XLRI
Mittal Steel in 2006: Changing the Global Steel Game
Word Count: 800
All the M&A activities were based more or less on the same strategic
principles. They looked for distressed steelmakers at diversified geographical
locations for acquisitions. They employed a team of experts who would travelling
to different locations and impart the knowledge and best practices followed in
one location to other like cost
cut measures and marketing
methods. The principal focus in
the deal making and turnaround
stages fell on one-time value
creation principally by importing
modern
management
techniques
into
previously
inefficient state-run mills. Mittal
Steel
gave
significant
importance
to
knowledge
sharing programme, technology
expertise and encouragement of
talent at each level of the
organisation. One such example
is
Knowledge
Integration
Program (KIP), an early Mittal
initiative to keep stirring the
whole organization. The KIP
involved twice-yearly meetings
in which (operating and staff) functional representatives from all Mittal Steel
plants would meet for 24 days to review performance against targets, highlight
accomplishments and setbacks, discuss technical issues of common interest,
update each other on developments in their respective areas, and jointly commit
to future targets44 The venue would rotate among the various plants, and the
agenda was set in consultation with the functional heads. Apart from being an
informational forum, the KIP meetings facilitated the creation and nurturing of
interpersonal networks. Mittal steel enjoys a global workforce with good blend of
cultural mix, purchasing power and multiple sources of revenue to mitigate risks.
Mittal Steel also eyed the organisation run by government for acquisitions to
minimize opposition and garner political support. One such examples is
acquisition of Kryvorizhstal which was bought from Ukraine government.
XLRI
Mittal Steel in 2006: Changing the Global Steel Game
Word Count: 800
Threat:
It induces complexity, duplication of people, processes and technology. Besides,
cultural differences might create failure if not managed properly. It will be subject
to political, social and legal uncertainties in some of the developing countries in
which it will operate. Any disruption or volatility in the political or social
XLRI
Mittal Steel in 2006: Changing the Global Steel Game
Word Count: 800
environment in those countries could have a material adverse effect on
ArcelorMittal's business, financial condition, results of operations, etc.
Conclusion:
In summary, this acquisition provides Mittal with several strategic advantages
delivering a leading position in high-end segments in North America, with strong
R&D capabilities. Also, it would get access to operations in high-growth
economies of Asia and South America with low-cost profitable assets and local
operations expertise in numerous emerging markets and access to raw materials
and upstream integration.