Acerinox- Small Company in a Large Market

Topics: Steel, Better, Stainless steel Pages: 3 (617 words) Published: December 8, 2010
Acerinox: Managing the Change in the Global Market

Why a much smaller company, compared with its main competitors (Arcelor Mittal, Thyssen Krupp, etc..) can be competitive in a volume industry, like it is the stainless steel?

Financial Policy

The first reason why Acerinox shows competitiveness in a volume industry is because of the way it all began. For the first ten years after it’s foundation, the company applied what they called Financial Policy, which meant that shareholders would not receive dividends at the end of the year (for those ten years). Instead that money would be used to cover expenditures and serve as investment to improve processes.

International Orientation

The demand in Spain wasn’t enough to reach scale economies, creating the necessity to expand abroad. In 1975, with the fall of the Spanish government, Acerinox saw the opportunity to expand, opening its doors to other countries and setting up there. The first country where Acerinox established itself was France. As well, Spain’s inclusion in the European Union also helped increase sales ten times more in a 10-year period. They were able to do this with the help of international agents, creating a joint venture with Nissho Iwai Co., Nisshin Steel Co., and Spanish investors (Grupo Banesto, Banesco, and Banco Guipuzcuano). Because of conflicting interests between the Japanese and Spanish companies, business relations ended early, but this happened only after these alliances provided Acerinox with sufficient information and support for sales.

Efficiency in Production Processes

Being part of an international market made Acerinox realize that its products needed high degrees of standardization; because of this they focused large efforts on constantly improving (KAIZEN) there production processes through economies of scale and cost minimization. Also because of this they opted for an integrated plant that gave them the advantage to control the whole production process and...
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