Organisational Strategy for Severstal: Challenges, Opportunities, and Future Directions

This report analyses the key external challenges and opportunities faced by Severstal, suggests future strategic options and directions, discusses the most important aspects of the internal business situation of Severstal, and recommends steps for the company to take over the next decade.

Organisational strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
The key external challenges and opportunities facing Severstal................................................4
The most important aspects of the internal business situation of Severstal................................6
Future strategic options and directions that Severstal should consider.......................................7
Steps would you recommend for Severstal to take over the next decade...................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The business strategy is considered as a major planning framework which helps a
company to develop systematic business operations (Andriani, Samadhi, and Suryadi, 2019). In
the recent times due to increase in competition between different companies, the importance of
business strategy is increasing at a rapid pace. All major companies in the international and
national marketplace focus on implementation of a perfect business strategy for desired success.
In this project different external challenges and opportunities which are faced by Severstal
company are explained in a precise manner. This report includes strategic options and directions
that the company should consider in the international marketplace. In this report example of
Severstal company is taken into consideration which is a Russian company founded in 1955.
The company is associated with steel and mining based industrial operations and has its
headquarters in Cherepovets. The company is also listed on the Moscow exchange and LSE and
it is one of the largest steel companies of Russia.

TASK
The key external challenges and opportunities facing Severstal
In the functioning of a business there are various challenges and opportunities that are
faced which impact on its working. Challenges and issues which are present in the external
environment can cause negative impact on profitability of Severstal. In order to understand key
external challenges and opportunities faced by Severstal which are mentioned below:
 Political factors- The political factors are associated with the rules and regulations that
are developed and formulated by government (Antony, Gupta, and Gijo, 2018). It is
essential for Severstal to focus on all the major political factors in order to lead the
marketplace. The corporate laws which are developed by the government of Russia are
impacting on its functioning. It is also one of the crucial responsibility of a company to
follow the rules of government. The implementation of rules and regulations can be a
major challenge for the business. On the other hand, government of Russia is also
supporting industries with help of policies and plans that can be a major opportunity for
Severstal.
 Increased competition- There are various emerging economies of South America and
middle east which is giving tough competition to Severstal. The Market of steel products
is increasing in the world and is also expected to grow at a faster pace in the coming
times. The mature markets of steel including Japan, EU and North America are also
creating a major challenge for Severstal. The future growth prediction is five per cent in
global construction, automotive and other transport markets by 2021. This analysis is
performed on the basis of future growth of Asia-Pacific, Africa and the Middle East. The
China is also increasing as an major steel producer which can be a major threat or
challenge to Severstal (Carvalho, and Madeira, 2020) South Korea is also a major threat
to Severstal as it is growing as a major threat to Severstal in terms of steel production.
 Emerging steel market- In the recent times, there is a significant growth rate recorded in
the international marketplace which can be a major challenge for Severstal. The company
has to expand in the international marketplace with development of good volume of
trade. In order to capture the steel marketing in the year 2022, Severstal should focus on
key practices related to development and strategies. In order to go ahead in terms of steel

production, the company should focus on development of a major planning framework.
The South America, Asia and Middle east based markets are also giving a tough
competition to Severstal.
 Challenging and dynamic steel industry- The steel industry is dependent upon iron as
the steel is made up of small amount of carbons and major portion from iron. The steel
demand in the world is increasing at the faster pace which is increasing the competition.
Many developing and developed countries are becoming major importer of steel due to
increase in demand of steel products. This is creating a competition and major challenge
for Severstal to rise at the marketplace in a set period of time (Davids, and Brown,
2021). The privatisation of government owned assets in emerging economies of the BRIC
countries and middle east offering FDI opportunities. This can increase threats for the
Severstal company in order to perform operations in a systematic manner for increasing
profitability.
Illustration 1: Global steel production output vs global GDP

The most important aspects of the internal business situation of Severstal
It is very much important to understand the internal business situation of Severstal in
order to develop at the marketplace. The internal business situation is developed by the board of
directors of Severstal and top level management with support of planning framework. The major
elements which develop the internal business situation of Severstal are mentioned below:
 Government relations- The company is having good relations with the Russian
government which is a major advantage (Goldschmidt, Richter, and Pfeil, 2019).
Government is always supporting major steel companies of Russia, which is developing
internal environment of the company. This approach is helpful in development of the
internal environment of the company which is essential for development of productivity
of the employees as well as business. The government relations are also perfectly
designed and formulated by Russian government to support development of many
companies.
 Market share- This is also a major plus point in whole business situation of Severstal as
it has increased market share in the field of steel production. The company is also
increasing its market share and growth by increasing sales by 10% every year as a target.
The company is also actively involved in exporting steel to major countries of world
including China, Middle east and South Asia. The market share is currently fluctuating
for the company due to increased competition in steel industry.
 Management and operations- Severstal company is actively involved in development of
operations and functions. All major companies in the international and national
marketplace which are producing steel are creating a major impact on functioning of
Severstal. The management of the company is professional and trained to handle different
operations and functions in a specified manner(Halvorsen, 2020). Operations and
production management of Severstal is also professional which is active in management
of labour and resources. The optimum utilisation of resources is also important for a
company, the Severstal company uses professional operations.

Future strategic options and directions that Severstal should consider
In order to develop and expand in the international marketplace company can choose best
strategic routes. The selection of strategic routes in order to increase market share should be done
by board of directors in order to achieve desired results. The future strategic options and
directions which are available to Severstal are mentioned below:
 Increasing production capacity- The company can increase the amount of capacity it
produces every year to expand in global marketplace. Severstal should also enhance its
workforce performance by providing them performance based incentives in order to
increase the productivity (Zumitzavan, 2022). Severstal company should also focus on
purchasing raw iron from developing countries to get supply at nominal rates. This will
increase the production capacity of Severstal which is mainly important for the company
in recent times.
 Development of planning framework and strategies- This is the most important
approach or method which can be chosen by the organisation to remain competitive at the
marketplace. The Severstal company should achieve various goals and objectives with
the help of strategies and planning (Heavin, and Power, 2018). It is the ethical duty of
management of company to take into consideration advice of strategic and top level
management for better operations.
 Enhancement of quality- The Severstal company should follow the concept of total
quality management in order to lead the marketplace. The steel quality should be
enhanced by the company with a major focus on key growth objectives and targets. In the
current scenario, quality management is considered as major approach which is helpful in
competitive strength (Ruck, 2019). The concept of total quality management is
considered as an important approach which is helpful in attracting large number of buyers
from the marketplace.
 Research and development- It is recommended to Severstal to focus on development of
research department. This will help the company to focus on research based objectives
and conduct market survey to analyse the demand for steel products. The research and
development department of Severstal should be present at the international level in order
to research related to global marketplace.

Steps would you recommend for Severstal to take over the next decade
 Develop leadership based operations- The leadership is considered as major approach
which is helpful in management of workforce. In the recent times, leadership is
developed as an important approach for management of large number of employees. The
Severstal company should use the application of leadership in order to grow more at the
marketplace (Paletti, 2018). This will impact on its operations and will provide a positive
result to the company. In the recent times, democratic leadership should be adopted by an
organisation to facilitate decision making. The decision making in democratic leadership
is perfect, as there is an involvement of large number of employees as well as of
subordinate employees.
 Development of workplace- Workplace management is the major task or function of a
company which enables it to grow at the marketplace. It helps and supports a company to
develop a precise internal environment for development of different operations. It is the
major responsibility of management of Severstal to focus on development of workplace
in order to gain competition edge. The workplace management of Severstal should be
performed by professional human resource management in order to develop
effectiveness.
 Facilitating employee engagement and relations- The company should focus on
increasing relationship between different employees for operating in the marketplace.
Human relationship theory should be implemented by Severstal to develop harmony
between different employees. In the current scenario many global companies are using
this theory for development of healthy relationship between employees. This will
increase the overall productivity of the organisation and also help in increasing job
satisfaction of the employees (Penco, Torre, and Scarsi, 2019). The company should
implement this theory with effective supervision and control in order to lead the
marketplace. All major companies in the marketplace which are dealing in steel trade
should focus on this approach for better approach in international marketplace.
 Customer relationship management- The business entity should focus on development
of effective relationship with different customers (Phillips, and Moutinho,, 2018). In
order to increase healthy relationship with different customers, it is important for the
company to deploy CRM software. The customer relationship management software is an

IT based approach which increases satisfaction of the customers. Achievement of
optimum relationship with different customers is the major responsibility of Severstal
company's management. The goals and objectives should be achieved in a specified
manner with the help and support of company's plans and policies.

CONCLUSION
From the above stated report it can be concluded that business strategy is a major concept
which is used to develop focused business operations. In the recent times, it is major role and
duty of strategic management of a company to develop practices according to company's
functioning. The above analysis concludes that it is essential for a company to overcome issues
and challenges in a set period of time for performing different functions. The project concludes
role played by top level management and board of directors in order to develop strategic
decisions for overall development of company. This report also concludes effectiveness of
strategic choices which are available to a company to develop at the marketplace.

REFERENCES
Books and Journals
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practitioners’ perspective. International Journal of Productivity and Performance Management.
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organisational tasks as factors for an effective communication and governance strategy in the
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Halvorsen, S., 2020. The geography of political parties: Territory and organisational strategies in
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Phillips, P. and Moutinho, L., 2018. Strategy. In Contemporary Issues in Strategic
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Ruck, K., 2019. Internal communication and the associations with organisational purpose,
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Zumitzavan, V., 2022. Practical strategy for maintaining organisational performance in the
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