In the late 1980?s I went to work for LTV Corporation, Dallas, Texas. One day many of us middle managers were called to a lavish gala at corporate headquarters to watch the very public announcement that LTV’s steel division, LTV Steel, had purchased/merged with another floundering US steel producer, Republic Steel. Both were losing hundreds of millions of dollars, perhaps billions, yearly. None of us peons could understand the executive wisdom of merging 2 large, ‘losing’ companies into one giant losing company. Our CEO argued that each organization would benefit from complementary products and substantial economies of scale.

Did the venture succeed? Were the peons or the big wigs right? In either case, briefly describe WHY the eventual result happened. Was this a good example of the principles of Operations Management properly applied?

Please note: this is a REAL case, in the sense that it relates to actual events that can be tracked/researched via the literature/Internet.

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