Strategic Management Project

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Group-11
Amit Kumar
100
Arkadip Gupta
101
Dipayan Ghosh
102
Giri Seshadri
103
Sri Divya
104

Introduction
Tata Steel, formerly known as TISCO Tata Iron and Steel

Company Limited, is the world's sixth largest steel company.

It is the second largest private sector steel company in India

in terms of domestic production.

Ranked 315th on Fortune Global 500.
Vision statement: To be the global steel industry

benchmark for Value Creation and Corporate Citizenship

Mission:
Sustainable Growth
Differential value creation
Enhance employees' competencies
Continuous improvement of business processes
Being responsible corporate citizen

Time-Line
1907: Tata Steel was established by Indian Parsi businessman

Jamsetji Tata
1935: Production of high-tensile steel commenced.
1961: Industrial license is obtained by Tata Steel for an Alloy-

Steel project 1963: The government approves in principle

expansion by One-Million tons during the 4th Plan.
1965: The Steel Ministry agrees to expansion to 4-Million

Ingot tons with a Strip Mill.

1974: Amalgamation with West Bokaro Limited for coal mine

operations.
1979: Five-year Rural Development programme for upliftment

of the villagers near Jamshedpur taken up.

 1981: In 1981, Ratan was named Chairman of Tata

Industries; the Group's other holding company.

1985: Merger with the Indian tube company
1986: Started export cell
2000: Company was recognized as the world's lowest-cost

producer of steel.
2005: The company was also recognized as the world's best

steel producer by World Steel Dynamics.

2007: Won their bid for Corus .The joining of the two will

create the fifth largest steel company in the world

INDIAN STEEL INDUSTRY

Step Analysis
Social Factors:
Rehabilitation of people in mining areas.
Impact on economy and climate change.
Technological Factors:
Popularity of Steel Portals.
Application of SML (Steel Markup Language).
Economic Factors:
GDP Growth Rate.
Reduction in Customs Duty.
Political Factors:
Recommendations on Captive Mines.
Mining Scams. Eg: Goa
`

SWOT Analysis
Weakness
High debt loads
Strengths
Operational Inefficiencies
Access to Raw Materials
Low demand for existing
Strong Brand Value
products
Access to Corus talent pool
Less product innovations
Risk Mitigation
Good Corporate Governance High attrition rate
Opportunities
Competitive advantage by
value of size
Growth of Infra Sector in India
Higher pricing opportunities
in foreign markets
Movement along Value chain
front

Threats
Socio Political Scenario/
Cap on mining activity
Advancing technology
International Competition
Regulatory requirements
Rising prices of Coal

External Analysis

Michael Porters Five Forces

Analysis
Buyers Power(low)
Increasing Demand for Steel.
Low customer preference.

Suppliers Power(high)
High Raw Material Prices.
Lack of Transportation.
Fragmented Coke Suppliers.

Competitive Rivalry(very high)

Competition from Foreign Players.
Spurt in Merger and Acquisition Activities.

Threat of New Entrants

(moderate)
High Cost of Basic Inputs and Services.
Industry is Capital Intensive.

Threat of
Substitutes(moderate)
Use of Aluminium, Plastic, Carbon Fibre.

External Factor Evaluation Matrix

Factors

Weighted
score is
2.75 Tata
Steel is
externally
somewhat
strong.

Score(S Weight Total

)
age(W weighted
)
value(S*W)

Threats
Technology Risks

0.15

0.15

Raw Materials Security and

Price Volatility

0.12

0.24

Forex, Credit, Liquidity and

Counterparty Risk

0.07

0.14

Regulatory and Compliance

Risks

0.06

0.12

Health, Safety and

Environmental Risks

0.11

0.33

Macro environment

0.18

0.72

Industry Cyclicality

0.15

0.45

Growth Projects

0.12

0.36

Financing

0.08

0.24

Opportunities

2.75

TATA STEEL GLOBALLY

TATA STEEL
INDIA

Reduced growth, reduced

consumption Long steel growth
remain prospective,

Cash cows

TATA STEEL
EUROPE

Fall in demand; increase in

diversified product offering

Star question
mark

TATA STEEL SE
ASIA

High demand, High growth

opportunity, High y-o-y growth

Star

NAT STEEL

Automation implementation, up
gradation of production units,
increased performance, obtained
multiple projects

Question mark

Iron Ore Project

Canada

Ramping up of coal production,

succesful completion of Direct
shipping Ore project

Question mark
(2013)

Profit Pools
Brownfield expansion

Increase in capacity, more

production, more dedicated
production to flat steel

Cash Cows

Global wire business

Largest wire manufacturer,

Revenue US$ 496 M

Cash Cows

TATA growth shop

Increased savings

Agrico

Present in market for over

Cash Cows
80 yrs, high popularity, high
product diversification

Tinplate Company of
India Ltd

Largest producer, high

growth opportunities y-o-y
14%

Star cash
cows

TATA Sponge Iron Ltd

Improve synergies, future

alternative

Question
mark star

GreenField expansion

Future growth opportunity

for furthur product
diversification

Question Mark

Internal Analysis

Balance Scorecard

Financial

Turnover at 1,34,712 crores by 2013

EBITDA is at 12,654 crores by 2013
PAT is at -7058 crores by 2013.
India leads in geographical distribution of revenue at 29%
and in capital employed by geographies by 46% for Tata
Steel.

Customer

Diversified customer base.

Automotive ,Construction , Engineering , Consumer goods
industries etc are major customers.
Increasing marketing efforts in industries like Railways ,
Ship Building , Defense etc.

Internal business processes

Kar Vijay Har Shikhar ,a Continuous improvement

programme, a well-defined six step process involving

TQM and statistical tools for improving quality.
Some of the key themes through which process
improvements are taken up are Throughput, Value-inuse, Energy Efficiency, Opportunistic Plays, Logistics &
Supply Chain
Adoption of National Voluntary Guidelines to enforce
transparency , ethics and care for the community.

Learning and Growth

Presence of four research centers supporting cutting

edge R&D in steel.

Tata Steel Group Process Improvement Teams
deployment for continuous process improvements.
Growth of the company as a whole has been affected by
weak global economy in 2013.

Internal Factor Evaluation Matrix

Weighted
score is
2.56.Tata
Steel is
internally
somewhat
strong.

Business Model Analysis

Key
Partners

Nat
Steel
Millenni
um
Steel
Corus

Key Activities
Mining
Extraction
Manufacturin
g

Key
Resources
Access to
Raw Material
Strategic
Alliances

Cost Structure

Value
Proposition
Trusted
Brand
Highly
valued by
all
stakeholde
rs

Customer
Relationshi
ps
Strong
Base
Value
driven
Channels
Traditional
supply
channels
direct to
customers

Customer
Segments
Automotiv
e
Constructi
on
Engineerin
g
Consumer
goods

Revenue Streams

Major players in Steel Sector

Main Producers (SAIL plants, Tata Steel and Vizag

Steel/RINL),
Major Producers (Essar Steel, Jindal Steel & Power and
Ispat Industries)
Other Producers
Total production value :
Sector

Production

Public Sector

12.579 M tonnes

Private Sector

38.015 M tonnes

Total

50.594(89% cap
util)

Major player in Steel Sector

NAME

MAJOR
PRODUCTS

TOTAL CAPACITY
(million tonnes)

REVEN
UE
(Billion
US$)

Tata Steel

wire rods, bars,

and steel flats

28

6.9

Jindal Steel &

Power

mild steel slabs

and sponge iron

20

3.2

Essar Steel

sponge iron, steel

and iron ore
pellets

14

5.6

Rashtriya Ispat
Nigam Ltd

liquid steel

30

1.7

Bhushan Power
& Steel Ltd

iron Ore
beneficiation

12 (incl of the
expansions)

1.32

Lloyds Steel

corrugated sheets
and steel coils

Steel Authority
of India Limited

Stainless steel and 25

iron

Mahindra

1.8

7.8
0.210

Product Portfolio

High

Ferro Alloys
and Minerals
Division

Low

Bearings and
Tubes
Division

Low

Market Growth

High

Steel Division

Market Share

External factor based decisions

Updating frequently on the latest technological
advancements
Improving storage facilities
Cash management and treasury management
techniques
Internal factor based decisions
Improving operational efficiency.
Merging
with
high
technology
foreign
companies in similar line of business.
Incentivizing employees for long term
association with the company.

ANSOFF MATRIX
Market
penetration
: Bearings
and tube
division
Market
developmen
t:
International
markets
Alliance and
Mergers

Product
developmen
t: Steel coils
and
Corrugated
steel

Diversificati
on:
Not
diversifying in
the near future

Long Term Strategic

plan
28 mtpa
Fewer Intnl
Markets

2012

60+ mtpa
Strong Intnl
presence

2020

Thank you !!