International Business Strategy-Case Study.doc

International Business Strategy: Presentation1. Mittal Steel was a result from a string of international acquisitions which was ran with a vertically integrated business model whereas, Arcelor, who had a greater downstream concentration, was the product of three primarily European steel companies. These two large companies were both relatively young and despite having separate management teams, sales and product groups, operating assets, and procurement division, their overall geographic and market strengths were remarkably complementary. 2. The motivations factor for both firm Arcelor and Mittal steel to merger is more or over about their position to become the biggest steel company in the world. As they were two relatively young corporations with roughly equal of proportions along with that Arcelor and Mittal steel were both extraordinary complementary in geographic and market strength. Whereas Mittal steels concentrate in vertical integrated business model and Arcelor focuses more on downstream concentration, as they have showed a limited overlap in the business model. The merger between the two corporations is winning to be the global leadership of its major customer market, including Automotive, constructions, household appliance and packing. Furthermore, they have generated revenue of approximate $ 105 Billion in 2007 and are responsible for 10% of world steel production as a result of successful merger. 3. What was the strategy underlying the new firm?The steel industry was undergoing great amount of consolidation. Both Arcelor and Mittal steel decided to mergers and acquisitions to make their potential in 2006. In that time, many companies tried to mergers together to get own market power. But it was not always successful for every firm. In the case of Arcelormittal, they have set their own goals as it enters the next phase of its journey towards transformation which is aiming for higher level of market domination from the share of business models. These two companies had different types of management. Therefore, the main point of this company is a cross culture management. What they need was to share the management skills, culture and even in terms of languages. It was essential to understand each others methods and communication in order to make two companies united. 4. The challenges faced from implementing this strategy, is that they may face resistance from the two companies. Employess would be reluctant to adhere to new company policies or procedures as they have been used to the current methods of their brand. Also the biggest issue is that of company culture. The two companies would have already defined their own company culture and when merged the two cultures could clash if they are significantly different from one another. The clash in cultures could lead to a decrease in motivation and lower the morale of staff. This would result in low productivity as staff would be unhappy to work for the company. To implement this strategy successfully Arcelor and Mittal used a number of different techniques. Firstly the two companies ensured that the merger was a quick transition. With a quick transition it kept momentum with the two companies. Weekly progress meetings were held, this ensured that if any problems aroused they were rectified quickly. They merger board also tried to make sure they kept energy and motivation behind the merger, so employess would still be productive. The two companies also held Interviews and surveys with their current staff to get better understanding of each companys culture. To ensure all employess were informed and had a chance to meet the next executives websites with interviews were available to all staff that could be accessed at any time. 5. Firstly, the case study illustrates an interview with the two post merger managers of ArcelorMittal, highlighting their strategy and implementation in regards to the merger in June 2006 and the keys elements as to why this was successful. However, the comparative paper, gives a generalised approach for successful strategy execution.SimilaritiesNeilson et al give strong focus to the importance of “clarifying decision rights” and “ensuring information flows where its needed.” ArcelorMittal created an organisation with effective communication flow through the foundation of a “complete entity” between the two companies and integrating the separate management teams, allowing easier communication between companies. By conducting interviews and surveys with employees, communication and knowledge was able to flow effectively, leading to significant changes of “an entire rebranding exercise,” showing the importance of eliminating communication barriers between employer and employee. The focus of “concrete messages” is also highlighted as important by Neilson et al and was a main focus for ArcelorMittal. Rather than the usual monthly meetings held during large mergers; they had weekly progress meetings, meaning that communication was flowing regularly to those involved, allowing quick reaction to any problems. The external communications were also managed effectively through interaction with different countries, media interviews and press releases conveying the company message to potential customers.In regards to “clarifying decision rights,” all roles were clearly stipulated so that no confusion occurred and clear strategy was developed of how decisions would be made throughout the integration process. As teams were formed before the organisation had even been announced, by the time it came down to decision making, everyones roles, interaction and decision making processes had been consolidated, leading to a clear and precise system when it really mattered.DifferencesDifferences between the successful strategy execution lain out by Neilson et al and the strategys implemented by ArcelorMittol is that Neilson et al generalised organisations successful at implementing stategy as having a culture of “persuade and cajole” rather than “command and control”. However, the culture of ArcelorMit