ArcelorMittal was the worlds largest steel producer in 2018 accounting for more than 5% of global crude steel production. They entered into a joint venture with Sahaviriya Steel Industries, the largest steel producer in South East Asia having their base in Thailand. The joint venture enabled ArcellorMittal to have its steel distributed through Sahaviriya’s distribution channels in Thailand and other parts of South East Asia. In addition, it could utilize Sahaviriya’s facilities to produce steel products that would be sold locally. In return, ArcellorMittal provided information about the American and European steel market to Sahaviriya.
Required:
- Explain how the joint venture enabled ArcellorMittal to achieve its objective of maximizing shareholder wealth.
- Explain how the joint venture limited the risk of the international business.
- Many international joint ventures are intended to circumvent barriers that normally prevent foreign competition. What barrier in Thailand did ArcellorMittal circumvent as a result of the joint venture? What barrier in the Europe did Sahaviriya circumvent as a result of the joint venture?
