STEEL INDUSTRY CASE
← General features of the business environment and key issues in the case
Positive aspects of the environment
Steel remains still the symbol of the industrial revolution in the spirit of people and thus is still very popular. It is the metal more used in the world.
Steel is a general-purpose metal which enables him to be employedin many sectors such as: public equipment (rails, indication), chemical industry, pharmaceutical and nuclear (tanks, engines, pipings), agro-alimentary (conditioning and storage), building (reinforcements, frames, ironwork, and hardware), means of transport (car, aeronautics, railway, and aerospace), medical (instruments and apparatuses), and component mechanics (screws and bolts, springs, cables,bearings, gears). Steels are also very present in intended products at the general public (movable, kitchen utensils, and electric household appliances)
The infrastructures of the refineries and the liquefied natural gas trains are almost made of steel what makes this alloy an essential metal. Steel is also a metal which can be recycled and inexpensive and thus very much used by the sector ofthe packing, it is also very resistant to the shocks, which is interesting for the sector of the shipyards.
The fast development of the lines at high speed in the years 1980 increased the request of the sector and consequently of steel. This strong demand was reinforced by the economic boom of the 30 glorious ones. Some mergers such as Arcelor have made it possible to become the world leader inflat products and special steels.
Lastly, the Chinese market contributes enormously to the development of the demand for steel in the world and it is it which partly determined the price level.
Through this document, it is not only positive aspects of the merger between the two steel giants Arcelor and Mittal. Indeed, we subsequently analyze the negative aspects ofthis action.
Firstly, if we start from the manufacturing process, it appears that obtaining iron is a long and costly this can be explained by access to resources difficult, costly and risky.
If it is now in the energy, we realize at that time with the burden of these giants of the steel through a logistics infrastructure and exceptional. This market is huge and commitments are as a result. Thus,to reduce their energy costs and secure supplies in case of peak consumption, manufacturers of steel usually conclude long term contracts.
But this rule on the steel market was not built overnight, and has not always been easy.
Indeed, under this apparent prosperity, sustained by the Government incentives to encourage the development of steel industry by setting minimum prices (such as theECSC in Europe), these multinationals have been hit hard by the economic crisis. It started from 1974 and placed the steel sector in the doldrums in particular the United States and Japan.
But this dark period lasted for a time, and the explosion of commodity prices in the early eighties has accelerated the development process of this second stage fusion.
Note thereafter several flats by selectedindustries related to steel.
The first is the building industry where the financial sector building and construction, which is particularly cyclical, tends to falter after experiencing a boom for a number of years. Moreover, the automotive industry is extremely competitive and put a very strong pressure on prices mainly due to the increasing concentration sector. Finally, the packaging industryeven if the steel is recyclable and relatively inexpensive; it is increasingly facing competition from materials.
← Porter's five forces
Capacity of negotiation of the suppliers:
The energy production requires important contributions of external resources which constraints the actors to establish solid contracts with their suppliers in order to consolidate a long lasting activity. By...
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