Mittal's strategy
A recent BusinessWeek article ("Mittal & Son", 4/16/07) tracks the growth of the world's largest steel company. Although it now controls only 10% of the world's steel output, the trajectory indicates increased and relentless growth, with major deals announced at a rate of two a year. And the company I dominant in key markets n the US and Europe. No deals have been announced yet this year (the company is still digesting Arcelor, its biggest buy ever), but there's no reason not to believe that there are more on the way.
What's fascinating about the article the way it spells out the strategy of oligonomies everywhere:
Lakshmi came to believe that steel companies could churn out heavyweight profits if they grew big enough to negotiate on an equal footing with suppliers of iron ore and coal and with customers such as automakers.
Furthermore, the virtues of have only a few big players in any one field are spelled out:
In the long run, Lakshmi's vision is an industry dominated by a handful of powerful companies, strong enough to cut output rather than prices in a downturn.
These are points I've been hammering at for years, and it's interesting to see them so baldly expressed.
