PAKISTAN STEEL MILLS

STRATEGIC MANAGEMENT - 11:45 TO 2:45

AUGUST 27, 2021

RABEE AHMED - 21512
HAMZA AHMED KHAN – 21516
1. Introduction of PSM

This is Truth that an organization turn out to be sickening over time it means to sale or dissolve it.
The Most Classic example is the Pakistan Steels Mills that has been non-functioning for years and
government is showing slightest concern over the condition of Steel Mills. In Addition to, PSM
has been constantly suffering greater damages & loses which shows in term of aggregate amount
of Rs 70 billion. Further, it’s not going to be possibility of revitalizing and enlivening of Pakistan
Steel Mill and even it does not seem to be resume operation and making products when there is
need and requirement of bulb production for infrastructure developments under CPEC which need
of around tons of steel and iron goods for production in project. On the other Hand, PSM had not
suffered loss of Rs 26.526 billion under Moin Aftab Sheikh Period because he did wrongfully act,
corruption and violation against rules and that money could have been utilized to pay Rs 2.04
million to 13,000 employees that was awaiting their Salaries respectively. Unfortunately, in June
2020 government decided to downsize 9.350 employees of PSM because of its cost decline
procedure. More, PSM ensured employees around 30,000 that has now decreased to as much as
9,000 employees excluding employees that had already retired.

2. following are the important macro and micro environmental factors affected the working of
Pakistan Steel Mill:

 Political Factor:
The Key motive of the demise of Pakistan Steel Mill is the intrusion and intervention
concerned made consecutive government. More, appointed unskilled and unworthy individuals
over important positions those consuming political associations.

 Economical Factor:
Supplementary crucial motive of the end of Pakistan Steel Mill is that totally relay on imported
steel for domestic uses. Even with (SBP) has confidence in stating that getting low-priced
imports from other countries such as Ukraine & China smashed and injured domestic making
of steel & iron that had been fallen 8.6% for the first quarter of fiscal year 2016 related with
31% progression for the same quarter of fiscal year 2015.

 Social Factor:
PSM became part of privatization is considered to be another issue for its end. More,
Government underestimated the value of Pakistan Steel Mill configuration and made certain
decision of selling the organization over low rate of price. Though, collection of employees
who were working in Pakistan Steel Mill stood-up in contradiction of privatization decision
triggered opposite of that judgement.

 Technological Factor:
Pakistan Steel Mill has suffered through conventional approaches by using low quality
outdated equipment for producing Steel and Iron. More, PSM has underprivileged
infrastructure, they are not investing higher in R&D Department because they are relying on
imports for producing technology & Machinery.
 Environmental Factor:
Pakistan Steel Mill is also part of steel melting industry that is largely producing to air
pollution. More, Pollution is produced because of underprivileged quality of scrap material.

 Legal Factor:
When we making comparison Pakistan Steel Mill with other countries like Japan, it is apparent
to understand the requirement of experience labor is critical & vital in producing steel & iron.
PPP Government at that time, employed large volume of fresh labors and it was around 9,000
labors enough to fulfill the requirement of Steel industry but they hired 17,000 employees that
seemed to be illegal act made by government.

 Ethical Factor:
Multiple factors have been perceived are recognized for demonstration of failure encompasses
Governmental impact, business abnormalities, management incompetency, unproductive
managerial decision etc. More, other steel sources drawback and influence includes increase in
import, ship-breaking and old steel melting techniques are also considered to create negative
influence over success of Pakistan Steel Mill.

3. Strategy for PSM:

The Government decided to privatized PSM as they have given the golden hand-shakes to
their workers the cost of that was almost 2 billion PKR, in this process both local and foreign
(China & Russia) shows their interest to acquire PSM. Such industry like PSM has tremendous
scope to empower country’s overall economy. So, for IFE, compared to privatism, we need
sincerity to PSM and reform throughout to its International Standard. Which means Qualified
people through merit which means not just into the influence of political and bureaucracy & A
comprehensive Business Plan. Quality management and accountability throughout the PSM. For
EFE Along with Forward Integration for the distribution, previously they awarded to their friends
and family and upper management has no concern over that due to heavy corruption. and Market
Penetration due to high demand in our country as population is growing more societies are
developing making demand of steel increasing along with automotive industry as manufacturer
wants to meet the demand of country and there is huge demand also increasing in the country in
the context of CPEC development. So, market development in the region of Baluchistan can make
a market competitiveness.

4. Recommendations

 Product Development for increasing sales by Improve the quality of products to international
standards.
 Forward Integration control over distributors. Mainly acquire them. For cutting the expenses
and discourage corruption. As previously distribution was rewarded to close circle without
any hesitation.
 Horizontal Integration increasing control over competition by increasing the quality of a
particular product gaining market shares.
 Increase budget on marketing for its products. Such as Market Penetration. Due to increase in
demand.
 Market Development introducing your products into new geographical area such as other
resourceful developing nations. Like Afghanistan recently they explore 3 trillion dollars
resources but look after the international scenarios as well.
 Related Diversification Adding new related products, such as mechatronic products like solar
panels, batteries & UPS. & Develop a comprehensive business plan to guard against
competition.
 Retrenchment assets reduction to reverse declining sales and losses, Discourage overall
Nepotism in this process. Do not sell anything until proper investigation.
 Divestiture Selling of a loss occurring part of PSM that becomes unbearable and for coping
up losses.