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Lakshmi Mittal and the Growth of Mittal Steel. In 2007, a controversal merger between Mittal Steel and Arcelor was completed:

1) What forces drove Mittal Steel to start expanding across national borders?
2) Mittal Steel expanded into different nations through mergers and acquisitions,as opposed to greefield investments Why?
3) What benefits does Mittal bring to the countries that it enters?Are there any drawbacks to a nation when Mittal Steel invests there?
4) What are the benefits to Mittal Steel from entering different nations?
5) The acquisition of Arcelor was very acrim0nious,with many politicians objecting to it.Why do you think they objected?Were their objections reasonable?
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Lakshmi Mittal and the Growth of Mittal Steel

1) What forces drove Mittal Steel to start expanding across national borders?

There were several reasons why Mittal Steel started expanding across national borders. Initially, the Mittal Group found that it was not possible to invest large amounts in its country of origin because of the socialist policy of the government that discouraged large investments in the private sector. A large number of steel mills were in the public sector and were owned by the government. They spied the first opportunity when in 1976 it invested a steel mill in Indonesia. To provide raw materials for the Indonesian plant Mittal Steel expanded into Trinidad and Tobago. This was how expansions took place. In Trinidad and Tobago the Mittal Group leased a government owned steel plant. The Mittal group developed an expertise in introducing innovation and cutting edge technology into the steel making process. This helped turn around the steel mills.

Mittal needs to expand in a global manner because he has acquired the skills to acquire steel plants and turn them around through innovation and cutting edge technology. His basic strength cannot be applied in one country alone because the opportunities for investment and expansion in one country are too few. On the other hand global expansion presents several opportunities for acquisition and expansion.

2) Mittal Steel expanded into ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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