The case study talks about a steel company which fictional name is Zhang National steel Company, that was one of the largest steel company in China and that has to confront a saturated market. Liu hong, director of the international accounts of the company thought they needed to act quickly and create a strategy to avoid firing many workers because of the crisis. This crisis wasproduced because before the Beijing 2008 Olympic games, the government subsidies steel companies, but after the games, the government didn’t have much incentives for steel construction, and as China is one of the biggest steel producers of the world, they got into a demand crisis.
The strategy that Lio proposed was to become international, looking for other markets satisfying the Chinese steel supply.Background
As Zhang National Steel Company is a fictional name, we investigated and found, based in many location and organizational coincidences, that the real name of this company is Nanjing Iron & Steel Co. Ltd Company. This company was founded in 1999 and in 2003 made a joint venture with Fosun group, that is the largest private owned conglomerate in Mainland China. This enterpriseoperates in 6 production facilities in China, with a production of one million tons of medium and heavy steel plates.
Their most important competitors are, Anshan Iron and Steel Group Corporation, Baosteel group Corporation and Jiangsu Shagang Group Co., Ltd. And the industries in which they compete are the steel production and primary metal manufactory.
Before they made the joint venture,they were located in Yangtze River, but because there were a lot of steel mills in this riverbank, they were having problems. After they made the joint venture, they invested in new barges that can travel in rivers and seas, and for this reason they changed their location. This caused that the company can be more competitive.
We have sources that confirm that the company is becominginternational. In 2011 German plan makers has ordered a 4.7 meters heavy plate mill to the company.
The steel industry is very important for the economy or the world. This material is used in different sectors, such as the construction, the mining, the metal mechanic, the automobile, the infrastructure, the oil and gas and the container industry. Years ago steel consumption was bigger than the one predictedfor this year by the World Steel Industry. According to the world steel industry’s report made in 2010, the steel industry is a boom industry because of its increasing demand for developing all the projects that have been going on around the world, especially by the developing countries for its infrastructural projects. The adoption of liberalization policies all over the world is another reasonwhy the World Steel Industry is growing that fast. On the other side, due to the continuity of the developmental projects around the world, the steel industry has enough potential to grow at an accelerated pace in the future. According to an analysis of the World Steel association, for this year the demand of steel will grow in a 6,5% in relation to the last years, and by 2015 its growth will be thesame of the year 2010: 15%. In the year 2011, the top dominant countries in the production of steel were China, Japan, United States, India, Russia, South Korea, Germany, Ukraine, Brazil and Turkey; and the top consumer countries were China, United States, India, Japan, South Korea, Russia, Germany, Italy, Turkey and Brazil in that order.
The company is expecting an increase in their productionin 1.6 million tons of annual production.
* Yang Si Ming: In the case study he is named with a different name, Liu Hong. He is the general manager of Nanjing Steel Corporation since 2003. He has being occupying various positions in this corporation, since 1975 in Fosum group.
* Mao Tse-Tung: He was the leader of the communist party in China. Who promoted the steel...