Defining a Long-Term Vision and Strategic Plan
BCG worked with a major steel company to create a long-term vision and a value agenda to prepare it for ambitious growth.
SteelCo is a major integrated flat steel producer with a market cap of approximately $20 billion.
Global conditions for the steel market were starting to recover, and future prospects were encouraging. SteelCo is one of the most competitive flat steel producers in the world and was in a good position to take advantage of the positive market trend.
Given the positive industry outlook, SteelCo asked BCG for support in developing a long-term vision that would generate substantial value for the company, as well as a strategic plan to implement the vision.
The SteelCo long-term vision was built from the bottom up. This provided a very dense fact base of industry trends and alternatives to support the top executives’ discussion of what the company's aspirations would be, given the industry outlook.
The development of the fact base relied on several analyses:
The case team mapped the key trends in the global steel industry, the dynamics of the local market, and the implications for the client's business.
We screened and assessed the financial and strategic attractiveness of organic growth (both greenfield and brownfield), mergers and acquisitions (M&A), and other tactical moves (such as partnerships) from a risk-return perspective.
The growth options were then prioritized using rigorous financial modeling, including scenario analysis, stress testing, and Monte Carlo simulation.
The project identified several strategic moves the company could make to solidify its leadership position in the domestic market. Specifically, we recommended a refocusing of the portfolio to move SteelCo toward more-sophisticated, value-added products that would drive stronger mid- to long-term margins and reduce the threat of direct local competition.
Additionally, vertical-integration initiatives—both upstream and downstream—were defined and implemented in the years following the project execution. The BCG team also detailed the capital-expenditure and risk-return profiles necessary to implement all of the suggested strategic moves, recommending a prioritized execution.
On the international front, several acquisition targets were mapped, as well as potential partnership schemes. Value drivers and a rationale for the international moves were also defined in terms of the potential for value creation and positioning for the global steel industry end-game. In this context, several M&A moves were recommended.
By implementing some of the recommended strategies, such as vertical integration and focusing on higher-value-added products, the client conveyed a differentiated positioning to the capital markets. This, along with strong financial results that followed, helped the client become one of the top ten global value creators in terms of five-year total shareholder return.
Also, the client is now much better positioned to be a protagonist in the end-game of the industry.