1. THE FORMULA

2. SUB HQ Gives ‘instant market access´without generating over-capacity in the industry. Lowers entry barriers: - Brand names - Distribution channels - Retaliation by incumbent firms Acquisition as the entry mode Acquisition Electrolux in the White Goods Industry

3. The ideal long-term structure Product A Product B Product C Components Electrolux in the White Goods Industry

4. Electrolux’ formula 1. Expand through foreign acquisitions 2. Retain leading local brands 3. Centralize production to few locations: Close local production, transform acquired companies to sales subsidiaries 4. Centralize production of components 5. Coordinate global purchasing for increased bargaining power Electrolux in the White Goods Industry

5. Electrolux’ ideal division of labor “Cold” products Standard segment “Wet” products Designer segment Microwaves Components Electrolux in the White Goods Industry

6. Product/brand strategy 1. Locally supplied 2. Globally supplied according to local standard 3. Group standard 1. Locally supplied products and brands 2. Acquired brands, centrally manufactured according to local demand 3. Strategic products, centrally manufactured with global standard, rapid delivery Electrolux in the White Goods Industry

7. SCI in Funeral Services SCI - Services Corporation International 3,420 funeral service locations, 433 cemeteries, 191 crematoriums in twenty countries and on five continents. Accounts for 11 per cent of all funeral services in the United States, 14 per cent in Great Britain, 25 per cent in Australia, 28 per cent in France.

8. SCI in Funeral Services SCI’s formula 1.Expand through acquisitions in metropolitan areas. 2. Retain local image of acquired companies. 3. Centralize a select number of resources, skills, and activities: Hearses, limousine services, embalmers, marketers, clerical workers.

9. ISS’ formula in the (fragmented) cleaning industry 1. Employs fixed standards and routines for cleaning of large objects. 2. Acquires only when companies turn to ISS by own will (no competitive bidding). 3. New organizational structure introduced within two weeks, reduction of personnel. 4. Assessment and control of existing contracts: Identification of contracts where new routines, cleaning schedules, and personnel reductions can be applied. Termination of unprofitable contracts. ISS in Cleaning Services

10. Ispat in the Steel Industry

11. Ispat’s formula Ispat in the Steel Industry 1. Targets underperforming, state-owned plants that are up for sale. 2. Negotiates skilfully for right price and responsibilities. 3. Secures access to favorable loans from World Bank, EBRD, and governments. 4. Uses dedicated, international task-force to re-structure new plants. 5. Duplicates follow-up routines for continuous improvements: daily reports, daily meetings, incentive plans, CEO meetings. 6. Promotes the sharing of knowledge and best practices in the international organization. 7. Built on the founder’s dedication, attention to detail, and involvement.

12. Major acquisitions YearUnit Capacity (million metric tons) 1992Ispat Mexicana (Mexico) 4 1994Ispat Sidbec (Canada) 1.8 1995Ispat Karmet (Kazakhstan) 5 1997Ispat Germany 2.8 1998Ispat Inland (U.S.) 5.8 2001Ispat Sidex (Romania) 5 2003Ispat Nova Hut(Czech Republic) 3 2004Ispat Polska Stal (Poland) 6 2004Ispat Iscor Ltd.(South Africa) 6.5 2005International Steel Group (U.S.)16 2006Arcelor (Luxembourg) Ispat in the Steel Industry

13. Organization and profitability (2002) LNM Holdings Ispat Nova Hut Ispat Sidex Iscor Ispat Karmet Ispat Annaba (Algeria) PT Ispat Indo (Indonesia) Revenue: $ 3.8 billion Net profit: $ 564 million Ispat International Ispat Unimetal (France) Ispat Germany Ispat International (Britain) Ispat Sidbec (Canada) Caribbean Ispat (Trinidad) Ispat Inland (U.S.) Ispat Mexicana Revenue: $ 4.9 billion Net profit: $ 49 million Ispat in the Steel Industry

14. SWAT teamLiquidity fixDebugProduct mixIntegratePrune Remove most existing managers and replace with Mittal executives to get the company running on a commercial basis quickly. Reestablish credit with suppliers to assure a steady flow of raw materials. End barter arrangements that beget corruption and destroy cash flow. Bring in Mittal technicians to improve operations such as rolling mills and blast furnaces. Rework maintenance schedules to reduce downtime. Shift to production of higher- value goods such as cold- rolled steel and galvanized sheets. Try to sell to end users rather than middlemen. Form regional groups to boos purchasing power and prevent plants from competing with each other for the same customers. Close or sell off noncore subsidiaries, from catering to hotels. Gradually cut back staff, possibly through buyout programs. How to turn around a steel plant Business Week, December 20, 2004 Ispat in the Steel Industry

15. BHP Steel “Compare this with the failed international expansion strategy of BHP Steel, emanating from Australia, where the focus was almost entirely on becoming a player in the US steel industry through expensive acquisitions and joint ventures. BHP Steel announced that all its overseas steel plants were for sale, in October 1999.” Mathews (2001) Ispat in the Steel Industry