Strategic Management in Steel Industry - Dissertation Example

With this understanding, it might appear that the evident differences in economic and social policies among OECD governments are explicable as rational responses to the real world, based on democratic political choice, free of overriding concerns to liberalize national economies". In order to run the steel making and the steel selling business profitably-which often is set up at massive deployment of capital and manpower requiring setting up of large scale steel plants ;it has become virtually necessary to plan the operations and policy along the strategic lines.

In fact strategic management gives a way of approaching the various issues in any business along scientific lines so that business objectives are attained in an orderly and timely manner. Some businesses are simple, involving easily understood stages involved right from production to marketing to financial aspects; whilst others -like steel industry- are so very complex that one section of business may not even appreciate the complexities involved in the operations of another section of the business, not to talk about keeping in sync with policy thrusts and strategic orientations of the two sections.

Strategic management provides answers readily in such complex business situations by offering a model of identifying the strategic areas where attention and focus is required. This paper approaches the issue of strategic management in steel industry through a thorough literature review exploring the concept of strategic management as it is theorized and practiced in steel industry and attempts to find an empirical support for the same through questionnaire survey of policy making and decision making executives in the randomly chosen steel makers.. From the dissertation, it is clear that the concentration witnessed among the steel industry’s customers is still more marked among its suppliers.

In the seaborne iron ore trade, three companies control more than 70 percent of the world market. In coking coal, five suppliers control nearly 60 percent of all exports. The merged entity will immediately achieve industry leadership with a production capacity of approximately 130 million tons a year and around 10 percent of world steel output. The new group will have leading positions in the high-end segments of North America and Western Europe with low-cost production in high-growth, developing economies.

In conclusion, Mittal Steel has low-cost operations in the developing economies of Central and Eastern Europe, Asia and Africa; Arcelor has low-cost slab manufacturing in Brazil as well as other South American facilities. For its part, Mittal Steel will contribute sizeable captive supplies of raw materials – enabling the combined entity to have strong positions at every step of the value chain. Mittal Steel is approximately 50 percent self-sufficient in iron ore and coal and in 2004 produced more direct reduced iron (DRI) and coke than it consumed.

It intends to invest in lifting raw material production, particularly at its major mines in the Ukraine and Liberia. The combination of Mittal Steel and Arcelor will result in a steelmaker more than three times larger than its nearest competitor and with every chance of reaching a production capacity of between 150 million tons and 200 million tons within ten years.