Severstal: Growth and Consolidation Strategies in Global Steel Industry

Running Head: MANAGEMENT 0
SERVERSTAL
Report
Case Study- Severstal: Growth and consolidation strategies in a turbulent global steel
industry
Student Details

MANAGEMENT 1
Executive Summary
In this report, there is the industrial analysis, which helps in evaluating the global steel
industry’s macro environment. This analysis helps in the identification of the forces faced by
the Serverstal Company. For industrial analysis, “PESTLE Analysis” is used in this report. In
addition, with the help of “Uppsala Model”, identification of world steel industry’s
internationalisation driver is also mentioned in this report, which leads to the extension of
global business. At the end of the report the recommendations is given which helps in
enhancing the global competitiveness.

MANAGEMENT 2
Introduction
Overview of the Global Steel Industry
Since 1970, there was the drastic change in the global steel industry. In this industry, China is
the major producer and consumer as compare to the other countries and the Europe has a
consolidate market of this industry. After 20th century, it had been observed that at the
beginning of the century the global steel production was approx. 28 million tonnes, which
had been increased and became 781 million tonnes at the end of the century (Stroud &
Fairbrother, 2008).
Recently, World Steel Association released its SRO (Short Range Outlook) which estimated
that the demand of global steel production would reach up to 1,657.9 Million Tonnes in 2018,
an increment of 3.9 percentage of production over 2017 (Price, 2010). In addition, they also
estimate that in the succeeding years the demand for the production of global steel will
increased by 1.4% and would reach up to 1,681.2 Million Tonnes.
Severstal Russian Steel
Severstal Russian Steel is the Russian company, was found in 1993, which majorly operates
the steel and mining industry. This company’s headquarter is in Cherepovets city in Russia.
The company is the producer of the steel in Russia and listed on the London Stock Exchange
and the Moscow Exchange (Serverstal , 2019). This company has a broad market, which
includes product mix, covering the larger area of distribution network and it has self-
sufficient raw material. The company focus is on the high value added products such as flat
steel. In addition, the focus of the company is also in sales and construction of longer
durability product.

MANAGEMENT 3
The assets of the company involve the production of various products related to pipes with
larger diameter and machinery metal ware. In addition, they provide the facility of service
centres and stamping for automotive parts, which are exposed (Fortescue, 2009). This
company is the vertically integrated company, which deals in the sector of steel and mining.
The aim of this company is to be the leader in the value creation in the international market,
through focus on people, excellence and unity.
In this report, there is the detail explanation on the industrial analysis of macro environment
in global steel industry. In addition, this report also identifies the drivers of
internationalisation in the world steel industry.
Task a: Macro Level Analysis of Global Steel Industry
In the following paragraphs, there is the industrial analysis of the global steel industry’s
strategic macro environment and the identification of the primary forced faced by the
Severstal. This industrial analysis is done with the help of PESTEL Analysis.
PESTEL Analysis
a. Political Analysis
This analysis is related to the local and national government intervention in the economic and
business environment (Suliman & Heloise , 2018). The government system and policies plays
an important role in the business as the new interventions and changes done by the
government affects the business environment. These affects can be positive or negative for
the company. Political stability, regulatory practices, global pressure, change in the
government policies, armed conflicts and other stakeholders such as NGOs are some of the
aspects of political factors, which affect the company.