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Running head: FDI 1Foreign Direct InvestmentClifford R. SmithNameBUS616 - International BusinessInstructor DateAshford University
FDI 2Foreign Direct InvestmentMittal Steel traces its origins back to a family-owned business in India in the 1970s. Lakshmi Mittal took the business beyond the confines of India. Through several foreign direct investments and a keen sense of the market, the company began to grow expeditiously. Thirty-two years after Mittal Steel’s first foreign investment, the small Indian steel company rose to be the world’s largest steel company.Mittal Steel began as a family business in India. Faced with limited growth potential in their homeland, due to government regulations and state-owned competition, Mittal open their first overseas steel making facility in Indonesia in 1975. The Indonesian plant sought to cut costs, and, therefore purchased iron pellets from a struggling company in Trinidad. In the same year, the Trinidadian plant contracted Mittal to turn their plant around (Hill, 2010). Mittal turnedthe plant around, and by 1989 Mittal had purchased the plant in Trinidad. The steel industry was in decline and Mittal believed that this was the perfect time to expand by buying struggling businesses at low cost, and holding out until the market increased. Mittal continued his foreign investments through the coming years. In 1997, Mittal’s growth wasslowed by capital constraints. Therefore, Mittal decided to become a public company and raised $776 million for further expansion. By 2005, the market had picked up and was booming. By this time, Mittal owned steel making plants in India, Indonesia, Trinidad, Mexico, Canada, Germany, Kazakhstan, United States, France, Algeria, Poland, and a few other countries (Hill, 2010). In 2006, Mittal merged with Arcelor, making them the largest steel company in the world.