Reference no: EM134045488

ArcelorMittal,12 the world's largest steel company, had some 232,250 employees working in 60 countries in 2013. The company's registered headquarters is located in Luxembourg City, its operational and financial headquarters are in London, and its marketing and distribution centers are worldwide through its "Steel Solutions and Services" network. With 2013 crude steel output of 91.2 million tons (representing some 8 percent of world steel output), ArcelorMittal produces almost three times the amount of steel as the second largest producer, Nippon Steel of Japan. The largest regional market for ArcelorMittal steel is Europe (46 percent of total sales) followed by North America (27 percent), South America (11 percent), Africa and CIS (Commonwealth of Independent States) another 16 percent. While the mature European and North American markets form the basis of revenues for ArcelorMittal, future growth is more likely in such emerging markets as China, India, and Brazil where the company is making significant new investments.

Fifty-seven percent of ArcelorMittal employees are located in Europe, 16 percent in Asia, 12 percent in North America, 9 percent in South America, and 6 percent in Africa. ArcelorMittal is a highly vertically integrated steel company: it owns iron ore and coal mines that provide a significant amount of raw material input that is needed in steel making. It also owns steel mills in several countries in four continents of the globe that manufacture everything from basic steel rebars for the construction industry to fine steel used in the manufacture of appliances and cars. Also, because of its strong presence in Africa, the Americas, and Europe, Arcelor- Mittal has been able to consolidate its global operations (manufacturing, finance, and sales), which makes it one of the most efficient steel producers in the world for others to emulate. The Mittal family, who are originally from India, owns 41 percent of the company and the balance of shares is publicly held. Arcelor came to existence in 2002 through the merger of three European companies (Arbed of Luxembourg, Aceralia of Spain, and Usinor of France) to fashion a global leader in the steel industry, producing some 47 million tons of high-quality steel annually.13 Mittal Steel, on the other hand, was formed when two sister companies of the Mittal family, LNM Holdings and ISPAT International were merged in 2004 to produce some 63 million tons of steel with the key objective of being a low-cost global competitor. The merger of Arcelor and Mittal was consummated in 2007, thereby creating ArcelorMittal, the world's largest steel company. The key to Mittal Steel's success is its proven expertise in acquiring steel companies (especially privatized ones in countries like Kazakhstan, Romania, and Ukraine) and restructuring these underperforming assets. This was done by successfully stripping nonperforming assets, integrating the acquired companies, and implementing a "best practices" approach in operations management to enhance profitability. The size, scale, and product mix of ArcelorMittal's integrated operations give the company the flexibility to produce what the global market needs. Ownership of coal and iron ore mines (e.g., in Kazakhstan and Liberia) enables the company to keep raw material costs under control, thereby stabilizing ArcelorMittal's cash flows and profitability.

Questions:

1. Define Globalization, Deglobalization and decoupling in international business.

2. Is ArcelorMittal a "Stateless" corporation of an MNE? Where is its home country?

3. What is Mittal Steel's core competency, and what was its strategic motive for global business?

4. What is Mittal Steel's core competency, and what was its strategic motive for global business?

5. What are the different entry modes into foreign markets (Define each one them)?

6. What can be a motive to MNEs global strategy?

7. What determines the choice of selecting an entry mode over another?