Reference no: EM132801327

The use of a divisional organizational structure has advantages and disadvantages. This spotlight examines how ArcelorMittal was able to share knowledge between its different divisions, resulting in increased efficiency. By breaking down divisional walls, they were able to enhance knowledge and learning at multiple facilities.

ArcelorMittal's approach to neutralizing the disadvantages of a divisional organizational structure is examined. Their ability to share knowledge and technology between divisions, and the resulting benefits, are discussed.

Read the following case and answer the related questions.

ArcelorMittal announced Steligence in June of 2018 as a truly integrated approach to construction. This platform drives the selection of the best available technology in steel production, and the modular application of steel components in buildings, making possible efficiency gains in planning, design, construction cost, and flexibility of building compared to conventional methods.

What led to the ability of ArcelorMittal to develop a platform helping the steel maker create deeper relationships with customers? It started by learning to work effectively internally.

It did it by breaking down the barriers between organization units to facilitate knowledge transfer and learning. One of the disadvantages of a divisional structure is that the divisions often perceive themselves as being in competition with each other and are therefore unwilling to share information to help other divisions improve. ArcelorMittal has overcome this by "twinning" different steel mills, one efficient and one struggling, and challenging the efficient plant to help out its twin. This process was so successful the company rolled into the next phase-digital twinning. These centers of digital excellence proliferate across Europe, and in these centers new technologies are developed from prototype to maturity. Empowering and encouraging people to work collaboratively allows the company to be nimble and execute start-up style initiatives. These centers allow the company to meet customer needs through a "virtual mill" removing all geographical and technical boundaries. Quality is maintained with advanced analytics and cost efficiency are obtained in production and logistics with the use of digital visualization.

Twinning was the first step in developing a deep collaborative culture that would be necessary to support the digital architecture that would eventually support the development of the Steligence platform. The platform offers significant reduction in the cost of construction and reduced time of build which are critical outcomes for the customer. The future will be built on Action 2020 goals focused on the following:

-World-class assets where every facility is operating in the most efficient and cost-productive manner.

-Emphasizing cross-functional, cooperation-focused teams focused on the customer.

-Focusing on developing technology-driven customer response capabilities.

The experience of ArcelorMittal demonstrates how firms can act to overcome the typical disadvantages of their divisional structure. Communication, competition, collaboration, and commitment will lead ArcelorMittal valiantly into the future.

How did ArcelorMittal cost efficiencies and production make gains in Europe?