Seminar Paper Synopsis

Submitted by Vaibhav Palaye (PGDM-IB, 2010-12, Roll no: 37)

Under the guidance of Dr. Ramkishen K J Somaiya Institute of Management Studies and Research

Topic: Channel management designing for distribution of Steel in Brazil and South Africa.

Functional Area: International Marketing- International Distribution Channels.

Scope of the Seminar Paper: The Seminar paper will first look into the market potential of Steel in Brazil and South Africa. These emerging economies are the epicentre of huge infrastructure projects, industries and thus are a great potential market as far as Steel is concerned. The paper will then look at the various distribution channels for Steel in those countries by leading Steel producers and the Channel management designing decisions for the distribution of Steel in these countries.

Methodology: The methodology would involve secondary research and the paper would be exploratory in nature.

Expected Outcome: The paper will explore the market potential of Steel in Brazil and South Africa and the various sectors which will contribute more to the consumption of Steel. The Seminar paper will present the different ways in which Channel management designing for the distribution of Steel is done in Brazil and South Africa by leading steel producers.

Bibliography:

1. South Africas Steel Industry, Research Channel Africa The report talks about the Global market for Steel Major steel producing countries, Major steel producers, iron-ore supply to the steel industry, Stainless steel and consumption pattern. It then talks about the South African market, Production, Products, Employment, Consumption, Trade, Price fixing, Environmental issues. The report also talks about the Primary carbon steel producers in South Africa like ArcelorMittal South Africa, Highveld Steel & Vanadium, Scaw Metals, Cape Gate, Cape Town Iron & Steel Works, Stainless steel producers in South Africa, Columbus Stainless. This report gives detailed analysis of the Steel industry in South Africa and its players.

2. The South African Iron and Steel Value Chain, Kumba Iron Ore In this paper, Kumba has sought to examine some of the most critical features of the iron ore, steel and steel consuming downstream industries and to highlight those considerations which could have an important bearing on formulating appropriate policies to achieve certain developmental objectives related to the South African iron and steel value chain. The iron and steel value chain consists of four distinctive stages, spanning multiple industries: exploration and extraction, mining beneficiation, metallurgical beneficiation and shaping and conversion/fabrication and manufacturing/end user industries. Kumba feels that there should be a common understanding of the economic, commercial and policy drivers that inform the viability of the iron ore and steel value chain.

3. Iron & Steel Industry in Brazil: In a Sweet Spot The report talks about the Brazilian steel industry getting poised to get a big boost from domestic factors. Having realized that its growth momentum might wilt if the infrastructure deficit is not bridged, Brazil has launched a sustained effort to build or improve ports, railroads, airports, and roads. The Soccer World Cup and the Olympics, which Brazil is slated to host in 2014 and 2016, respectively, are also adding to the sense of urgency. Eager to showcase the two mega sporting events to the world, Brazils federal government has already drawn the blueprint to build and upgrade stadiums and airports, as well as spruce up urban infrastructure. Riding on this infrastructure boom, the demand for steel in Brazil, already on the rise, is expected to increase manifold over the next few years. Clearly, the primary beneficiaries of this trend will be steelmakers based in the country. Its not just infrastructure though. The growth in the size of the middle class, which now makes up more than half of Brazils population, and the nearly 45% rise in wages over the past few years, have pushed up the demand for automobiles, appliances, furniture and everything else that requires steel as a raw material.

4. The Brazilian Steel Industry and Environmental Performance The Brazilian steel industry dates back to the nineteenth century but the sector was largely developed during the industrial development programmes of Presidents Vargas and Kubitschek during the 1940s and 1950s. Until the 1990s, the steel sector was predominantly state-run, becoming highly inefficient and dated during the authoritarian period (1964-85), but privatisation under the Plano Real has led to modernisation, improved technologies and more efficient management. In terms of environmental performance, the last ten years have witnessed significant changes in the sector. In response to environmental regulations and greater environmental awareness in industry and amongst stakeholders, steel firms have implemented technological and management responses to reduce emissions and control wastes. This paper stresses that these changes have been positive and successful on the whole, but that greater uniformity in terms of responses amongst firms and in terms of State regulation is required to ensure that the sector as a whole is performing well in terms of reducing its environmental impact.

5. Distribution Channel in Steel Industry Within the Distribution category, the business is categorized as OE or Retail, based on whether the customer is serviced directly, or through the Retail / Distribution network. In OE, there are sub-segments like OEM distribution, and in Retail sub-segments like GC/GP retail distribution, CR retail distribution, and geographic segmentation. In OEM distribution, the customers specify the grade of steel that they require and the company takes responsibility to supply them the same grade of steel in the agreed cut to size condition. In retail distribution, companies maintain stocks of material for feeding its retail chain and provide Value for money products.