Mittal

2920 words 12 pages
“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
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Finally, Mittal would maximize efficiency by removing nonessential elements of the mill (p 9). This ongoing sixth step allowed each mill to continue to strive for maximum profitability.
By investing early in emerging technology, which eventually changed standard methods of steel production, Mittal began its climb to the top of the industry. By strategically acquiring various mills with an emphasis on globalization and regional integration, and having processes in place which gave Mittal management the tools to increase profitability, Mittal was able to successfully grow from a marginal position to become one of the largest steel producers in the world. 2. Compare Mittal’s economics per ton of crude steel with its competitors.

The answer to this question is based on the data provided in Exhibit 4 (p 16). The explanation below is applicable to the year 2004.
Out of the largest 10 steel producers, Mittal has the following three characteristics as listed below: * The lowest revenue per ton; on average, Mittal has the least expensive steel in the market among the 10 largest steel producers. * The lowest implied operating costs per ton; Mittal is the most efficient crude steel producer amongst the 10 largest steel producers. * The third highest operating income per ton; Mittal’s operating income is 30% lower than the competitor with highest income and 200% higher than the competitor with lowest income.

Appendix

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