Mittal Steel Growth

ArcelorMittal

In less than fifty years Lakshmi Mittal went from growing up in India as a poverty stricken teenager to being fifth richest man in the world. Mittal worked as a steel worker with his father and in 1971 established a small company Mittal Steel of India. Lakshmi Mittal was faced with numerous challenges in India that limited the expansion of Mittal Steel. Tough restrictive governmental regulations and competition for market space from SAIL (a state-owned firm) and Tata Steel (large privately owned firm) encouraged Lakshmi Mittal to leave India (Hill).

In 1975, Mittal relocated Mittal Steel to Indonesia in order to expand operations free of government regulation and market competition. In 1989 Mittal began to expand his company on a global scale. While many other global companies utilized the decade of the 90's to grow and expand into other areas that would help to diversify their holdings and markets, Mittal stretched its corporate reach beyond the limits of its capital, managerial ability, and basic mission of the company. Throughout the 1990's Mittal began buying struggling steel companies and turning them around to be profit oriented; however, this business approach depleted Mittal's capital.

Lakshmi Mittal redefined the strategic business objectives that would lead Mittal Steel into the 21st century. In order for Mittal Steel to succeed in the future, Mittal concluded that being competitive in the international market space was vital for long term growth and profitability. By examining the company's strengths and weaknesses, Mittal was able to begin the restructuring process of his steel company. In 1997 Lakshmi Mittal established a business plan that would allow Mittal Steel to become publically traded in the United States and Amsterdam (ARCM).

This directly relates to Mittal's strategic decision making. By first defining the main goal, it was then possible to alter Mittal Steel's direction. At Mittal Steel, Lakshmi Mittal established steps to make the company the leading steel company in the world. Through the establishment of business objectives, strategies, and phases, Mittal laid the groundwork for the company to obtain its ultimate goal. In 2006, Lakshmi Mittal coordinated the hostile takeover and merger of Arcelor steel of Luxembourg for 32 billion dollars or 26.9 billion euro's. The two major international steel companies were combined creating ArcelorMittal. Through its creation ArcelorMittal was headquartered in Luxembourg and immediately controlled an estimated ten percent of steel production in the global market space. By year end 2008, ArcelorMittal's international market capitalization was an estimated at 37 billion dollars. ArcelorMittal is the global leading producer and manufacturer of steel (ARCM).

ArcelorMittal produces coated and electro galvanized type steels, specialty steel bars and rods, cold rolled steel, wire rods and slab steel. ArcelorMittal has manufacturing operations established in Europe, Asia, Africa, and throughout the Americas. By mid 2012, ArcelorMittal had an estimated 335,000 employees, established operations in 66 countries and reported revenues of 108 billion dollars. Today, ArcelorMittal is listed on the stock exchanges of New York, Amsterdam, Paris, Brussels, Luxembourg, and the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (S&P).

ArcelorMittal appears to be a company that thrives in the international market space through fair market competition; however, in 2010 ArcelorMittal was charged for operating a price fixing cartel. Price fixing is when the price of a service or product is established through means other than natural market determination. Price fixing includes agreements between competitors to charge customers a specific price for a good or service. These agreements ultimately affect the price paid by a customer for goods or services. A cartel can best be described as a group of two or more manufacturers or producers of products that agree to control supply chains and quantities produced to fix or control price points (Boyes). In June 2010, the European Commission found ArcelorMittal and 16 other steel producing guilty of operating price fixing cartels within the European Union and abroad. ArcelorMittal received the heaviest fine of 291 million dollars or 270 million euro's (EU). ArcelorMittal appealed to the European Union Court of Appeals. The high court upheld the lower court's ruling. The high court ruled that the practice was extensive, but reduced the fines to an undisclosed amount. ArcelorMittal argued that they were the global market leader in steel production with an estimated 14 percent of the market space (EU).

Lakshmi Mittal has served as President and CEO of ArcelorMittal since 2006. During his tenure as CEO, Mittal has initiated a program to restructure the company to be more competitive in the global market space. His keen business style and decision making abilities are vital to the economic transition that ArcelorMittal requires. As a result of the current economic downturn, major investment projects for global companies have declined in recent years. New project bids for ArcelorMittal have reduced by more than 22