Strategy and Change Management

TABLE OF CONTENTS Introduction Severstal st computegic analysis outside surroundal analysis gatekeepers five forces Yips supranationalization dodge Current strategy Industry life vibration merchandise placeplace segmentation Severstal acquisition activities BCG MATRIX Ansoff ground substance Stakeholder analysis Conclusion accompaniment References Introduction This assignment is based on unitary of the banginggest stain confederacy in the existence it is cognise as Severstal. This come with was founded in 1955 by Cherepovets mark mill and remain under soviet government monomania until 1991. In 1993 Alexel Mordashov became owner of this c entirelyer-out and registers the lodge name as Severstal in Russia.After the privatisation it get downs one of the external Russian companies with overseas export and ownership of overseas assets. And they too listed in LSE and RTS stock markets. They own end product in Canada, US, and Europe. Severstal is one of the ahead( p) poise manufacturers in Russia. It consists of six segments such(prenominal)(prenominal) as Kolpino bear upon service Centre, metal w ar, pipes, trading and services, nerve and scraps procurement In 2008, Severstal became thirdly biggest steel producer in Russian and 14 in the world, and the tax reaches to US$ 22. one million million. In same year they decided to exchange fraternity structure by making three particles such as Severstal international, Severstal Russian steel and Severstal choices. These changes improved their meshing in the world. In 2007 they also established gold business enterprise in the world. In 2010 Severstal improve their stellar(a) position in Russian market. However, they be famous for their high grade added products such as galvanized sheet, cold rolled and pipes. However, the company got 10 boards of directors and 5 ar independent director including chairman.Finally, this research part with examine the company strategic practiseance and tell us detail information of the company including its environmental factors and financial performance in the world. EXTERNAL ENVIRONMENT FACTORS large environmental factors depart critically analysis the company external factors through and through its broadly frame work such as curse analysis. This framework will helper to know about the company environment in the world. Political factors * Government are establishing new trade barriers for all that squeeze out have negative or positive impact on their business. Other political factors which fire affect their business are unseemly impact on business, such as operational results and financial impact. * Severstal enthronization policy offer have functional political risk. * All majorities of production and trading operations are taking place in separate region and countries with stand able political and social system. Economic factors * S abject rate of economic maturation stand affect Russian economy. * Recessio n can foreshorten demand of all lovesome substantives such as oil, fuck up and metals that leads to loss for the company. Increased in inflation can decline production and increased unemployment in the country. * Increased in oil price can lead to slow down in world economic fruit and reduce demand of steel in the world. Social factors * Social corporate responsibility. * Changes in employment police forces and labour can affect on their business. * strong attentions and following social rules of government can lead company growth in future. * Creating employment satisfaction and fulfilment of employee working capability can heighten erect relationship with labour. Technological factor New applied science and innovations is required to discipline the market position. * Implementing new techniques methods for development * Creating new types of steel alloys such as construction products of building. * Better services, fictitious character and technology for manufacturin g and production. Porters five forces http//www. google. co. uk/search? q=porters+five+forceshl=enprmd=imvnsbtbm=ischtbo=u However, steel industries were not economic from long time. All the manufacturers and producers were not seen profitable in late 1990 to 2003.In USA, more(prenominal) than 50 industries went for bankruptcy. Eventually, twenty prototypical blow becomes revolutionary for steel labor. For example mittal steel paid $35 billion to buying European devil and becoming world largest steel diligence in the world. New entrants on that point are two powerful entrants in the steel industries they are reorganisation and privatisation. There will be modified threats of new entrants in steel constancy. However, Chinese are increasing competency of rate at 30%. Since 1990 Chinese has become third world exporter and producer in the world after Russia and Japan.Although the steel sedulousness will have a competitor such as china, and India steel attention can become t he threat for Severstal. Substitutes There are not umteen substitutes for steel, but because of the advance technology they introduced substitutes by other material such as aluminium in cars, plastics and aluminium are used to unclutter this thing. However, in present world steel has become one third thinner over last few years. Similarly for construction big items such as building, bridges, trains etc steel are only used to correct these items.Buyer power There are many come across buyers for steel such as Toyota, Ford, Volkswagen and one of the leading steel buyers who produce food cans is known as crown holding, they make one third of food can in Europe and North America. All these industries buy high heap of steel to produce their items. Car manufacturers are the leading buyers of steel in the world. Supplier power The key producer of steel is iron ore. There are three big ORE producers they are TINTO, RIO, CVRD and BHP Billiton they control 70% of steel market in the world . The supplier power of steel maker is precise high in this ndustry. Despite of recession, steel ore price was not decrease in the market. Competitive Rivalry Since 2000, the industry has become very fragmented, the blow over most producers in the world has been accounted for 14% of production. Most of them were selling the steel in tonnes. Price were decreased in 19th century and teeny-arm slow down in the demand. However in the twenty first century demand boomed by Chinese market. Chinese were the largest consumer of steel in the world. Other big companies like mittal, Tata and thyssen Krupp were buying weaker matchers in the market.New steel giant mittal becomes the world largest producers in the world. Yips sphericisation strategy From the supra macro environment situation the company decide to adapt the global strategy in order to achieve higher revenue and profit in the future. This yip globalisation model helps to evaluate the industry. http//www. google. co. uk/imgres ? um=1hl=ensa=Nbiw=1280bih=709tbm=ischtbnid=ED-UITUWq9ob0Mimgrefurl=http This model is consisting of four drivers which help industry for global expansion in international market.However, apply this framework in Severstal industry to see it benefits Market drivers If we see the performance of Severstal, it most revenue is generating by North America, Russia and other resources of the world. According to its annual report the company is generating revenue from all across the world. The steel market is cyclical with short salad days to peak demand in the regional markets. However, in future company can dominate the position Chinese market. Basically, Chinese has very slight amount of producers in the market to supply steel in international market.Cost drivers Mostly the steel industry generates its income through iron ore and other tippy materials including, energy, electricity and labour. However, to increase its revenue company fatality to globalize and reduce the cost in order to improve its profitability. The industry acquire to go for it assets were the company acquire from mergers and acquisition. Finally the company learn to produce the material in the different countries to reduce it production costs and logistics cost in the end. Government driversThe industry has benefit in the country where they have giving trade laws such as European Union who provides human resource and infrastructure facility compared to other parent company that run in Russia. Competitive drivers The rapid development in environment come outs the new aim of competition in steel industry. The vision and mission of Severstal is to achieve it steel production across the globe. The report returns that Severstal is a 14th largest steel industry in world that produced 19. 2 million tonnes of steel in the world. However, mittal is the largest industry to produce 54. 4 million tonnes of steel in a year. instance study Severstal). However, Severstal need to expand its business by implementing a strategy in the business that can help the company step by step to improve the market condition in the future. CURRENT outline Severstal industry life cycle https//www. google. co. uk/search? q=industry+life+cyclehl=enprmd=imvnsbztbm=ischtbo=usource=univsa=Xei=bRgaUIbkHtK There are four stages of industry life cycle such as * suppuration Severstal need to focus on development and innovation of product which help company to bring new technology and environment benefits.They should asseverate the quality of the product. * Growth Severstal need to maintain its business growth drivers such as vertical integration, cost emoluments and strategic market focus. * Maturity Severstal is one of the reign steel industries in the market. However, they need to maintain position in US and Europe market to achieve maturity in the business. Although, china is actual market with less revenue that can become your main market in the future. * Decline In 1990 steel industry was f acing colossal decline in their sales and production.However in 21th century steel industries are dominating the position in the world by acquire small industries for example mittal acquisition European steel company and Tata purchase other steel industry. Market segmentation According to the market research the in effect(p) vertical integration form progress competitive advantage to Severstal, they need to keep strengthens the industry cyclicality market risk and provides flexibility and disruption allow us to capture the market opportunity. This vertical integration system helps company to improve financial performance in all three division of market.This vertical form also help to maintain the cost advantage and supply chain with high level of sufficiency, However, Severstal need focus on acquisition of small steel industry to acquire and develop the business in entire world. Target market * Severstal need to target rising markets such as Latin America, south eastern Asia, A frica and middle east * They need to secure their assets in fast growing steel markets. * developing a new global raw material base will secure access to high potential market ensure its leading position and develop its expansion strategy for the company. Severstal need to target Chinese market and Asian market to develop their position in the world. aligning * Severstal need to maintain its position in Russia and North American market. However, their object for 2012 is to improve EBITDA margin and despite many economic and industry challenges. * Our spirit is to keep global cost curve across all the operations and strengthen our market position. * They need to more focus on potential emerging market and high value added product which drive our margins to flush position. SEVERSTAL ACQUISITION ACTIVITIESPortfolio matrices (BCG MATRIX) The most common portfolio analysis is Boston consulting group matrix which analysis the market share and market growth of the industry. This matri x show high growth demand heavy investment for example it show the excess capacity or develop brand. http//www. google. co. uk/imgres? hl=ensa=Xbiw=1280bih=709tbm=ischprmd=imvnsbtbnid=pBDs3BceOtFkAMimgrefurl=http//www. quickmba. com/strategy/matrix/bcg/docid Stars Europe, US and Russia has high market share for Severstal. interrogation marks Chinese and Asian market.Cash cow North American and Russian market is cash cow where Severstal can develop their market international by export steel in the world. Dogs other countries like southmost Korea. Ansoff matrix Ansoff matrix is a framework to proposed growth strategies for company to develop its business in future. Market penetration * Severstal should maintain the focus on emerging markets such as Russia and north America * Russian market can increase its revenue in coming(prenominal) years. However, WTO has announced the upcoming winter Olympic Games in Sochi Russia which give additional opportunity to develop its market. They ne ed to more focus on south East Asia, Africa, nub East and Latin America where they got fastest growing steel market. harvest-tide development * Severstal need to maintain the quality of product such as raw materials like iron ore, coking coal, scrap. * Severstal are targeting to expand access of raw material that could develop the strategically * Severstal need to more focus on gold business which can increase their revenue. Market development * Severstal need to develop its market position in china and Asian market. * They need focus on high value added products and fast growing market. To maintain and maximise margins of the company, they should need to focus on steel related minelaying and steel production. * Target main market such as Russia to become no 1 in that market. Diversification * Severstal need to concentrate more on their existing products such as wire ropes, metal run off and steel pipes. * Company need to maintain its stability in the market. STAKEHOLDERS ANALYS IS http//www. google. co. uk/imgres? start=95hl=enbiw=1280bih=709tbm=ischtbnid=YIubWJZV1827SMimgrefurl=http//intoprojects. om/how-to-identify-stakeholdersdocid=gTtb0gkJERbD9M There are two types of stake holders they primary stakeholders and secondary stakeholders. firsthand stakeholders * Customers customers are the key person for every company. Who want high value added product and skinny quality and better customer services. * Suppliers supplier is a person who give raw materials and other products to company and want their payments on time * Employees employees endure vital role in every organisation, those are the people who perform good for the company and maintain the standard of the company.In order to achieve good salaries and benefit from the industry. * Shareholders shareholders always want the industry to perform well in the market and achieve high revenue every year in order to get more dividend from the company. Secondary stakeholders * Consumer group consumer group has a responsibility to check the fairly and safety product are assumption to consumers. * Trade union A trade union is a govt law that everyone has in their company. However this trade union assist the labour in any requirement and help them work in better environment. twinge group this group maintain the rules and regulation of the government on company law influence and regulation. * Government Government are related with legislation, VAT, and taxation, low employment. * Community group this community group includes all community such as jobs, contributions, ecological factors and share will comes under this group. * Media media also play vital role for every industry in order to kindle brand and create good relationship with customers and ongoing activity. Areas to conflict Primary stakeholder * Customer are not satisfied with the product and quality that are