Strategies adopted by South African steel manufacturers under conditions of demand contraction.

Abstract

ABSTRACT This thesis is an analysis of a company operating in contracting market demand for its products, post the 2008 financial crisis. It is a case study based on ArcelorMittal South Africa, a large (monopolistic) steel company, and how they have adapted their strategy in response to the reduced market demand. The research required an in-depth analysis of how the external and internal environment that ArcelorMittal South Africa is exposed to has changed post the financial crisis, and how this has translated into a strategy. Thus, a qualitative research approach was adopted in this study, using semistructured interviews as the primary tool. Due to the subject matter, the desired demographics of the respondents were senior members of the organisation that provided the necessary depth of knowledge and perspectives. This was triangulated using published information in the form of annual reports, newspaper articles and engineering journals. The thesis makes the following key contributions: · How the financial crisis has reshaped forces in the steel industry · An analysis of the resources and capabilities of a company, and how these can become a source of competitive advantage. Where this is not evident, a strategy must exist to turn them into a source of competitive advantage · Highlights some of the strategies applied by steel companies and others in order to improve organisational efficiency and provide sustainable profits · The intricacies and challenges that a large monopolist faces in both the external and internal environments · The need to redefine historical target markets, thereby impacting on the products produced, in pursuit of sustainable profitability in the longer term · Demonstrates understanding and highlights risks associated with the trend in backward integration prevalent in the global steel industry Industries that have historically been slow to change are now being forced to become more dynamic and flexible, challenging efficiency levels. This is the new business order, and a failure to adapt on all levels in the organisation has the potential of humbling large companies.