International Business MGMT

Course Code: BBA2543 Program: Bachelor in Business
Administration
Course: International Management System Year /Semester: 3rd /
5th
LC: 00023000190
1.What forces drove Mittal Steel expanding across national borders?
Mittal steel started expanding across national borders due to government regulations
along with tough competition from SAIL and TATA steel. Mittal Steel believed that it
would be more likely to experience growth if the company would transpire outside of
the India. The company made its first move in 1975 when it set up a steel making
plant in Indonesia. To provide raw materials for Indonesian plant mittal steel
expanded into Trinidad. The Mittal group developed an expertise in introducing
innovation and cutting edge technology into steel making process. It would be more
likely for the growth of the companies .
The forces drove Mittal Steel expanding across national borders were the fact that the
business was facing limited growth opportunities in India because they had no great
demand for steel when compared to other countries. The government regulations of
the country also constrained the expansion of the company where the regulation
restricted the company to expand across borders.
1. Mittal Steel expanded into different nations through mergers and acquisitions, as
opposed to Greenfield investment why?
Mittal steel expanded into a different nation through mergers and acquisitions as
opposed to Greenfield investment because mittal steel entered into foreign
expansion at a time in which the steel industry was in the middle of a 25 years
slump .This had caused many other steel companies to become distressed and in same
case go under. However lakshmi mittal saw value in the weak state of these firms. He
Believed with an injection of capital , they could move towards greater efficiency.
On the other hand, Greenfield investment took a different more costly approach.
Before its merge with Arcelor, Mittal Steel was fourth largest producer of steel with
Indian origin. Mittal Steel was the formed in the year 2004 by merger of two sister
companies belonging of the Mittal family. The growth of Mittal Steel was centered
around mergers and acquisitions. During the period 1985-2005, Mittal steel acquired
many steel making companies like Trinidad, Sibalsa, Dosco, Ispat Internatinal, Island
steel etc. During the above period Mittal Steel made 19 acquisition in countries
ranging from china to Poland. Through acquisition, the company made it to the list of
fortune 500 companies. Mittal steel increased its capacity by ten time on account of
these acquisitions. The products of Mittal steel considerd of semifinished steel, flat
product, finished product, wire rod, coated steels, tubes and pipes. The strategy of
Mittal Steel had been to acquire loss making companies owned by formerly public
enterprises and then make investment to reduce their production cost and expand
capacity.
Administration
5th
LC: 00023000190
Mittal steel expanded into different nations through margers and acquisition and
opposed the Greenfield investment because mergers and acquisition is much more
cost efficient quicker to execute and easier to manage because the company already
established they have the customer base, suppliers and have all the large sum
equipment so Mittal steel only need to invent the company with capital to improve
their efficiency with modern technology and increase management skill. From this
Mittal steel can cost on buying expensive equipment and less risker for them to
acquire the desired assets than building them from the scratch.
2. What benefit does Mittal Steel bring to the countries that it enters? Are there any
drawbacks to a nation when Mittal Steel invests there?
The benefit that Mittal Steel bring to the countries that it enters are the increase in
revenue, employment, resource, business expertise etc. Mittal steel are most
international of all steel manufacturing companies with manufacturing facilities in 18
countries. So for those keen to experience life abroad, we encourage mobility by
offering overseas position to help ndividuals broaden their personal and professional
horizons. We have a specialized division dedicated to such opportunities.
Benefit of Mittal Steel is Global competitive advantage. First is creating a global
customer base and thus being better able to predict markets trends. Second, the
company has a strong manager integration program an approach that is unheard of in
steel industry. We have people getting together and talking about how they can
improve process. Third is global purchasing power. Mittal steel create drawbacks in
farmers because industry pays more amount than farms and then all workers will
tournover to industry. Migration will their in village to city or industries sites. People
will transfer to city area for jobs in industry. Create more pollution in river side by
industry. The wastage material from industry should be well managed.
5. What impact do you believe the exchange rate had played in Mittal expansions
decision? Also give your views on how would international monetary system had
impacted Mittals expansion strategy.
Mittal steel has impact on exchange rate of monetary decision. There are some
common factors of exchanged rate.
a. Inflation: the rate at which the general level of prices for goods and services is rising
is known as the inflation rate. Countries with lower inflation rates will trend to see an
appreciation rates will tend to see an appreciation in the value of their currency.
b. Interest rate: there is also high correlation between inflation, interest rates and
exchange rates.
c. Balance of payments: if the value of imports is greater than the value of exports, this
mean there is a deficit in the current account. This deficit is a result of more spend on
foreign sources to make up the deficit is usually a feature.
Administration
5th
LC: 00023000190
The purpose of international monetary system is to facilitate international economic

exchange since most countries have national currencies that are not typically accepted
as legal payment beyond their borders.
4. What are the benefits to Mittal Steel from entering different nations? Give your
view on the prospect of socio cultural differences.
There are various benefits to Mittal Steel from entering different nations. Mittal steel
brings several benefits to the countries that it enters . Its presence in the market is
beneficial as it focuses on acquiring and improving distressed companies. These
acquisitiins also help to contribute more capital to each country .However there are
also some drawbacks .Here company was entering to different nations there company
went widely global. Their company will be well-known to various people of different
countries. There will be huge amount of production of goods and services which will
increase the income of the company. Mittal Steel also has high risk as well as high
hope from entering different nations. Risk can be that may be there business will be
successful or not but despite of having risk there are high hope in being successful. As
Lakshmi saw opportunity in purchasing the assets of distressed companies on the
cheap. He always believed that the global steel industry was about to turn a corner. He
also saw all sorts of opportunities for buying poorly run companies as they came up
for sale, injecting them with capital, improving their efficiency by getting them to
adopt modern technologies, and taking advantage of the coming boom in Steel
demand. He also saw opportunity to use the purchasing power of global steel
company to drive down the price it would have to pay for raw material inputs.
As we know, business always exists in an environment shaped by culture.

Organizations that intent to sell products and services in different countries must be
sensitive to the different cultural factors at work in their target markets. Even cultural
differences between different countries, different regions in the same country can
seem small, but businesses that ignore them risk failure in their ventures. To carry out
managerial tasks successfully, it is very significant for the business to acquire socio
cultural proficiency. According to the prospect of socio-cultural differences there are
some benefits that Mittal Steel possess from entering different nations. Different
cultural people have different skills which drives new innovative ideas which will be
fruitful for the company and it will be more productive for the business. We know that
diverse team are more productive and can help in effective production. Socio- cultural
people can drive innovation and best ideas. Further the company can adapt to the
culture and know about the local market and its competitors from the people of
different nations. Though, socio- culture people can be difficult to manage it is always
an advantage to the companies operating outside home country.
Administration
5th
LC: 00023000190

International Business MGMT

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International Business MGMT

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Course Code: BBA2543 Program: Bachelor in Business

1.What forces drove Mittal Steel expanding across national borders?

The purpose of international monetary system is to facilitate international economic

As we know, business always exists in an environment shaped by culture.

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