Building a culture of innovation
– managers at Arcelor Mittal 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 Finance & Accounting segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Arcelor Mittal can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Arcelor Mittal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Arcelor Mittal 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 Steel War: Mittal vs. Arcelor - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arcelor Mittal 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. Arcelor Mittal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Arcelor Mittal 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.
Leveraging digital technologies
– Arcelor Mittal 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Arcelor Mittal 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. Arcelor Mittal 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.
Buying journey improvements
– Arcelor Mittal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Steel War: Mittal vs. Arcelor 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.
Creating value in data economy
– The success of analytics program of Arcelor Mittal has opened avenues for new revenue streams for the organization in the industry. This can help Arcelor Mittal to build a more holistic ecosystem as suggested in the The Steel War: Mittal vs. Arcelor case study. Arcelor Mittal can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Arcelor Mittal is facing challenges because of the dominance of functional experts in the organization. The Steel War: Mittal vs. Arcelor 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Arcelor Mittal 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 Steel War: Mittal vs. Arcelor, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats The Steel War: Mittal vs. Arcelor External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Steel War: Mittal vs. Arcelor are -
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 Steel War: Mittal vs. Arcelor, Arcelor Mittal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arcelor Mittal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Arcelor Mittal 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Arcelor Mittal can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arcelor Mittal 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 Steel War: Mittal vs. Arcelor .
Environmental challenges
– Arcelor Mittal 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. Arcelor Mittal can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Arcelor Mittal in the Finance & Accounting 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 Arcelor Mittal business can come under increasing regulations regarding data privacy, data security, etc.
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. Arcelor Mittal needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Arcelor Mittal in the Finance & Accounting industry. The Finance & Accounting 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.
Technology acceleration in Forth Industrial Revolution
– Arcelor Mittal has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Arcelor Mittal needs to keep up with the evolution of technology in the Finance & Accounting 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.
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.
Weighted SWOT Analysis of The Steel War: Mittal vs. Arcelor 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 Steel War: Mittal vs. Arcelor 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 Steel War: Mittal vs. Arcelor 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 Steel War: Mittal vs. Arcelor 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 Steel War: Mittal vs. Arcelor 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 Arcelor Mittal needs to make to build a sustainable competitive advantage.
