Mittal Steel in 2006

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Mittal Steal in 2006: Changing the Global Steel Game Industry Analysis Although steel was a highly demanded good, the industry as a whole was largely unprofitable. One reason for this was that the industry remained highly fragmented in contrast to their suppliers and even some of their buyers, who were considerably more consolidated. Aside from the increased competition that fragmentation contributed to, it also degraded the steal industry’s bargaining power to raw material suppliers and in some cases, such as the auto industry, the buyers. The resulting high fixed costs, volatile raw material prices, and intense price competition fueled unstable profitability. Adding to the fragmentation issues was a lack of differentiation in the…show more content…
LMN’s initial approach was to resurrect distressed government owed plants then breath new life into them through technology sharing and smart practices. He soon sought larger targets that would provide him not only economies of scale, but also provide competitive advantages through geographic scope. Starting with Karmet, he began to shift his targeting toward plants that were either highly integrated, possessed significant mineral rights, or supplied a strategic geographic advantage. Through designing their activity architecture in this way, Mittal steel became the world's largest and most integrated steelmaker; providing strong positions in North America, Europe, Asia, and Africa. The result of their strategic positioning, combined with their focus of coordination through KIP and KMP, made Mittal the first firm in the industry to operate as a transnational organization. Each plant provided its own uniqueness, providing different capabilities and skills that could be harnessed for the good of the whole organization. There was also a heavy flow of people, materials and finances between the interdependent plants, but at the center of it all was the Mittal Steel directing tight coordination and a shared strategic decision making process. On a regional level, they operated through regional hubs. This allows Mittal’s positioning of adjacent plants to
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