ThyssenKrupp Essay ⋆ Business Essay Examples ⋆ EssayEmpire

ThyssenKrupp AG, a German industrial conglomerate, was created by the merger of Thyssen AG and Friedrich Krupp AG Hoesch-Krupp in 1999. Today, the steel and engineering company remains a dominant steelmaker, with its service and engineering business recently earning almost a third of the company’s sales. Employing a business concept mainly focused on technological innovation and expertise and diversification, ThyssenKrupp AG continues to follow its historical roots, making it Germany’s 10th largest company (2006) and one of the key players in the European and world steel market.

More Than A Steelmaker

ThyssenKrupp ranks among the top 30 listed companies in Europe, and remains one of the top 12 (2006) largest steel-producing companies in the world (by steel volume), in the top five (2006) by sales, and number one in Germany. The expected sales figure for fiscal year 2008 is €53 billion. By splitting into five business segments, ThyssenKrupp gained for itself a much more precise market position in the world’s highly competitive industrial markets. The company’s major activities include its steel and stainless steel business (production of flat steel products and stainless steel flat-rolled products), and capital goods (divided into two units: elevators and technologies), and services (materials and industrial services).

The steel giant, with its 193,000 employees (2007) is increasingly expanding overseas. Already, more than two-thirds of its over 2,400 production sites, offices, and service centers are functioning outside Germany. Although approximately 70 percent of company sales (2007) are generated in Europe (inclusive of 36 percent in Germany), Thyssen’s focus is firmly on North America, another key region and part of its long-term strategy of increasing market activities outside Europe.

Milestones In The Company’s History

The origins of the company can be dated back to 1871, when August Thyssen first built up his steel and engineering business. In the early years, Thyssen focused on increasing his iron and steel production, and on the expansion of both the raw material base and his manufacturing operations in Germany and overseas. Thyssen’s aim was to diversify and to integrate acquired companies, products, and businesses into one group, the Vereinigte Stahlwerke AG (1926).

In 1914, the internationalization of the group was disrupted by the outbreak of World War I. After the first abrupt downturn, production soon increased again in support of Germany’s war effort. While the war resulted in the loss of foreign business opportunities, Thyssen remained nearly completely intact in Germany. Following a restructuring process and being renamed Thyssen-Hütte, the company played a significant role as a supplier of preliminary steel products for the World War II economy.

After the war, the company went into liquidation: Thyssen-Hütte was dismantled as part of Germany’s war reparations. With the halt of the destruction of Thyssen-Hütte in 1949 and the split of Vereinigte Stahlwerke AG into separate companies, August Thyssen-Hütte AG returned to its original form and business. Once again, the focus of August Thyssen-Hütte AG’s business strategy was on diversification through horizontal and vertical acquisitions, and restructuring. The company has become Europe’s biggest steel producer and service provider, with technological expertise resulting in a diversified conglomerate.

Friedrich Krupp AG Hoesch-Krupp, another German steel giant, emerged in 1992, following a hostile takeover of Hoesch AG by Friedrich Krupp AG, marking the first hostile takeover in German business history. In 1997, the newly formed Friedrich Krupp AG Hoesch-Krupp attempted to take over the much larger Thyssen AG. However, massive resistance from Thyssen’s employees culminated in both companies entering negotiations vis-à-vis a merger. April 1, 1997, saw the consolidation of the steel business of both companies, followed shortly afterward by the announcement of an intention to fully merge their entire companies. In March 1999, ThyssenKrupp AG came into existence.

The origins of Friedrich Krupp AG Hoesch-Krupp can be traced back to 1811, when Friedrich Krupp GmbH was established. Initially, the company produced high-quality cast steel and later focused on more finished products, such as high-precision rolls and forged and rolled seamless railway tires. Recognizing the importance of innovation, Krupp worked on the improvement of steelmaking processes simultaneously with the expansion of the company into a horizontally and vertically integrated concern. As in the case of Thyssen AG, Krupp’s involvement in the war economy has been critically evaluated.

Bibliography:

Alfred D. Chandler et al., eds., Big Business and the Wealth of Nations (Cambridge University Press, 2000);
Jeffrey Fear, Organizing Control: August Thyssen and the Construction of German Corporate Management (Harvard University Press, 2005);
International Iron and Steel Institute, www.worldsteel.org (cited March 2009).

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