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SUBMITTED BY

MEHVISH REHMAN

SUBJECT:INTERNATIONAL BUSINESS

TOPIC:CASE STUDY

23/4/10B

BA

(5TH

)

5

G.P.G.C FOR WOMEN

S/TOWN RWP.

SENERIO

Lakshmi was born on 15 June 1950.His father named Mittal start a small

steel mill in Kolkata.

Lakshmi started his career in 1970.

SENERIO

In early 1970 company face limited growth opportunities in India.

In 1975 his father financed him and he start business in Indonesia in 1976

CONTIUE………

Trindian impressed by growth of Mittal and invite him to start business in his

country under a contract.

In 1989 Mittal purchase plant of trinilandian.

Steel industry had been in slump for quarter of century because of ;

Excess capacity of steel. Slow growth of demand.

Substitute material of steal available.

CONTIUE………

Lakshami saw opportunity and purchase all raw material of all

distressed industries at low cost.

He injected all material with capital and improve their efficiency by adopting high

technology.

so, In1992: Acquire Sibalsa in Mexico.

1994 : Purchase 4th largest Canadian steel mill.

1995: Acquisition of mid sized German steel mill.

After acquiring large numbers of mill he still hungry for more success.

He decide to generate capital by issuing shares in all these countries except India and Indonesia because of limited liquidity

of capital market.

CONTIUE………

Capital generated from IPO Mittal purchased 2 more German steel maker.

In 2005 : Mittal Steel takeover of the International Steel Group, USA.

That time was again the time of boom in steel industry and steel prices hitting

highs.

CONTIUE………

On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor. 

Through subsequent transactions Mittal Steel increased its ownership to 94.2%, which included the issued & outstanding

shares of Arcelor and all of Arcelor’s convertible bonds.

CURRENT SITUATION

Headquarter in Netherlands. The world largest steel producer

company. Highest revenue earning industry.

Biggest direct reduced iron producer. No1 richest person of the Europe.

No 4 richest person of world. Now 224000 employees operate in 49

different nations. Mittal steel strategy is aimed at creating

value through steel cycle.

Focus on global marketing effort.

QUESTION # 1.

There are several forces that played a role in Mittal Steel expanding across the border.

The company was facing limited growth opportunities because of

govt rules and regulations and strict competition from the

state owned and private competitors.

There are high growth opportunities in other countries such as Indonesia, Mexico,

Kazakhstan & German etc

QUESTION # 2.Mittal expended his business through

acquisition instead of green field because ;

It is less costly than green field.Less risky.

Need less efforts & Less time consuming.

Labors, technologies or machinery & equipment is already installed.

Easy to execute because everything already established.

Not have to face more barriers.

QUESTION # 3.BENEFITS FOR THE COUNTRY WHERE ENTE

R:

Provision of employment. Take part in the development of the country.Economy of the country become stable due to investment.Standard of living of the people increases.

GDP of these countries increases.Resources, technologies, capital & skilled

labors come in the country.

Have positive effect on capital a/c & current a/c.

DRAWBACKS:Acquire the market of that country.

Discourage local steel industrialists or producers.

Use the land, labor & resources of that country & generated revenue send back

to the home country (India).

Sovereignty or independence of that country decreases

QUESTION # 4.BENEFITS TO MITTAL STEEL:

Expending & growth of the business.Generate revenue by doing FDI.

Learn different skills from the labors of the country where invest.

Inward flow of earning.

It is the source of efficient production to enter in the countries where produce more efficiently.Get wide & large market in different countries by setting plants in different countries.

Enter into economically developed country.

QUESTION # 5.The acquisition of Arcelor by Mittal led to the creation of Arcelor-Mittal, the largest steel maker in the world.

It has been one of the most controversial deals ever, but Mittal faced many objection & opposition of management of France & Span Govt.

THEY OBJECTED BECAUSE:

France Govt was against the deal because of worries over the future of

about 28,000 Arcelor’semployees.

CONTIUE………

France Govt also against it because of its effect on economy, as the revenue

generated by the Arcelor will start flow towards India.

Mittal become dominant in the France.

CONTIUE……… WERE THE OBJECTION REASONABLE OR NOT?

It is reasonable to some extent as,Mittal become dominant.

Future of about 28,000 employees were at risk.

BUT IT ALSO HAVE MANY BENEFITS:

GDP of the country increases. It have positive effect on capital a/c & current a/c.

CONCLUSION

Earlier research has shown that FDI by MNEs contributes to economic growth.

Domestic investment may accelerate economic growth but new technology is usually acquired through FDI.

FDI has promoted to effective economic growth and the role of the foreign direct

investment in this field has been extensively known in China and

India,economics have been using FDI as a stimulus in the growth process for their

business.

CONTIUE………

The growth theory says, Export and FDI have played a crucial role in the growth of

the business, because FDI, export and economic growth have triangular

relationship.

23/4/10B

BA

(5TH

)

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