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Submitted on: Jan 14
th
2011
Submitted By:
- 12487716
- 12486756
- 12491872
Aye Myat Sandar Tun
Muthukumar Selvarasu
Lu Yang

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Contents
1. Executive Summary .......................................................................................................................3
2. Introduction ....................................................................................................................................4
3. Data Findings .................................................................................................................................3
3.1 External Data Finding ...............................................................................................................3
3.1.1 PEST Analysis..................................................................................................................3
3.1.2 Porter Five Forces.............................................................................................................7
3.1.3 Macro Environment of the Company ...............................................................................9
3.2 Internal Data............................................................................................................................10
3.2.1 Primary Activities...........................................................................................................10
3.2.2 Support Activities ...........................................................................................................11
3.3 ArcelorMittal STP............................................................................................................12
4. Analysis........................................................................................................................................13
4.1 SWOT Analysis.......................................................................................................................13
4.1.1 Strength...........................................................................................................................13
4.1.2 Weakness........................................................................................................................14
4.1.3 Opportunities ..................................................................................................................13
4.1.4 Threat..............................................................................................................................16
4.2 Implication ..............................................................................................................................18
5. Recommendation / Conclusion.....................................................................................................20
6. References ....................................................................................................................................22
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1. Executive Summary
In this company report, we have conducted environment scanning of ArcelorMittal in the
form of external and internal analysis. In addition, the provided data is showing the
opportunity to compose some firsthand observations of the company though these are
considered tentative. We endeavour to outline some key issues facing company in terms of
growing business.
According to the data, we have found out that ArcelorMittal success as the global number one
steel company in the steel mark for all its products. The company is using the effective
strategy in order to control all its companies and plants across the whole. Moreover, the
company is having advantage on production and sale figure by improving the relationships
with suppliers, and customers.
Basing on the overall data findings and analysis, we made recommendations on ArcelorMittal
to improve the relationships with government and local people. It is as important as suppliers
and customers relationships. ArcelorMittal plants need to operate by raising points to fulfil
the environmental safety and works demand by leverage tax and other environmental
exemptions.
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2. Introduction

ArcelorMittal is a global steel company headquartered in Avenue de la Libert, Luxembourg.
It is the largest steel producing company in the world and is the market leader in steel for use
in automotive, construction, household appliances and packaging. It holds sizeable captive
supplies of raw materials and operates extensive distribution networks. The company was
formed in 2006 by the merger of Arcelor and Mittal Steel. It ranks 99th on the 2010 Fortune
Global 500 list. (Source: Wikipedia)

ArcelorMittal key financials for 2008 show revenues of $124.9 billion and crude steel
production of 103.3 million tonnes, representing approximately 10% of world steel output.
ArcelorMittal is listed on the stock exchanges of Paris (MT), Amsterdam (MT), New York
(MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona,
Bilbao, Madrid and Valencia (MTS). (Source: money.cnn.com)

The report will have details analyze about development of ArcelorMittal by applying SWOT,
Porter Five Forces. Also it focus how the company doing well to be in global platform. There
will be data finding which explain the strength and weakness of the company, also how the
company conduct with shareholders and partners and about the company management. We
focus on the environmental issues which talks about health and safety as well as labor issue if
any exist. Also how the company doing in micro environment and discuss about situation as
well.








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3. Data Findings
3.1 External Data Finding
3.1.1 PEST Analysis

The following PEST analysis provides the information which ArcelorMittal can
comprehend the macro environment of steel industry in order to response effectively
regarding to the current situation.


Figure (1) Analysis by PEST factors
Political:
! Air emission: According to new operating permits which are established by the 1990
Federal Clean Air Act Amendments, companies have to pay for emission fees for air
emission based on tons they emit.(The global steel giants local impact, May 2008)
! Government pressure on environmental issues: Federal and state governments
various laws and regulations have impact on companies in this industry directly. In
addition, ArcelorMittal itself is facing problems with government, international
organization and people regarding to air pollution, water pollution and noise pollution
issues in every country where its plants have. (ArcelorMittal: Going nowhere slowly,
2008-2009)
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! Government Stability: It is necessary to take consideration on government stability
in order to invest and build plants as it can affect the manufacturing and company
growth.
Economic:
! World steel production: The world steel production in 1412mt in 2010 and the
production rate is estimated to be increase till to 16777mt by 2013. (Emerging
Markets now drive global steel demand, 2008)
! World steel consumption: The demand of steel industry is increasing globally.
Overall world steel consumption by 2010 is 1413kt and it is estimated to increase till
to 1677kt by 2013. Compared with last five year 2005, it increased 377kt. (Emerging
Markets now drive global steel demand, 2008)
! Inflation: Unemployment rate is also one of the factors to consider for business
growth as government will keep piling on more stimulus money and therefore
affecting inflation rate.
Social Culture:
! Engagement with people: It is important to engage with local people as steel
manufacturing plants are badly affecting their health condition by emitting toxic air.
People un-satisfaction can push the company into the trouble with local government
as well as with global organization like UN, WHO.
! Understanding people nature: According to the 2008 ArcelorMittals steel project
in India, the company can learn that giving respect on local people is important. As
they planned to invest vast amount of money for its plants which need 8,800 acres to
be built by using the indigenous land of livelihood for many family, the local protests
were occurred. (ArcelorMittal: Going nowhere slowly, 2008-2009)
Technology:
! Advances in technology: Adapting new technologies and programmes help industry
more efficiency in processing, refining, casting, direct rolling, etc... In addition, it can
also make the improvement in managing diverse location and controlling the market
requirements. Currently, ArcelorMittal is making profit by using SCOOP (steel cost
optimization) in order to enhance technical-economical optimization. (Technology
and Steel Industry Competitiveness, 1980)
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3.1.2 Porter Five Forces
It is necessary for ArcelorMittal to do the analysis on possible threats by using Porters 5
forces model in order to recognise the relative strengths and weakness of ArcelorMittal
companys competitive intensity and profit potential.

Figure (2) Analysis by Porters five forces

Threat of New Entrants (Low):
! It is not easy for the new barrier to enter the market as they need heaps amount of
money to invest in steel industry.
! New entrants have the limited distribution channels because of fewer connections
with many distributors while comparing with the global market leaders.
! As for global company ArcelorMittal, it has strong economies of scale which make
new entrants to enter and penetrate the market place.
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Threat of Substitutes (Low):
! Even there are alternate products to substitute steel but it is not much.
! As steel is irreplaceable in some particular parts, it still plays the important roles in
many industries (construction, automobile, transportation, Household appliances,
etc...).
Bargaining power of Suppliers (High):
! ArcelorMittal is a company which has the great relationships with over 60,000
suppliers for many years on the global platform so it is difficult for competitors to
compete and take over its unique place.
! From the suppliers point of view, it is less possibility to switch the company to
bargain because of ArcelorMittals high buying amount.
Bargaining power of Buyers (Moderate High):
! Switching cost is moderate because of few reasons. As it is hard to hand over the big
buyer companies from ArcelorMittal in order to use the uncertain quality and new
materials in their firm, in addition, they still need large investment to switch. But it is
still possible to change because of more reasonable price.
! ArcelorMittals quality products are also the factors that the buyers consider to
choose.
! In 2009, it had revenues of $65.1 billion and crude steel production of 73.2 million
tonnes because of its broad bargaining power of buyers.
Rivalry among competitors (Moderate to High):
! It is the world number one steel company in all major global steel market.
! Even it has high market place, there are many regional competitors are trying to
influence ArcelorMittal as knowledge and technology are distributed
! There is less differences in steel products apart from quality so some buyers are
looked on the price. And then steel companies are competing each other based on
price.
! It is same concept that ArcelorMittal also needs to change cost structure in order to
compete with different competitors.

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3.1.3 Macro Environment of the Company

Customers: As customers play obvious role in the sales figure, the company is trying to
reach and meet the customers requirements. ArcelorMittal interface with customers
directly through services centers to provide all kind of services like cut-to-length and
slitting of sheets, several finishes, transformation and distribution
(arcelormittalinoxbrasil.com.br, 2010). In addition, their 4000 employees offer a
complete line of solutions and services to more than 5000 customers thought processing,
innovation and logistics of flat carbon steel (eassc.org, 2010).
Employees: ArcelorMittal has total 320,000 employees (2009) in 60 countries and the
company invest amount of money to train employees on different training programmes.
In 2003, Environmental education programme for employees and families was
implemented in Minas Gerais State. (arcelormittalinoxbrasil.com.br, 2010) There were
more than more than 300,000 people had been trained in ArcelorMittal University since
2007. Furthermore, Global Health and Safety Agreement signed with trade unions for
employee relations and benchmarking (ArcelorMittal at a glance, June 2009).
Suppliers: ArcelorMittal is controlling the good relationships with its suppliers and their
ethics by helping their business practises as these can reflect the company. Since 2004, it
had a supplier engagement programme in ArcelorMittal Brazil. The company is
connecting with 6,000 suppliers and contractors over the world through a communication
channel: supply portal. Its supply chain is large and complex, ranging from mining and
raw materials to highly sophisticated technological products and activities (Dedicated to
Marketing a difference, 2009).
Shareholders: ArcelorMittal gives the equal right to each shareholder and board
independence in order to satisfy them (esade.edu, 2010).
Competitors: ArcelorMittal has global and regional competitors across the world.
According to the world steel association, ArcelorMittal is in the first place with
103,300,000 crude steel outputs per year followed by Nippon steel, Japan and Bao steel,
China with 37,500,000 and 35,400,000 respectively. The Posco, South Korea which used
to be the main competitor of the company take the position of 4 for 2009 2010
(steelads.com, 2010)
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Media: Company develops the Web TV 2010 to announce the information and latest
news about ArcelorMittal from different countries relating with various category of news
like international affairs, finance, communication, distribution solution, and so on. This
web TV makes positive and powerful impact on company
3.2 Internal Data
3.2.1 Primary Activities
Inbound Logistics: ArcelorMittal has significant raw material and mining assets, as well
as certain strategic cost-plus based long-term contracts with external suppliers. In 2008
(assuming full production of iron ore at Dofasco for captive use), approximately 47% of
ArcelorMittals iron-ore requirements and approximately 13% of its coal requirements
were supplied from its own mines or from long-term contracts at many of its operating
units. (Source: wikinvest.com)
Operations: ArcelorMittal has steel-making operations in 20 countries on four continents,
including 65 integrated, mini-mill and integrated mini-mill steel-making facilities.
ArcelorMittals steel-making operations have a high degree of geographic diversification.
Approximately 35% of its steel is produced in the Americas, approximately 46% is
produced in Europe and approximately 19% is produced in other countries, such as
Kazakhstan, Algeria, Morocco and South Africa. (wikinvest.com)
Outbound Logistics: ArcelorMittals facilities have good access to shipping facilities,
including through ArcelorMittals own 12 deep-water port facilities and linked railway
sidings. It has its own downstream steel distribution business, primarily run through its
division Steel Solutions and Services. (wikinvest.com)
Marketing and Sales: ArcelorMittal provides value-added and customized steel solutions
through further processing to meet specific customer requirements. On October 23 the
launch edition of ArcelorMittals innovative webzine boldspirit went live. This state of
the art ezine was originally launched as a print magazine in 2007. (vanksen.com)
Service: The sale of all products is handled by the ArcelorMittal commercial
organization which provides a service that meets justifiable expectations and real
needs. It aims to offer clients precisely the products and services they need. In short, it
provision of services, knowledge and experience are at the total disposal of the clients.
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The team consists of commercial, technical and logistics experts. They will ensure
that clients reach their company targets faster and more easily. Maintaining a business
partner relationship with the commercial organisation is simply an extra benefit to the
company. (arcelormittal.com)
Distribution Solutions handles processing, finishing and distribution of steel mainly made
by the ArcelorMittal Group and serves customers from a variety of industries, including
automotive, construction, household appliances, public works, civil engineering and
general industry. Distribution Solutions offers products, steel solutions and global
solutions including design and technical support through more than 500 sites located
throughout the world in 30 countries. (arcelormittal.com)
3.2.2 Support Activities
Procurement: ArcelorMittal recently signed projects with Chinese suppliers for the Bar
mill in Mozambique and Direct Reduced Iron kilns in South Africa. The procurement
department is a multidimensional sourcing unit dealing in raw materials (coke and
ferroalloys), MRO items, industrial products, refractories, plant safety items and capital
equipment. The activities range from floating RFQs to negotiating EPC and turnkey
projects for different plants in the ArcelorMittal Group. (arcelormittal.com)
Technology Development: ArcelorMittal will be working with leading venture capital
firms - including Bessemer Venture Partners, Khosla Ventures, and Kleiner Perkins
Caufield & Byers - to help finance clean technology innovation through the fund. The
objective of the fund is to support the commercialization of clean energy technologies,
which will help in the reduction of greenhouse gas emissions. In particular, the fund will
focus on ventures that have relevance for the steel industry and its customers.
(arcelormittal.com)
Human Resource Management (HRM): ArcelorMittal has published a Human Rights
Policy that articulates our respect for all human rights, focusing on the areas that have
been identified as priorities for our industry. This Policy complements existing policies in
areas such as our Code of Business Conduct, the Health and Safety, Environment and
Human Resources Policies and the Anti-Corruption guidelines. (arcelormittal.com)
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The Global Executive Development Programme, in particular, provides a systematic and
transparent process for managing an individual's performance, strengths and development
needs. It offers regular feedback and on-the-job coaching to help motivate people and
accelerate their progress. (arcelormittal.com)
3.3 ArcelorMittal STP

Segmentation: Segmentation of its market is the key to effective planning for
ArcelorMittal. It helps Nestl to respond to competitive challenges in the marketplace and
helped them to position its brand to leverage the strengths. ArcelorMittal divide its market
basing on products; Automotive, Construction, Packaging and household appliances. Then
the company can also identify micro segments to address the crucial factors of buyer need,
purchasing power and buyer behaviour by depending on price and demographics.

Positioning: Currently, ArcelorMittal is already at the place of number one on the global
platform. The company is trying to keep this position for longer while comparing with
global companies and regional companies. In order to gain that position, company provides
quality and safety products with the latest technology in terms of brand image.
Furthermore, the company is leading in 5 regions on 4 continents. The company is
positioning itself on the global market as well as in the customer mind.

Targeting: The Company choose generic competitive strategies depending on the market
segments. Most of the companies target on one market segment more than in others in order
to achieve successful market. In the case of ArcelorMittal, it keeps its eyes on every
segment they divided and it gets successful in every single segment of its products even
these segments are broad and complex.




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4. Analysis
4.1 SWOT Analysis
4.1.1 Strength
Figure (3) Strength Analysis

Strong brand name and recognition: ArcelorMittal is the first and most global steel
company which is one of the strongest steel brands in the world, with a crude steel
capacity of more than 113 million tons steel and is present in 60 countries. (eassc.org,
2010)
High global market share: It is the number one worldwide supplier for automotive steels
with a leading market share of 21%. (ArcelorMittal at a glance, June 2009)
Sustainability strategy: Achieving sustainability and capturing growth through
geography, product and value chain. (ArcelorMittal at a glance, June 2009)
Trained Employees: According to the microenvironment data, ArcelorMittal is training
their employees with various programmes to be one of the competitive advantages as only
human resources cannot be copied.
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Services: Company is fulfilling the customers needs by providing all possible services
through many service centers and their trained employees. It is taking advantage and
increasing sales by satisfying customers.
Innovation products/services: New packaging concepts constantly designed to achieve
differentiation by steel solution (bottle can, easy open end). Complementary industrial
network in Europe with production plants and service centers near customers can make
facilities. High Strength Steels contribute to reduce greenhouse gases by using lighter
structures. The ULCOS project seeks to achieve a reduction of more than 50% in steel
industry CO2 emissions. (ArcelorMittal at a glance, June 2009)
Internal Control: The Company has mapped its internal control system in accordance
with the recommendations of the Committee of Sponsoring organizations of the Tread
way Commission (CoSo), which recommendations are aimed at providing a reasonable
level of assurance. (arcelormittal.com, 2010)

!"#"$ Weakness
Internal system: Excessive subsidiary companies are not easy to control. Each them get
in trouble will influence ArcelorMittal. The knowledge is also easy to be copy.

Figure (4) Internal System
Diversity: More than 60 plants operating in a network; 18 Management Committee
members, 5 Group Management Board members representing 10 different nationalities.
(Juergen Schechter, April 2008)
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Local Impact: Company is facing the problems with regional governments and local
people regarding environmental issues (air pollution, water pollution, noise pollution) as
ArcelorMittal needs more effort on caring environments and upgrading environment care
machines which are outdated.

Figure (5) Local Impact

!"#"& Opportunities
Increasing demand for steel: Driven by emerging market macro-economic and
demographics, the demand of steel in these years will increase. (esade.edu)

Figure (6) Increasing demand for steel
Leveraging global leadership in high growth markets and low-cost areas:
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Figure (7) Growth representation
New markets: In January 2009, ArcelorMittal began trading on a single order book in
Paris, Amsterdam and Brussels, under the symbol MT. ArcelorMittal remains a member
of key NYSE-Euronext indices, including the CAC40 and the AEX. (arcelormittal.com,
2009)
Merger & Acquisition: Mittal Canada completes the acquisition of three Stelco
subsidiaries, the Norambar and Stelfil plants, located in Quebec, and the Stelwire plant in
Ontario. Stelfil and Stelwire will add 250,000 tons of steel wire to the company's annual
production capacity, providing a wider product mix to better meet customers' needs.
(arcelormittal.com, Feb 2006)

!"#"! Threat
Unstable global market: ArcelorMittal's MT second-quarter results were in line with our
expectations, but as we have heard from other steelmakers in the past two weeks, the third
quarter will not be as bright, with weakness stemming from destocking in China and
fiscal issues in Southern Europe combined with a normal summer slowdown. (Bridget
Freas, July 28, 2010)
Increase costs: The 580 million tone increase has put strong upward pressure on raw
material costs and the freight cost to move bulk materials. NAFTA represents only 11%
of global production.
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Figure (8) Global Production by Region
Global spare capacity: Global spare capacity falls which put upward pressure on steel
prices.

Figure (9) Global Production VS Capacity







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4.2 Implication

Although ArcelorMittal has several measurements for customers commitments, it still has
to reinforce this achievement to continually retain more customers. ArcelorMittal can make
use of social media like Facebook and Twitter to publish their news for keeping in touch
with their potential customers/investors. The company needs to emphasize more on
subsidiaries management and quality control instead of over satisfying own brand name.
ArcelorMittal can set up own knowledge factory to groom their employees by increasing
the strength of technological breakthrough and R&D. ArcelorMittal is working successfully
in engaging with its suppliers for different supplied through a communication channel. In
this point, the company has benefits.
The management strategy of ArcelorMittal is emphasizing on size and scale, vertical
integration, diversifying high quality product, continuous growth in a strong employee
benefits and customer service centers focus. The company focuses more on how to achieve
business sustainability and growth as it plans to keep playing the leader role in global steel
industry.
Generally, according to the data we found, ArcelorMittal has done the good job for their
development. In some areas, the company could achieve better efforts if they adopt
corresponding measures. They had established business relations with local
universities/colleges for their technology research and created many job positions for local
graduated students. These factors can improve the public relationships with company but
sometimes ArcelorMittal is keen on its strategies and decisions which lead occurring
protests like in the case of India. That means they need to pay respect to local people,
otherwise, the company growth in that region will be affected.
There is threat of environmental issues as mentioned in SWOT analysis. The companys
attention on this part is relatively poor. The company is getting lots of money from banks
on order to maintain and control pollutions that company is making but they use most of
that money on own business not by investing on environmental issues. This event gives the
bad image to governments, international organizations and the people. It is important to
have better international affairs as a global company.
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With increasing natural resources price, ArcelorMittal had merged and acquired smaller
steel companies in order to own bigger resources, or seek capable suppliers with lower
price on the resources. Being a global successful company, it achieve the successful in
terms of managing the problem of diversity by holding different forms of communication
parties for employees with different culture backgrounds to make them get know each other
well.
Based on the data from 5 Forces, we have found out the threat of new entrants is low for
ArcelorMittal but the company requires to keep paying attention on its potential
competitors because it is not a easy job to stand as number one as forever. So we can say
that the company activity of doing research for analyzing potential competitors and new
entrants by setting up an institution is the right strategy.





















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5. Recommendation / Conclusion

The study report shows that the pollution, health and safety and labour problems
experienced by neighbours and employees at ArcelorMittal plants formerly owned by
Mittal Steel. Rather, they represent the reasonable conclusion of the companys strategy
of trade old, heavily polluting steel mills and taking cost-cutting to its excessive.

On health and safety issues in the company's history Kazakh face to the air pollution at all
locations and the hazardous waste dumping in South Africa, the problems are different,
but the common theme is the age - old clash between the need to invest in environmental,
labour and health and safety improvements and the need to keep the cup. In South Africa
the company has resorted to practices in the case of families who refused to give their
land for the use of coercive measures have Mittal. In India they are planning a large steel
complex in the land of the indigenous communities and poor farmers.

While the company claims, has made important investments for the necessary
improvements, particularly in Central and Eastern Europe Anecdotal evidence from
works and local residents suggests that the level of efficiency of investment was not
satisfactory for various reasons. In some cases, questions have been about the
investments, raised and to invest in other cases funds seem to be made, but their demands
for higher production and the system of bonus payments appear to agencies use in
situations have led to choose where they have between increased production and
environmental or health and safety.

While no one expects all the problems solved overnight the company's claims made
intensive investment to address these problems, however, providing for its reluctance to
basic information and interest groups to meet with them being undermined. Their
approach to ignore the large number of letters sent by Ohio's citizens and requests to
complete its environmental action plans in Romania and Ukraine, shows a fundamental
lack of goodwill and cost doubt on the sincerity of his intentions. In South Africa, Mittal
not interested to release 9000 pages "Master Plan" in which describes pollution and plan
for dealing pollution and plans for it.

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From overall analysis covered in the case studies, we want to make the following general
recommendations. These are not intended to be comprehensive, but serve as a starting
point for improving the company's interaction with its neighbours. Since the new
common culture that is set ArcelorMittal, we hope that this will develop a culture of
implementation of human and environmental - management on an equal footing with
financial consideration.

Management:
! In a first step, where it was not enough to meet the management needs of
ArcelorMittal with all stakeholders - to listen to their concerns and to develop action
plans for the involvement of stakeholders.
! Where they have been made must be disclosed environmental action plans for the
public, and where they do not have to be developed.
! Environmental action plans must be developed for use in consultation with
community living next to ArcelorMittals plants and incorporated into government
licenses.
! The company has its agreements his managers do not have to make the trade - offs
between environmental / health and safety on the one hand and production goals on
the other.

Local & National Financial Institutions where ArcelorMittal Operation exist:
! ArcelorMittal should out from no tax or environment exemption
! ArcelorMittal status as one of the largest employers in some areas so should not be
treated as exemption in terms of health and safety and employment law issues.
! ArcelorMittal must not be displaced poor and indigenous - native communities
depend for their livelihood from the country where the company plans to build its
facilities.

Finally, we wishes to thank the University to make the ArcelorMittal Case Study Report
of the investigation and the opportunity to learn this work, also thankful to
Mr. Krishna Rajulu, for motivating this work and contributing helpful comments.


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6. References

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! a m e s C o o k u n l v e r s l L y - A r c e l o r M l L L a l C a s e S L u d y 8 e p o r L


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