Five Forces Analysis of the Steel Industry.

For a long time the steel industry was seen as a static and unprofitable one. Producers were
nationally based, often state owned and often unprofitable. The early 2000’s saw 50
independent steel producers going into bankruptcy in the U.S. alone. But there then followed a
surge in confidence. During 2006 Mittal Steel paid $35bn to buy European steel giant Arcelor,
creating the world’s largest steel company. The following year, Indian conglomerate Tata
purchased Anglo-Dutch steel. But these acquisitions were made just before the onset of the
Great Recession in 2008 and further turmoil in the steel industry at large.

New Entrants.
In the last two decades, China has become a major force in the world steel industry. Between
the early 1990’s and 2011 Chinese producers increased their capacity seven fold. Although
the Chinese share of world production reached over 45% by 2011, most of this was directed at
the domestic market. Nonetheless, China was the world’s largest steel exporter in 2011, and
there were fears that any slowdown in domestic demand would lead to a surge into international
markets. The Chinese companies Herbei and Baosteel are ranked number two and three in the
world.

Substitutes.
Steel is a 19th century technology, increasingly substituted for by other materials such as
aluminium in cars, plastics and aluminium packaging and ceramics as well as composites in
many high-tech applications. Steel’s own technological advances at times work to reduce need:
thus steel cans have become about one third thinner over the last few decades.

Buying Power.
The major buyers of steel are the global car manufacturers. Car manufacturers are sophisticated
users, frequently leading in the technological development of their materials. In North America
at least, the decline of the once dominant ‘Big Three’ (G.M., Ford and Chrysler) has many new
domestic buyers, with companies such as Toyota, Nissan, Honda and BMW local production
plants.

World steel production increased by about 50% between 2000 and 2008, dropped by about
10% in 2009, before recovering to reach a record in 2012. Despite acquisitions by companies
such as Mittal and Tata, the industry is fragmented. The top five producers still accounted for
only 17% of world production in 2012, up only 3% since 2000. The world’s largest company,
ArcelorMittal, accounted for just 7% of production. Overcapacity in the European steel
industry was estimated at 25% in 2012, but when ArcelorMittal tried to close down its Florange
plant, the French government threatened to nationalise it. After a cyclical peak in 2008, the
world steel industry price went down 40% by 2012, basically the same as in 2005.

Another important user of steel is the metal packaging industry. Leading can
producers such as Crown Holdings, which makes one-third of all food cans produced in North
America and Europe, buy in large volumes from around the world.

Supplier Power.
The key raw material for steel manufacturers is iron ore. The big three ore producers---Vale,
Rio Tinto and BHP Billiton---control about 70% of the world market for internationally traded
ore. Iron ore prices had multiplied four times between 2005 and 2 level in 2012.008 and, despite
the recession, were still twice 2005’s

Competitive Rivalry.
Because of over-all reduction in the market size, rivalry between the main players is at the
sharp end. In addition the threat of new and substitute products underscores the need for in
depth strategic planning. This will be necessary even to keep pace, not to speak of gaining
competitive advantage in the short term.

Case: Review the data on the steel industry.

Set out the direction that a strategic plan could take.

Use Crown Holdings as the focal organisation

Identify a change initiative that could be undertaken immediately.

REVIEW THE DATA ON STEEL INDUSTRY
India's done steel utilization developed at a CAGR of 5.69 percent amid FY08-FY18 to
achieve 90.68 MT.

India's rough steel and completed steel generation expanded to 102.34 MT and 104.98 MT in
2017-18, separately.

In 2017-18, the nation's done steel trades expanded 17 percent year-on-year to 9.62 million
tons (MT), when contrasted with 8.24 MT in 2016-17. Fares and imports of completed steel
remained at 4.33 MT and 5.41 MT, amid Apr-Nov 2018 (P).

DIRECTION THAT A STRATEGIC PLAN COULD TAKE

India is relied upon to surpass Japan to wind up the world's second biggest steel maker soon.
The National Steel Policy, 2017, has visualized 300 million tons of generation limit by 2030-
31.

In 2018, steel utilization of the nation is required to become 5.7 percent year-on-year to 92.1
MT. Further, India is relied upon to outperform USA to end up the world's second biggest
steel shopper in 2019.

Colossal extension for development is offered by India's nearly low per capita steel utilization
and the normal ascent in utilization because of expanded foundation development and the
flourishing vehicle and railroads areas.

Swapping scale Used: INR 1 = US$ 0.0142 as of Q2 FY19.

CROWN HOLDING AS THE FOCAL ORGANIZATION

William Painter, developed a superior method to bundle sodas and brew. Painter's vision
upset the packaging business. His creativity, and the administration of the individuals who
came after him, fabricated Crown Holdings, Inc. into the world-class organization it is today.

Crown is a main worldwide provider of metal bundling items with a different geographic
impression.
INITIATIVE THAT COULD BE UNDERTAKEN IMMEDIATELY
Some of others recent government initiatives in this sector are as follows:
• An send out obligation of 30 percent has been imposed on iron ore (bumps and fines) to
guarantee supply to household steel industry.

• Government of India's emphasis on framework and restarting street ventures is helping the
lift popular for steel. Additionally, further likely speeding up in rustic economy and
foundation is relied upon to prompt development popular for steel.

• The Union Cabinet, Government of India has affirmed the National Steel Policy (NSP)
2017, as it tries to make an all around focused steel industry in India. NSP 2017 imagines 300
million tons (MT) steel-production limit and 160 kgs for each capita steel utilization by 2030-
31.

•The Ministry of Steel is encouraging setting up of an industry driven Steel Research and
Technology Mission of India (SRTMI) in relationship with people in general and private
division steel organizations to initiate innovative work exercises in the iron and steel industry
at an underlying corpus of Rs 200 crore (US$ 30 million).