ssPorter’s 5 forces analysis for Arcelor Mittal
1. Competitive rivalry:
Industry rivalry is high: Arcelor Mittal is still ranked no. 1 in the world top steelmakers (World SteelAssociation, 2013) with a reported 96.1 tonesof crude steel in 2013, higher than 93.6 tones in 2012. In 2014 Arcelo Mittal produced around 119 tones crude steel, it is present in 22 countries, all over the world. Ranked no.2 is Nippon Steel & Sumimoto Metal Corporation, with 50.1 tones crude steel in 2013. However, many companies, such as: global steel producers and US based steel companies: US Steel Corporation, Nucor Corporation and Reliance Steel & Aluminium. are consistently growing competition operating on the same markets as Arcelor Mittal. Increased competition comes from global exporters, such as major Chinese steel producers. These companies, which delivered the necessary steel products to the local growing market, are facing the recent slowdown of Chinese economy and therefore started to search for other markets and started to export globally, becoming the first exporter in the world, often dictating the market price. Increased competition from smaller competitors, mainly those using mini-mills. Many Chinese companies consolidated to form more powerful groups, such as Tianjin Bohai Steel in 2013, ranked no. 15, while other companies merged and became stronger. However, there are still small companies that represent a threat for Arcelor Mittal because they are more flexible and have lower costs. Products are rather similar, this fact resulting in intense competition to get large contracts from key users. Lately, the focus of steel producers was on developing franchises, or trying to produce specialised products for key users. High competition determined minimal costs for buyers to switch from a producer to the other. In the same time, the industry, including Arcelor Mittal, operated under its capacity. High exit barriers make steel producers continue to struggle for a market...
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