In Depth Analysis of Corus Group PLC

In Depth Analysis of Corus Group PLC

by: Kimberly Wylie

Table of Contents

Introduction 2

History and Business Overview 2

SWOT Analysis:  4

Porter’s 5 Forces:  5

Strategic Choices for Corus Group 6

Works Cited  8

Introduction:

Corus Group, formerly known as British Steel, is one of the world’s largest steel companies, formed in 1988 with the United Kingdom’s privatization of their major steelworks. Corus primarily manufactures coated and uncoated strip products. In addition, they manufacture sections and plates, as well as wire rod, engineering steels, and semi-finished carbon steel product. Corus also produces both rolled and extruded aluminum products, in addition to their steel products. This paper will discuss in depth analysis of Corus’ current positioning in the marketplace, their current strategies, and what future strategies they may wish to employ. (“Corus Group PLC Overview”)

History and Business Overview:

Government regulation of the steel industry in Britain began with price-control measures in the 1930s. In 1950, the Labor Party nationalized steel producers, as they felt these organizations “represented an unduly powerful oligopoly.” (“History”) Yet, by 1951, a Conservative government change in the UK oversaw the sale of many of the nationalized firms, back to their original shareholders. And, instead of nationalization, an Iron Steel Board was established and given the power to regulate the industry, including setting maximum pricing and whether or not large investments would be allowed. The steel industry, in Britain, after the formation of the Iron Steel Board, was one plagued with doubt. The fear that companies would be renationalized lingered in the back of investors’ minds. In addition, price controls created a setting that was not conducive to capital investment.

Yet, despite these challenges production soared thanks to technological advancements. Production doubled between 1954 and 1960, due to innovations such as continuous casting and oxygen-based production allowed British steelmakers. However, increasing competition was felt from Europe and Japan. (“History”) In 1967, with the return to power of the Labour Party, 90% of the UK’s steel manufacturers were renationalized, under a new holding company, British Steel Corporation (BSC). When the energy crisis of the mid-1970s hit, BSC was in the midst of a large investment program which entailed consolidating their smaller facilities and implementing advanced equipment in the larger ones. However, with the reduced demand for steel, BSC had to close many of their outdated steel mills. Trouble continued further with the 1980 strike, which showed Britain that their steel requirements could be imported. Along with sizably reducing their workforce, “during the 1980s BSC disposed of about $1 billion in noncore assets to focus on efficient steelmaking.” (“History”)

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