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Sample Essay on PESTEL Analysis of ArcelorMittal

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Sample Essay on PESTEL Analysis of ArcelorMittal

Introduction

ArcelorMittal is a steel and mining company which produces steel in safe methods and develops quality steel products. The company is recognized worldwide and it leads in steel production for auto motives, construction and home appliances. The company was formed in 2006 following a merger between Arcelor and Mittal. ArcelorMittal runs efficient operations in mining and production of steel and has been recognized among the Fortune 500 best companies (World Steel Association, 2012). The steel products from the company are distributed in many parts of the world and they contribute to 10% of all steel products. ArcelorMittal produces quality products which ensure that the company has a sustained market share and profits. The products are supplied conveniently and the prices which are favorable to the buyers and they range from flat objects to finished goods such as rails.

The company has grown rapidly since the merger in 2006 and it provides quality supply of steel to various construction companies (Bradshow, 2011). The employees are trained experts in steel processing which ensures that the production process is run effectively. ArcelorMittal puts emphasis on steel mining despite periods of economic recessions and poor returns on the projects which resulted in complete shutdown of two blast furnaces. The mining expenditures are rising every year but the company is able to sustain production though it accrues debts. Steel production is essential and the company has several subsidiaries such as Phenix Works. ArcelorMittal is based in Luxembough where the major operations are handled and other production sites areover 20 countries across the world. The employees are of diverse origin both in European countries and Non-European countries. The company has had recent acquisitions which are strategic in expanding its production with Nippon Steel and Sumitomo Metal.

Theoretical Framework

The culture upheld by ArcelorMittal is based on providing quality through corporate action and ensuring safety for the employees and end users of the products. The leadership structure at ArcelorMittal is focused on product diversity, geographic reach and diversification (arcelormittal.com). The employees are motivated to apply new technology in the production and the management is strategic in ensuring that the employees are developing and growing in their professional capacity. The corporate behavior which defines the company ensures that each individual is responsible for the outcome of their actions and a partaker in the company’s success (Denison, 1990). ArcelorMittal culture is based on three core values which are quality, sustainability and leadership. The leadership ensures that the working environment provides the opportunity to produce steel in safe and sustainable methods.

The theoretical framework indicates the outcomes of the decisions made in the company and the implications they have on the actions which are carried out. ArcelorMittal runs encourages open communication between the employees and management in order to achieve the company’s goal of producing quality. The company has strategies and plans of actions which are laid down and followed to establish their steel products among the best in the world. The new employees who are recruited into the company are integrated into the culture and they pass it on to others (Schein, 1989). According to Edgar Schien, culture is a pattern of shared basic assumptionslearned by a group as it solves its problems of external adaptation and internal integration by maximizing the available resources to achieve the desired outcome (Schien, 1985). AcellorMittal has developed its culture through a persistent leadership structure.

The leadership of ArcelorMittal upholds their culture by providing a value system which is implemented at all company levels. The value system provides a reference point for the company’s management during interactions with the buyers and suppliers of labor and technology. Edgar Schein elaborates on functionality of the organization based on artefacts, values and underlying assumptions. The employees learn the company’s culture by observing and practicing what they see without necessarily understanding the origin. The leaders of ArcelorMittal ensure that the value system is practiced and that the perception of the individual is influenced by their stay in the company. There is collaboration between the management and the employees to ensure quality steel production through the laid down procedures.

The basic assumption in the company is based on the mission and vision of the company. ArcelorMittal believe that steel production is a crucial step in “Transforming tomorrow”. The company recruits trained individuals from different countries and develops them to become experts in their fields who are passionate about their work (Dereshy, 2008). The talents identified in the employees is natured to produce desire outcome in terms of professionalism. The employees are treated with respect which they then reciprocate when handling customers. The leadership motivates the employees through incentives and equips them to develop at a personal level and to master skills which are relevant to their occupation. The company has elected artefacts such as the ArcelorMittal orbit which is an attractionmonument in the Olympic park with tunnels made of steel. People get to understand the importance of steel in everyday life and enjoy the serene view in the park.

Another artefact which the company has built is the ArcelorMittal University which provides leadership programs to individuals who become future leaders. The community benefits from this institution and they exploit the opportunity to learn. The employees also have internal trainings on personal development through goals and strategic plans. The programs are effective in dealing with the external stakeholders and integrating the employees in the company’s vision.

The dimension of culture as outlined by Schein is different from other frameworks such as Harrison’s model and Globe’s model. Harrison viewed culture in four different ideologies which were power orientation, role orientation, task orientation and person orientation (Dudovskiy, 2013). The power culture is where by the top management makes the decisions and passes on the information to the employees. The effect of this culture is that the employees are often dissatisfied and they lack a means to communicate with the management. The role orientation involves the setting of procedures and rules to resolve conflicts within the organization and deal with external competition. The task orientation focuses on completing a given subordinate goal using all the resources available while person orientation is focused on the members of the organization. The accomplishment of the ArcelorMittal goal is founded and effective operations in the production and distribution of steel products and hence Harrison’s model only addresses certain aspects.

The Schein dimension is the best framework for the study of ArcelorMittal since it addresses the basic assumptions which deal with external adaptation such as the mission, goals and strategies of achieving the goals. The assumptions safeguard against anxiety which may arise in the company among the employees since there are rules governing relationships and organization structure. Schein recognizes the various subcultures in the organization such as among the engineers, the machinery operators and the executive management. It is important to harmonize and align the subcultures so that the company operations are performed effectively.

Discussion of the Central topic

ArcelorMittal as a company originates from Mittal Steel, an industry that was initially set up by Mr. Lakshmi N Mittal chairman of the board of directors and chief executive officer in 1976 (De Smedt, & Van, 2008). It was not until 2006 that Arcelor and Mittal steel come together to form ArcelorMittal steel company as recognized today (Mey, 2011). The freshly amalgamated ArcelorMittal went on to pursue an extensive development strategy where in the year 2007, it announced thirty-five transaction globally.  Substantial dealings were made in many countries including Venezuela, Brazil, Australia, Canada, United Arab Emirates, France, Russia, U.S.A South Africa, Turkey, Sweden, the and Costa Rica in 2008 where most of these dealings were finalized (Mey, 2011).

            As a result of weakening and declining economic situation in the same year the company, ArcelorMittal decided to put off at the end of the year majority of the investment activities (De Smedt, & Van, 2008). To seizure growth and development in the later years after the crisis in the emerging markets, ArcelorMittal carefully resurrected some of the projects that had been stopped. By the year 2011 as a result of embarking on chief development programs with an objective of developing new mines and expanding the existing ones, the company’s capital expenditure on mining had grown to twice the previous expenditure that about US$1.3 billion (Mey, 2011). In the recent past, ArcelorMittal, has assimilated ThyssenKrupp’s Calvert facility in the US which has been enabled by the company’s cooperation with its development partners.

ArcelorMittal Company is focused on offering quality products, ensuring safety and sustainable development. The company has health and safety policy for the employees and outsiders who interact with the company products. The workers are provided with the necessary gear to ensure that minimal injuries and accidents occur during the course of operation especially in the mines. The anxiety which is created by the possibility of injuries is thus eliminated and the employees are positive and motivated to work optimally to achieve desire outcomes.  The leadership at ArcelorMittal is focused on bringing the injury rates to zero which has been evident in the significant drop in lost-time injury frequency rates over the year. The leaders courageously lead the employees in promoting safety.

            ArcelorMittal as accompany is guided by the principle of good governance which essentially refers to commitment to best practice standards. Good governance as a guiding principle in ArcelorMittal has been defined to contain three main elements. Primarily it entails ensuring compliance with the reporting requirements and external regulations that come with being a listed company. Secondly good governance entails strictly following our internal company procedures and policies on issues such as responsible sourcing and risk management, and having a continuous dialogue with our stakeholders. The third element entailed in the company’s good governance a wider definition in the sense of being a good corporate citizen. Which means fulfilling the sustainability agenda and objectives of our governance and acting appropriately in our position as a major multinational organization (Mey, 2011).

            The company’s approach to compliance is guided by ethical values which essentially entails shared regard for the highest standards of integrity as well as honesty as the company’s key assets. ArcelorMittal believes that it cannot live up to its fundamental brand values of quality, leadership and sustainability with no regard to integrity. It is only as a result of the regards to the highest standards of integrity that the company is able to remain not only successful but also strong despite the financial or economic environment in which the company operate (De Smedt, & Van, 2008). So as to guarantee these standards, ArcelorMittal Company is managed by executive officers, assisted by a management committee and governed by a board of directors that endeavor to maintain smooth running of the organization.

 Adjustments to the company’s corporate governance procedures and controls are made when necessary, through constantly monitoring the European Union, U.S.A and local legal best practices and requirements. As for the compliance with external regulations ArcelorMittal as a company go a step further than the formal requirements in areas such as the standards of behavior we ask of all our employees at every level, the genuine independence of our board and the way we interact with our shareholders. The strategy implementation and daily management are delegated to the executive officers by the board of directors.          

ArcelorMittal Company has a global perspective in leadership which incorporates experienced individuals into the management levels at various sectors of production. The leaders are able to foster team work and cohesion among the members which ensures that relevant information is passed on and the desired response is achieved (Schwartz, 1994). The mining sector, for example requires elaborate planning and execution of the plans as they are detailed to avoid hazards and produce quality steel. The company has a humane aspect since it values human life above anything else. The leadership of ArcelorMittal is also focused on the personal development of individuals to improve their skills and expertise in their specific professions. ArcelorMittal has set up a world class university, ArcelorMittal University which offers various programs which sharpen skills and help individuals master leadership qualities which are essential in management. The university is an artefact which the company has established and through it ArcelorMittal is able to promote growth of the community and the country.

            The company’s leadership also embraces Hofstede dimensions starting with the masculine-feminine dimension. The company employees both male and female workers who are qualified and hence achieve unbiased values (Hofstede, 1980). ArcelorMittal has managed to reduce the distinction between male and female roles by having female managers at various levels. The company is concerned with the wellbeing of people through the safety and health policies which are in place. The achievements which the company gets such as profits shares in billions of dollars are distributed to the shareholders. ArcelorMittal aims at improving the quality of life of people all around the world by providing products which are used in day-to-day activities such are the steel for railroad construction.

            The company ensures that the way the management approaches the disclosures is transparent and in a high quality manner as is primarily a particular priority in the way ArcelorMittal approach governance. Key performance indicators of the company is the incorporation of result of the survey commissioned various investor relations. ArcelorMittal as a company is committed to adopting best practice standards in terms of balance of powers, quality of reporting and corporate governance in its dealings with shareholders, and aim to ensure good corporate governance by applying rules on transparency. There is also committed to good governance by the company in terms of transparent and ethical corporate behavior (Mey, 2011). ArcelorMittal also aims at maintain a reputation for integrity and honesty in all our business transactions and management practices. The company has adopted a code of business conduct that applies to all employees of ArcelorMittal and its subsidiaries all over the globe.

             ArcelorMittal’s compliance programme entails compliance assessments, periodic compliance training, compliance policies and procedures, quarterly reporting to the group audit committee and quarterly compliance certification by senior management (De Smedt, & Van, 2008). Transparent governance is also a fundamental principle of the company’s worldwide sustainability strategy. ArcelorMittal’s ethical business practice and reputation for responsible is vital to its ability to operate successfully in the different cultures and countries, and is thus a key feature in sustaining the company’s success (De Smedt, & Van, 2008). Sustainability structure of ArcelorMittal as a company has been designed to make the business quick to respond to issues that arise through stakeholder engagement, specifically in weighing up ethical risks, environmental and social.

            The twelve members of the board of directors are responsible for appointing senior management and for the giving strategic direction as well as oversight of the business. The implementation of the company strategy as well as all operational decisions and overall management of the business is a responsibility assigned to executive officers of the company. The CFO and CEO work closely with the below team of seven executive officers, supported by the management committee (De Smedt, & Van, 2008). Further the company has a management committee is that is headed by the senior managers with responsibility for various functions and business divisions in ArcelorMittal (Mey, 2011). The main obligation of the management committee is to creating an organization that is accountable and inventive as well as adaptable for the main purpose of fostering an entrepreneurial spirit within the company (Mey, 2011). Hence this makes the structure of the committee to be both flat and lean. In ArcelorMittal all the executive officers sit on the management committee.

Conclusion

Like many global companies ArcelorMittal has undergone trying times as has been discussed in the history of the company. It is only as a result of the regards to the highest standards of integrity that the company is able to remain not only successful but also strong despite the financial or economic environment in which the company operate. The resilient and robust organizational structure of the company through its well organized leadership globally guided by transparency and integrity has ensured the company remains relevant.

ArcelorMittal Company has put structure in place to “explain the unexplainable and manages the unmanageable” through leadership. This structure has greatly impacted the company’s operations and lead to its worldwide success. The employees’ wellbeing is given first priority and they enjoy safe working conditions. Communication is a crucial aspect in the leadership whereby the employees are able to report issues to the management through the appropriate channels. The power distance which separates the employees and the management is greatly reduced. The over 460,000 employees in the company are able to communicate with the management and also receive directives from the management for appropriate actions in the operations.

 

References

Bloomberg L.P. 16 April 2008. ArcelorMittal and Nippon Steel Corporation Announce $240 million Expansion at I/N Kote in New Carlisle, Indiana. Retrieved 28 July 2017.

Bradshow, D. (2011). Forging a common culture. Financial Times. Retrieved from https://next.ft.com/content/84161690-7d78-11e0-b418-00144feabdc0

Dudovskiy, J. (2013). Power Culture in Harrison’s Model of Culture (1972). Research Methodology. Retrieved from research-methodology.net/power-culture-in-harrisons-model-of-culture-1972/

Deresky, H. (2008) International Management: Managing Across Borders and Cultures Text and Cases. Sixth ed. Upper Saddle River, NJ: Pearson Prentice Hall.

Denison, D. R. (1990). Corporate culture and organizational effectiveness. John Wiley & Sons.

De Smedt, S., & Van Hoey, M. (2008). Integrating steel giants: an interview with the ArcelorMittal postmerger managers. MCKINSEY QUARTERLY, 2, 94.

Dela Rama, M. (2012). Corporate governance and corruption: Ethical dilemmas of Asian business groups. Journal of Business Ethics, 109(4), 501-519

Edgar, S. H. (1985). Organizational Culture and Leadership (4th ed.). San Francisco, SC: Jossey-Bass Publishers.

Grove, C. N. (2005). Value Dimensions: Globe Study. The SAGE Encyclopedia of Intercultural Competence. doi:10.4135/9781483346267.n280

Gajdzik, b. (2008). Social and ethical challenges for metallurgical companies. Metalurgija, 47(1).

Hofstede, G.H., (1980) Culture’s Consequences: International Differences in Work-Related Values.Thousand Oaks, CA: Sage (revised and expanded in 2001)

Moradi, M., Abdollahzadeh, M. R., &Vakili, A. (2011, September). Effects of implementing 5S on total productive maintenance: a case in Iran. In Proceeding of the IEEE International Conference on Quality and Reliability, Bangkok (pp. 41-45).

Mey, J. H. P. (2011). The impact of implementing world class manufacturing on company performance: a case study of the ArcelorMittal South Africa Saldanha Works Business Unit (Doctoral dissertation, Stellenbosch: Stellenbosch University).

Schwartz, S. H. (1994) “Beyond Individualism/Collectivism: New Cultural Dimensions of Values.” In U. Kim et al. (eds.), Individualism and Collectivism: Theory, Methods, and Applications. Thousand Oaks, CA: Sage.

Schein, E. H. (1989). The role of the founder in creating organizational culture. Readings in managerial psychology, 278.

Top steel-producing companies 2012. World Steel Association. Retrieved 2016/07/28.

Rodríguez-Domínguez, L., MaríaGarcía-Sánchez, I., &Gallego-Álvarez, I. (2009). Codes of ethics in Spanish corporations: an exploratory content analysis. International Journal of Law and Management, 51(5), 291-309.

 

Roth, S. (2013). Common values? Fifty-two cases of value semantics copying on corporate websites. Human Systems Management, 32(4), 249-265.

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