Lakshmi Mittal and the Growth of Mittal Steel

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LAKSHMI MITTAL AND THE GROWTH OF MITTAL STEEL (Study case, chapter 7)

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Presentation transcript:

Lakshmi Mittal and the Growth of Mittal Steel Sophie Wang Akash mathran Berre simonse Divya yadav Rafael alvarez

Content Summery of the case Answers to questions Current events involving Mittal Steel

Summery of the case 1970 - Limited growth opportunities India 1975 - New plant in Indonesia 1989 - Take-over supplier by Mittal steel Global steel industry in a slump Purchase inefficiently run steel companies 1992/1994 - Acquired steel companies in Mexico & Canada 1997 - German steel takeover with new capital from IPO 2007 - Approved controversial merger between European giant Arcelor & Mittal steel. Making ArcelorMittal the largest steel company of the world.

Question 1 What forces drove Mittal Steel to start expanding across national borders? Limited growth opportunities in India - government regulation - competition (SAIL, Tata Steel) Opportunities in foreign counties - new method to reduce cost - steel industry was about to turn a corner

Question 2 Mittal Steel expanded into different nations through mergers and acquisitions, as opposed to greenfield investments. Why? Economy was in a slump - Weak companies are cheaper to buy Not having to recruit new skilled employees Time is money

Question 3 What benefits does Mittal Steel brings to the countries that it enters? Are there any drawbacks to a nation when Mittal invests there? Benefits - New machinery - Job opportunities - Supply of steel Drawbacks - Taking money out of the country - Competition for domestic suppliers - Pollution

Question 4 What are the benefits to Mittal Steel from entering different nations? Global company High risk and high hope - Prices to rise in the future Price setter - Monopoly power Buying companies cheaper than starting new ones

Question 5 The acquisition of Arcelor was very acrimonious, with many politicians objecting to it. Why do you think they objected? Were their objections reasonable? Objections - Nationalistic behavior (not reasonable) - Monopoly power (reasonable)

So what happened after the case? Lakshimi Narayan Mittal 6th richest person in the world In top 100 most influential people in the world 10% production of steel in the world Chairman and CEO 40% of shares ArcelorMittal

Steel bubble in 2007-2008

Current events for ArcelorMittal June 2010 – European Commission fined 17 steel producers for running a price-fixing cartel. January 2011 – Board voted to split off the stainless steel division into a new company “Aperam’’

ArcelorMittal’s future Looks good Expanding production in Canada doubling production in Quebec Research and Development 2-year plan