BAOSTEEL negotiating a cross-shareholder alliance
Doing business internationally and globally,
Seminar 2.
1. What is the strategic position of Baosteel and what are its motives for negotiating a three-way cross border, cross-shareholding alliance?
Strategic position of Baosteel: Leadership and competitive position.
Baosteel is the largest and most profitable steel-maker in China.
Baosteel emerged as a catch up strategy based on those pillars: integration, internationalisation and diversification ( haarde laiendamine)
Baosteel had to integrate, both horizontally and vertically, in order to increase production capacity while better controlling for key elements of the value chain.
For integration Baosteel completed series of domestic acquisitions. In order to upgrade production lines and improve technical proficiency, Baostell also partnered with key international players who were attracted by China´s rising domestic demand and cost advantages. For example joint ventures with ThyssenKrupp, and Arcelor and Nippon Steel.
Internationalisation: Baosteel listed its shares on the Shanghai Stock Exchange at the end of 2000 and raised capital to providefor its international expansion.
Baosteel cost advantage is heavily dependent on access to high-quality iron ire and this is something China doesnt have. On the upward side, Baosteel signed several agreements with major iron ore producers in Brazil, Australia, India and South Africa and established domestic joint ventures.
Diversification: Strategy is complementary with its core business and includes investments in steel-related industries.
Motives for negotiating:
1. Domestic and international competition has increased
2. To be able to fight against other big steel-makers in the world, especially in Europe. (Against Newco)
3. Baosteel had to face a dramatic domestic increase in steel demand. Production was smaller as demand.. That is why import on steel is high.
4. Creation of Synergy
5. Cost reduction
It was hoped that the alliance would
Seminar 2.
1. What is the strategic position of Baosteel and what are its motives for negotiating a three-way cross border, cross-shareholding alliance?
Strategic position of Baosteel: Leadership and competitive position.
Baosteel is the largest and most profitable steel-maker in China.
Baosteel emerged as a catch up strategy based on those pillars: integration, internationalisation and diversification ( haarde laiendamine)
Baosteel had to integrate, both horizontally and vertically, in order to increase production capacity while better controlling for key elements of the value chain.
For integration Baosteel completed series of domestic acquisitions. In order to upgrade production lines and improve technical proficiency, Baostell also partnered with key international players who were attracted by China´s rising domestic demand and cost advantages. For example joint ventures with ThyssenKrupp, and Arcelor and Nippon Steel.
Internationalisation: Baosteel listed its shares on the Shanghai Stock Exchange at the end of 2000 and raised capital to providefor its international expansion.
Baosteel cost advantage is heavily dependent on access to high-quality iron ire and this is something China doesnt have. On the upward side, Baosteel signed several agreements with major iron ore producers in Brazil, Australia, India and South Africa and established domestic joint ventures.
Diversification: Strategy is complementary with its core business and includes investments in steel-related industries.
Motives for negotiating:
1. Domestic and international competition has increased
2. To be able to fight against other big steel-makers in the world, especially in Europe. (Against Newco)
3. Baosteel had to face a dramatic domestic increase in steel demand. Production was smaller as demand.. That is why import on steel is high.
4. Creation of Synergy
5. Cost reduction
It was hoped that the alliance would