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“In our industry today only a strong company with a global reach can ensure long-term employment and provide acceptable returns for shareholders.” – Lakshmi Narayan Mittal Table of Contents 1. How has Mittal managed to expand from a marginal position to become the largest steel producer in the world? 1 2. Compare Mittal’s economics per ton of crude steel with its competitors. 2 3. What threats does Mittal face? 3 4. To what extent is profitability driven by global scale? What else is relevant? 5 5. Is vertical integration a value driver for Mittal? Why? 6 6. How would a merger of Arcelor with Mittal add value? 8 Appendix I 10 1. How has Mittal managed to expand from a marginal position to become the largest…show more content…
Many of these also used DRI technology (p 5). LNM also sought to acquire mills which would allow Mittal to become both more globally and regionally integrated. Being regionally integrated increased profitability by providing Mittal the ability to demand more reliable products and better overall terms from the suppliers (p 9). Since Mittal owned the mills in surrounding areas, it reduced rivalry by ensuring that nearby mills would not compete for the same customers, thereby increasing growth (p 9). Once acquired, the efficient way in which Mittal would execute the turnaround of mills was instrumental in company growth. The Mittal Method included a six step turnaround process which was implemented by a turnaround team on all newly acquired mills (p 8). The first step was to replace incumbent staff with Mittal management which would ensure that management of the new mill would share the goals and culture of Mittal (p 9). Second, Mittal would address any outstanding debts by providing the new mill with the necessary cash (p 9). Third, overall operations would be improved when Mittal brought in their own top engineers to run the operations (p 9). Fourth, Mittal would shift production to focus on higher value items, such as those desired by the automotive industry, and attempt to sell directly to the end user and eliminate other middlemen from the value chain (p 9). Fifth, Mittal would connect the new mill to the previously existing global network of Mittal plants,
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