...ArcelorMittal is a steel and mining company with a global presence in more than 60 countries. It is a leader in major global carbon steel markets such as automotive, construction, and household appliances to name a few. It is the combination of Arcelor and Mittal Steel, the latter being the origin of the present company. Mr. Lakshmi N. Mittal, Chairman and CEO of ArcelorMittal, started in the steel industry by building his first steel plant in Indonesia in 1976. This would form the beginning of Ispat International, while also establishing its parent holding company, LNM Group. In the 1980’s, still a minor player in the steel industry, Mittal looked to a new potential raw material source, DRI (Direct-reduced Iron). This had immense potential as production costs could be reduced by half while production volume itself could increase by tenfold. In 1989, Mittal leased one of the largest DRI suppliers, Trinidad & Tobago, and later bought it outright in 1994. As Ispat and LNM Group continued to expand over the next decade, Ispat acquired its parent, LNM Group, in 2004, and immediately merged with International Steel to form Mittal Steel, making it one of the largest steel companies in the world by volume and a major player in the steel industry. Mittal Steel’s growth finally led to the proposed acquisition, in 2006, of the world’s second largest steel producer in terms of production, Arcelor. After this successful acquisition, ArcelorMittal succeeded Mittal Steel...
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...Security Analysis Alcoa and Arcelor Mittal Economic Analysis TheUnited States, despite its previous struggles, still finds itself as the most powerful economy in the world with a per capita GDP of $46,000. The United State’s is able to maintain its lead largely in part to the country’s market oriented economy. Currently, the President, in conjunction with government is attempting to bring the United States out of the contraction that plagued the economy for the past few years. The global economic downturn in 2008, spurred by the sub-prime mortgage crisis, and investment failures played a significant role in a GDP contraction rivaled only by the Great Depression. With the onset of technology over the past decade, the United States economy now stands witness to a “two-tier labor market”.This type of market implies that those on the bottom of the market lack the professional/technical skills that their counterparts possess.Those who are in the upper-half have seen the majority of the gains in household income since 1975. This imbalance with the average household income failing to match the inflation rate put the economy in dire need of relief. In 2008 President Barrack Obama issued an asset relief program to help calm the fire. This relief came in form of the Trouble Asset Relief Program (TARP). The program issued 700 Billion in relief to help the economy in October of 2008. In addition to the TARP program, Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection...
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...Corporate Crisis and Restructuring of ArcelorMittal About ArcelorMittal ArcelorMittal is a multinational steel manufacturing corporation headquartered in Avenue,Luxembourg.It was formed in 2006 from the takeover and merger of Arcelor by Mittal Steel.ArcelorMittal is the world's largest steel producer,with an annual crude steel production of 97.2 million tones as of 2011.It is ranked 70th in the 2012 Fortune Global 500 ranking of the world's biggest corporations. ArcelorMittal was created by the takeover of Western European steel maker Arcelor by India-based multinational steel maker Mittal Steel in 2006, at a cost of €40.37 per share, approximately $33 billion total.Mittal Steel launched a hostile takeover bid which replaced a previous planned merged between Arcelor and Severstal, which had lacked sufficient shareholder approval. The resulting merged business was named ArcelorMittal and headquartered in Luxembourg.The resulting firm produced approximately 10% of the world's steel, and was by far the world's largest steel company.Total revenues in 2007 were $105 billion.In October 2008, the market capitalization of ArcelorMittal was over $30 billion. On 30 June 2010, the European Commission fined 17 steel producers a total of €518 million for running a price-fixing cartel, with ArcelorMittal being fined over €270 million.In 2012 the company had $22 billion of debt.As of 2012, due to overcapacity and reduced demand in Europe it had idled 9 of 25 blast furnaces.In October...
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...How Lakshmi Mittal Created Arcelor Mittal Steel and became a Billionaire The story of Lakshmi Mittal is such an inspiring story. Though he didn’t make our list of school drop out billionaires; he’s been nicknamed “Carnegie of Calcutta” after the 19th-century American drop out railroad tycoon; Andrew Carnegie. His story is that of a man, who rose from nothingness to join the coveted Forbes list of world’s richest top ten billionaires. He achieved this feat by creating ArcelorMittal; the biggest steel company in the world, worth over £100bn. Let me also bring to your notice that this Indian-born steel tycoon is the wealthiest man in Britain, with an estimated fortune of £30bn. He is also well connected to rich and powerful men such as Nicolas Sarkozy, Bernie Ecclestone, Tony Blair and Bill Clinton. Lakshmi Mittal was born in 1950 in a small town in India called Sadulpur, in Rajasthan. Being the eldest of five children, his parents decided to name him Lakshmi after the Hindu goddess of wealth. At the age of six, his family moved to Calcutta, where his father gained employment in a small British steel company. This gave the family the brevity to set up their own business, but it turned out to be quite challenging and tough. While his father worked night and day to build their new business, Lakshmi Mittal, who happens to be a shy and introverted teenager graduated from a Jesuit college, St Xavier’s. Mittal surprised everyone, including his parents by receiving excellent grades...
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...companies- one’s headquarter in Luxembourg and the other in the Netherlands. The target is Arcelor S.A, a big European company. And the acquirer is Mittal Steel Company, which was founded by Lakshmi Niwas Mittal. The negotiations began in January 27th 2006 when Mittal officially announced an offer to Arcelor’s shareholders. This was a hostile acquisition which faced many difficulties in respect to politics, and other economic aspects. The deal was reached on June 26th 2006 when Arcelor accepted the offer. Meanwhile the value of the acquisition was €26.5 billion; and the joining of the two big steel companies created the largest steel company in the world and created a lot of synergies after the its completion. Introduction & Background ArcelorMittal S.A. is the successor of Mittal Steel Company which was created through acquiring Arcelor S.A., the second largest steel producer after Mittal Steel, by Mittal Steel in 2006. It is the largest steel producing company in the world and one of the prominent multinational enterprises. The mighty steel empire was founded by Lakshmi Niwas Mittal in 1976 after purchasing the small plant in Indonesia. Lakshmi Niwas Mittal or 'King of Steel' built his empire without building a single steel plant. He expanded his steel business through various merger and acquisition activities. The detailed historical information for Mittal Steel can be seen on Exhibit 1-1.Arcelor S.A. was the pride of the European manufacture and steel industries and had the title...
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...the brand image of the company, I recommend that Paryavaran Mitra’s timeline should be extended by another two years, in order to carry out impact assessment and make alterations if required. EXECUTIVE SUMMARY: With three months away from completion of the project, and the impact of the program still looming at large, the company has to take a decision regarding the future course of action for Paryavaran Mitra and its role in the project. It is important for ArcelorMittal to maintain the brand image of the company and also maintain a good relationship with its partners. It can either choose to close the project as per the scheduled date and reallocated the remaining budget, or to extend the timeline of the project by another two years to carry out impact assessment and make alterations to the project if required. However, by extending the project, ArcelorMittal can evaluate the fulfillment of the objectives of the program and is also important in terms of the image of the company. It is recommended that ArcelorMittal should extended the project’s timeline by two years and use this for the evaluation of the impact and if required make alterations to the project. [Word Count: 164] TABLE OF CONTENTS: Situational Analysis…………………………………...……….…………..…4-5...
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...“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 steel producer in the world? Mittal Steel advanced from being a marginal company to become one of the largest steel producers in the world through its early investment in new steel making technology and strategic mergers and acquisitions. In the 1970s, 45% of the steel market was comprised of mini-mills which used scrap metal in production (p 3). Scrap metal was inexpensive but lower quality compared to other forms of production which made it difficult for mini-mills to cater to the demands of the most high-end but demanding customer in the steel industry, the automotive industry (p 3). Direct Reduced Iron (DRI) produces a substitute at minimal cost but without the quality issues associated with scrap (p 3). Lakshmi Narayan Mittal (लक्ष्मी...
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...------------------------------------------------- Case Analysis Case Analysis Format Directions Required Format for Writing of All Assigned Cases Simply download the format exactly as it is and type your responses to each of the sections DO NOT DELETE ANY SECTION DO NOT TYPE WITHIN THE SECTION BOX Isaiah T. Tyler Name_______________________________________________ Nucor Steel Corporation Case___________________________________________ ------------------------------------------------- Section I ------------------------------------------------- What is the setting of the case i.e. the type of industry, the firms, operations, and nature of the environment/market[s]? ------------------------------------------------- ------------------------------------------------- What appears to be the issue(s), concern(s), problem(s), challenge (s) and/or opportunities and their significance for the organization? ------------------------------------------------- Nucor Corporation with 24 plants/divisions and 8,000 employees, operated in nine states recycling more than 10 million tons of scrap steel annually. Producing carbon and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; and metal building systems, the corporation was known as the most modern and efficient, having streamlined organizational structure, incentive-based compensation and rigorous quality systems in the United...
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...COMPANIES TO ADMIRE: success story of L.N.Mittal “Raise yourself so high that one day god himself asks you “what else do you want?” “ Many of you reading this would want to start-up a venture of your own and some of you already have established enterprises. I want to ask you a question “is only the idea and the execution enough?” I believe it isn’t, because becoming an entrepreneur isn’t a one day task. It takes years of toil, in fact I believe it isn’t your usual 9-5 job and so each day is a different journey. What really binds all of us, established and aspiring entrepreneurs are “idols”. And this brings me to one of those businessmen who have been so many people’s idol MR.LAXMI NIWAS MITTAL, from his firm to his personality, to his success story, everything about him is inspiring. Most of us know Mr. Mittal as “Biggest steel maker of the world” as he happens to be the largest steel producer of the world. The story of how Mittal rose from relative obscurity to become a modern day Andrew Carnegie is relatively well known. He was born in Sadulpur, Rajasthan. His father's business Ispat India has weathered many storms in the last decade. At the tender age of 26 Lakshmi Mittal was despatched to Indonesia to oversee the family's mill now called Ispat Indo. Lakshmi Mittal parted ways with his father's in 1995. In the late '80s, Mittal moved into acquisition mode and bought mills in places like Trinidad and followed that up in Canada. The greatest coup was when he snapped up...
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...4,8 million €. It is the amount of money that Maurice Lévy, CEO of Publicis Groupe (3rd communication group in the world), received as part of his annual compensation in 2012 . Only a part, as stock options and other bonuses were, of course, not considered in the calculation of this impressive salary. This is just an example of one of the top compensated CEOs today in France. Are this high wages justified? This debate causes many reactions, especially in a period of difficult economic and social context in developed countries. Whereas important CEOs are able to ask themselves where to spend their next holidays, most workers remain concerned by being able to pay their bills at the end of the month. This inequality leads us to reflection. In my opinion, this inequality is proportionally unjustified. Showing the huge gap between CEOs’ and workers’ average wage wouldn’t be enough to prove the irrelevancy in today’s top executives’ salary calculation. This is why I will introduce various concepts and go more deeply in the analysis of my point of view. We should consider one of the principles usually used to justify CEOs’ compensation: the desert view. This concept emphasizes the fact that top executives deserve the money they make considering their competences, efforts and high responsibilities. It would be extremely hard to prove that a CEO sits at his position without having valuable business competences and experiences, especially as he is chosen by a board of administrators...
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...By 2006, Mittal Steel was one of the top producers of steel in the world. They earned their place within the industry by acquiring smaller steel companies and set standard practice as to how they acquire and manage these companies. These standards changed how business is done in the steel industry. These changes have produced consolidation, better efficiency, and restructuring, which has allowed Mittal to profit as global producer. Before Mittal Steel, most steel companies produced steel for their regions and many were losing millions of dollars yearly. Even though there was a need for steel all over the world, the shipping and tariffs cost were too high to provide services to international customers. Mittal saw an opportunity to capitalize on this by purchasing companies throughout the world to take the steel industry out of the regional market and into a global market. This would stop the bottleneck problems that industry faced due to local suppliers not being able to fulfill their demand and allow them more access to different suppliers. (Globalization, Kotler, 15). During the 80’s, many steel plants were state owned, which meant there was basically no growth or development within the industry. Mittal saw this, so instead of spending millions of dollars to build new facilities, they bought under preforming state owned companies which moved them into private ownership (Privatization, Kotler, 15). Mittal also invest in an older technology called, DRI, which was...
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...MM 5009 FINANCIAL MANAGEMENT Krakatau Steel (B) Syndicate 10 Benediktus Duan Putra (29114445) Frans J Purba (29114590) Ramara Arief K (29114452) Shinta M Hutasoit (29114419) MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS AND MANAGEMENT INSTITUT TEKNOLOGI BANDUNG 2015 I. Objectives Currently Krakatau Steel has been claimed as the biggest steel company in Indonesia. Even all Indonesia citizens presume Krakatau Steel as one of the valuable asset of Indonesia. However being the biggest local steel company is not enough. Going global is another step that Krakatau Steel must take. Having corporation with POSCO, the biggest steel company in South Korea to make a joint venture which required 388 hectares land, has shown that Krakatau Steel is ready to go to the next level. Therefore Anto, a finance analyst in PT. Krakatau Steel, would like to see the position and the opportunity of PT. Krakatau Steel to compete with other global steel company. Anto will use three reputable global steel companies which come from different region in the world. This assessment will also be used as a mean to find an appropriate company as a benchmark. II. Analysis To asses PT. Krakatau Steel’s position and opportunity in global competence, we use two local companies, PT Gunawan Dianjaya Steel and PT Jaya Pari Steel, and three global steel companies from different region in the world, which are Arcelor Mittal (Luxembourg), POSCO (Pohang Iron and steel Company...
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...The case detailing Nucor was interesting to me because they kept an extremely small corporate staff consisting of only 25 employees. This allowed them to keep a flat structure, keep less of a hierarchy, and decentralized their operations in general. Strengths Nucor’s main strength was its good relations with outside companies. This allowed them to keep operations small but at the same time fulfilled many of their needs like research and development, advertising, and company relations. Outsourcing these core components allowed Nucor to gain the experience from each of these companies while keeping their costs down. Keeping the company small also allowed them to offer superior bonuses to employees based on production. Incentives were derived from target profits for each of its 22 divisions. With a generous bonus system, this gave them an incentive to produce, and since the organizational structure was decentralized, the employees just needed to worry about hitting their specific profit level, and not as much about bureaucracy, which allowed them more freedom to perform well at their jobs. Weaknesses Nucor’s family environment for its employees was also its greatest weakness. Many employees knew that they would not lay off any employees which decreased employee motivation. This made cutting costs for Nucor extremely difficult because they still had to pay all their employees base salaries, even if they weren’t performing. In September of 2008, when the financial crisis...
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...Title of the Case: Nucor in 2009 Time Context or Period: 1905-2009 of Nucor Summary of the Case: In 1905, Ransom E. Olds, creator of the Oldsmobile, had a dispute with stockholders and left his own company — Olds Motor Works. He soon formed REO Motor Company, which evolved into the Nuclear Corporation of America and ultimately, Nucor. In 1962, this was the year that Nuclear Corporation made two moves that would soon change the company and ultimately the American steel industry. First, they acquired a company called Vulcraft, an unassuming producer of steel joists and girders. Second, to run Vulcraft, they hired a man named Ken Iverson who would soon emerge as one of the great visionaries and mavericks in American industry. Barely staving off bankruptcy, Nuclear appointed Ken Iverson as its new president. He acted quickly to put the company on a course toward profitability including selling off inefficient divisions. Not long after we shed our conglomerate business model to become a highly focused steel producer, The board of directors elected to change the name of the company from Nuclear Corporation of America to simply Nucor. Since then, Nucor has contributed over 70 million dollars to Scholarships and Educational Disbursements. It is a source for millions of dollars for educational funding. To this day, every child of every Nucor teammate is entitled to educational funds from the company. Now, Nucor is one of the leading steel producers in the United States. Later...
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...Corporte Governance ArcelorMittal Internal Corporate Governance 1. Internal Control The management is responsible for internal control in the company and has implemented a risk management and control system, which is designed to ensure the business is focused on achieving its objectives and to mitigate risk to the extent possible. This includes : - Management reviews - Reviews of the design and implementation of the company's risk management approach and business and functional audit committees. - Risk management - Whistleblowing - Audit Source: http://corporate.arcelormittal.com/investors/corporate-governance/risk-management-and-audit 2. Independence of the Board The board of directors consist of 11 members, which are divided into 3 non-independent members (Lakshmi Mittal the Chariman and CEO of ArcelorMittal, Jeannot Krecke who owns a decent number of shares in ArcelorMittal, and Vanisha Mittal Bathia who is a daughter to Lakshmi Mittal) , and 8 independent director members. The board of directors consist mainly of independent directors. This will help ensure that the board forces management to act in the best interest of shareholders and do not have an alternative motive to act in the private benefits for themselves or management. 3. Role of Audit Committee -- assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: - any financial report and/or other financial information provided to any governmental body and...
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