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December 19
On the Threshold of Determinative Strategy Selection

Dneprospetsstal is a unique company, which needs efficient investment process. Market entry and compatibility are among the main tasks, which McKinsey, an experienced consulting company in the field of metallurgy and heavy industry, is assisting to solve.

McKinsey is a leading world company founded in 1926 that created a management consulting concept. Now more than 80 offices of the company are working in 45 countries. A Moscow office representing McKinsey in the CIS countries was opened in 1993. Since then the company’s representatives have realized more than 250 projects aimed at rendering assistance to their clients in achievement of substantial and stable positive results, formation of a prominent organization capable of engaging, inspiration and keeping outstanding people, as well as securing their promotion.

McKinsey-DSSThe main task of McKinsey at Dneprospetsstal was development of a marketing strategy aimed at increase in the Company’s profitability. Within the framework of the project, the key issues were determination of target markets and segments, as well as optimal product portfolio, with which the Company would be compatible in that or another market.

The Company’s product portfolio was divided into five common categories – structural, stainless, tool steels, as well as our special products – nickel alloys and steel produced by powder metallurgy process.

These products were observed in four regions – CIS, Europe, North and South Americas and Asia.

Study of the current market situation and Dneprospetsstal’s place, analysis of product and consumer segments were the project’s first steps.

A competitive analysis was performed in each region; the most attractive markets for the Company were located. This work allowed determining all advantages and disadvantages of the production process, sales policy etc. The state of consuming industries, export, and import to each region was carefully analyzed.

Having a complete macro-image of special steels we moved to a microanalysis of the industry. At this point in time all the market participants (both consumers and manufacturers of special steels, i.e., our competitors) were studied. At the end of this work we had a complete picture of each participant under study – from a list and features of equipment to energy supply and alloying elements costs of production process. Attention was also drawn to commissioning of new capacities at the competitors’ and customers’ sites, projects on production of various alloying elements. Political and economic changes in the country were also studied, as they belong to those factors influencing the Company’s compatibility.

On the basis of the received information a detailed special steels market model was drawn up.

At the final meeting McKinsey proposed four possible strategic alternatives. They varied both in product portfolio and amount of output. Each variant had its scenario for required measures and investments anticipation.

Any variant adopted by the shareholders will be aimed at further development of our Company. Having a detailed «special steels world map” drawn by the working team, the shareholders will decide on the role we play in the market. Our Company will enter the new year of 2007 with a definite marketing strategy

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