Read the following case study and then answer Questions 1 – 5 which follow:
BAOSTEEL EUROPE
The internationalization of a leading Chinese steelmaker, and management of its European headquarters in Germany.
The Making of a Global Corporation
The name “Baosteel” combines Baoshan, a district in Shanghai, China, and the English word “steel.” “Baosteel” stands for a Chinese company with global outreach. However, experts on Asia think that there is an additional twist at play, as is often the case with company names in this region. In Chinese “bao” also signifies “valuable” or “precious,” and a literal translation of Baosteel may be “premium steel”—certainly something to which the company aspires.
Baosteel’s home market is staggering. On the demand side, the market reflects the sheer and insatiable needs of the largest and most successful emerging economy in the world. However, on the supply side, it is fragmented unlike any other market in the world. Currently, the Chinese steel market is divided by 260 steelmakers of various sizes, and some sources say this number could be greater than 1,000. While some of these firms are profitable, most are not. Thus, it is not surprising that the Chinese government is urging them to turn themselves into large steelmaking corporations following the lead of Baosteel.
The Baosteel Group was founded in Shanghai in December 1978 under the name of Baoshan Iron and Steel Complex. Skipping some of the historical details, it is sufficient to say that the current-day corporation is the result of a large merger between Shanghai Metallurgical Holding Group Corporation and Shanghai Meishan Group Co., Ltd. carried out in 1998 on the basis of a government decree. With continued growth, the most recent acquisition took place in April 2008, when Baosteel acquired the Bayi Steel Group in the province of Xinjiang.
Baosteel Group is a holding company consisting of five divisions:
1. Financial
2. Steel trading
3. Equipment and spare…