Strategic Report: Severstal's Challenges, Opportunities, and Future

This report provides an in-depth analysis of Severstal's organisational strategy, focusing on the challenges and opportunities it faces in the steel and mining industry. Using frameworks like PESTLE analysis, the report identifies key external factors impacting Severstal, including political, economic, soc...Read More

Organisational
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Challenges and opportunities facing the company......................................................................3
Important aspects of the internal business situation. ..................................................................5
Future strategic directions and options........................................................................................6
Steps or recommendations to Severstal.......................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Books and Journals:.....................................................................................................................8

INTRODUCTION
An organisational strategy can be defined as an aggregation of actions a business aims to
take to accomplish its future or long term objectives. Together, these actions create a strategic
plan which takes years to complete and need involvement from all the organisational levels. This
long range plan that allocate how an organisation plans to utilise its available resources in order
to support their activities and projects. It provides as direction for how an organisation can attain
its success in the competitive business environment. This report will be based upon a case study
of Severstal which is a Russian organisation in UK (Botelho, 2020). It is mainly operating their
business activities in the steel and mining industry. The headquarter is Cherepovets, Russia. It is
known as the world's largest steel organisation in the nation. It has worldwide business
operations in Russia France Ukraine Italy Kazakhystan and many other African countries. It is
also found that the organisation has its mining resources, hence, thus, locking its supply of raw
materials (George and Schillebeeckx, 2018). In the following report with the use of pastel
analysis, the main challenges and opportunities will be identified in business context. It will also
analyse the significant aspects of the internal business situation of Severstal. Also, some of the
future strategic options, along with directions will also be considered. In the end, some steps or
recommendations will be done in order to grow the business with strategic plans.
TASK
Challenges and opportunities facing the company.
Pestle analysis is a framework that is used by the organization in order to examine its
external environment factors. These external factors include political, economic, social,
technological, legal and environmental factors. In respect of Severstal, it is important to examine
all such factors as it can benchmark its performance in the future (Chung and Ho, 2021). Also, it
helps in identifying opportunities, along with challenges arise in the macro environment. Further
discussion is mentioned below: Political factors: It comprise free trade policies, political stability, antitrust issues, tariffs
and much more. In addition with UK, it has been found that Brexit has created some kind
of barrier in the operations due to which the imposition of trade restrictions have been
faced by the company (Pham and et.al., 2019). Also, as this organization has world-wide
business operations, it is significant to consider the political stability of the country as

more the political condition is stable more the opportunities can be grabbed for the
growth. Economic factors: This factor involves interest rates, exchange rates, cost of living,
employment rates, GDP and many more. From the case study, it has been found that the
exchange rates were the opportunities which is grabbed by the organization. Also, it is
seen that global recession and downturn had severely effects the steel industry and its
markets (Bormann, 2020). Social factors: These are the factors that considering the changing tastes and preferences
of customers, beliefs, values, perceptions and many more. It is seen in the case day that
the customers’ mindset is also pushes for the structural change in the company’s supply
chain and the steel producer also differentiate and create custom-made products that
attracts the higher prices (de Azevedo, Schlosser and McPhee, 2020). Technological factors: It is mainly based on the research and development activities,
together with creation and innovation of new technology that can support any business to
grow significantly. With the help of fast growing technology, the company can easily
fulfil its customer’s demand while expanding market in automotive, electronics and
shipping industries. Additionally, it is found that the organization have been predicting
lower investment levels in innovation and technology (Vishvakarma, Sharma and Kumar,
2021). Environmental factors: This factor consider the environmental laws and legislative acts
related with energy consumption, changing whether impacts, carbon footprints and so
forth. From the case study of Severstal, it is found that the company is facing a challenge
related with the environmental acts in order to attain planning permission as well as
finance for the construction of new projects. Furthermore, it is also recognised that the
respective organization has continued to spend their finances on CSR initiatives,
corporate governance and sustainability as a part of their tactical plan and to increase
world-wide awareness.
 Legal factors: In this category, laws and legislative acts must be considered by the
company so that they can have smooth function of business. It is important to note that
every country has diverse laws, rules and regulations which make the business to follow
and adhere (Doğru, 2019). For the respective organization, as it has global business

activities in countries such as China, India, North America and so on, it is essential for
them to comprehend local laws imposed in that country.
Important aspects of the internal business situation.
Resource base view or RBV refers an approach to attaining sustained competitive
advantages. It is found as simple and more feasible to use external opportunities by positioning
current resources in a fresh manner (Tahajuddin, 2020). This approach is in divergence to carry
out new skills or abilities for each diverse opportunity. As per this approach, resources possess a
big role in companies succeeding higher performance. In addition with Severstal, there are two
types of resources which are discussed below:
Tangible assets: These are the assets that are physical in nature. Machinery, land,
equipment, building and capital and many more (Frinses, Laba and Reni, 2021). Also, the
company can easily buy the physical resources in the market. They confer few benefits to the
business in the long range. In respect to Severstal, the following is mentioned with its tangible
resources: Employees: It is one of the major resources of the respective organization which are
valuable to the company (Sarfraz and et.al., 2021). Employees in the business are
facilitated with training and development session through which their skills and
competencies are enhanced. Hence, in order to gain competitive benefits, human
resources or employees play a very vital role for the success of business. Capital: This is a rare resource for the Severstal business which cannot be obtained by
other key players in the market. For the smooth functioning of business, there is a
requirement of huge capital amount through which other resources can be bought in the
business. In the steel industry, it is one of the competitive benefits for the business as
other player also need investment to survive.
Intangible assets: These resources have no physical presence and cannot be seen or touch.
Whatsoever, an organization can own these assets (Lengnick-Hall and et.al., 2020). Some of the
common examples are brand reputation or image, intellectual property, trademarks and many
more. In respect to Severstal, the following are some intangible assets of the business: Brand reputation: It is one of the intangible asset of the business which is rare to the
business. The respective organization already established itself all over the world and

develop a positive brand image in the minds of customers. It is a sustainable competitive
benefit as it cannot be accessed by other key players easily.
Innovation: It is found that the respective organization always tries to address their key
problems with innovative and creative solutions. With the help of brainstorming sessions,
employees identify new solutions and ideas for the growth of the business (Neng-Tang, and Hui-
Lin, 2018). These are immitable in nature as other similar organization also put innovation in
their current goods and services. Although, innovation always helps in gaining sustainable
competitive benefits in the market.
Future strategic directions and options.
Ansoff Matrix is also known as two by two framework and product or market expansion
grid. This matrix is used by the organisation to analyse growth opportunities and its related risks
(Lemus-Aguilar and et.al., 2019). In respect of Severstal, the following is mentioned with some
key strategic directions or options that can help business to grow and evolve in different ways. Market Penetration: This is the first option in the matrix that says that a company can
develop their business with its current products and services and in its existing market.
This option is useful in order to acquire new customer base in the same market in which
the business is already established (George and Schillebeeckx, 2018). Product Development: It is another strategic direction and option to the Severstal in
which the business can enlarge its current product portfolio within its current
marketplace. This option can be effective to use as customers can get boredom with
regular products and want something new and exciting that can match their tastes and
choices. Market Development: Through this option, the organization can build their business with
its current products and services into completely new market. This market can be based
on region, nations or even overseas market, but it is essential for them to perform a good
research about market and its potentiality so that the desired aims can be accomplished.
 Diversification: This is the last strategic option in the matrix that contains high risk for
the business. It says about the expansion of business through its new market and new
products or services. Before using this option, the respective organization needs to
analyse their available resources to create a new good or service and conduct a market
research in order to the need of it.

By analysing all the above strategic directions, the diversification option has been suggested
to the Severstal as this firm has command over expansion their business into new markets. They
properly conduct their research activity and identify the potentiality of new market and its needs
as well (KHAN, ZHANG, and SALIK, 2020). Also, with the help of resources they can create
new products and services in the steel and mining industry.
Steps or recommendations to Severstal.
From the above discussion, it has been recommended that Severstal should utilise the
available resources in a proper and efficient way so that they can grab growth opportunities.
Through pestle analysis, there are several threats and opportunities have been identified for the
business, so it is important for managers to effectively analyse their resources to snatch
opportunities such as political stability of the country can increase the chances of development.
The company can make several custom-made products and services that satisfy the demands and
expectations of customers (Mehta and Mehta, 2017). Adopting new technology can support
making customized services, but this should be taken into consideration that it requires capital
investment in order to have a smooth flow of work. Moreover, it also has been suggested that the
company should continue its attempt to protect the environment while gaining sustainable
competitive benefits (Zhu and Gao, 2021). They can take several CSR initiatives such as
recycling their iron and steel products so that less harm can be delivered to the surroundings.
Furthermore, they can think to expand their market share by exploring new emerging markets, it
needs proper research and resources to identify its potential.
CONCLUSION
From this report, it is concluded that organizational strategy defines a long-range plan for
the business that helps in allocating the resources to attain its overall aims and goals. It involves
the examination of both internal and external factors in order to recognize key opportunities and
risks associated with it. With the help of Ansoff Matrix, there are several options or methods
have been identified that can help bubusinesseso grow and develop.

REFERENCES
Books and Journals:
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Chung, H.F. and Ho, M.H.W., 2021. International competitive strategies, organizational learning
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de Azevedo, M.C., Schlosser, F. and McPhee, D., 2020. Building organizational innovation
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Doğru, Ç., 2019. The Effects of Perceived Organizational Support and Leader-Member
Exchange on Contextual Performance: A Study in the Banking Sector. In Handbook of
Research on Contemporary Approaches in Management and Organizational
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Frinses, K.E., Laba, R. and Reni, A., 2021. Effect of organizational culture and organizational
strategy towards organizational effectiveness with knowledge management as an
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George, G. and Schillebeeckx, S.J. eds., 2018. Managing natural resources: Organizational
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Neng-Tang, H. and Hui-Lin, L., 2018, October. Using instant messaging for collaboration: A
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Vishvakarma, N.K., Sharma, R.R.K. and Kumar, A., 2021. An Empirical Analysis of Impact of
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Reengineering. Global Journal of Flexible Systems Management, 22(1), pp.55-73.

Zhu, M. and Gao, H., 2021. The antecedents of supply chain agility and their effect on business
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George, G. and Schillebeeckx, S.J. eds., 2018. Managing natural resources: Organizational
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Pham, L.M.T. and et.al., 2019. Dynamic capability and organizational performance: is social
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Bormann, S., 2020. Strategic priorities and organizational design. Journal of Management
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Tahajuddin, S., 2020. The Employees’ Organizational Commitment Impact on Organizational
Change–The Introduction of New Work Strategy. International Journal of Research in
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Lengnick-Hall, R. and et.al., 2020. Incorporators, Early Investors, and Learners: a longitudinal
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KHAN, U., ZHANG, Y. and SALIK, M., 2020. The impact of information technology on
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Journal of Asian Finance, Economics and Business, 7(11), pp.987-998.
Mehta, P.A.L.L.A.V.I. and Mehta, K.H.U.S.H.B.U., 2017. Green HRM practices and
organizational culture. International Journal of Human Resources Management, 6(1),
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