Strategy
Tata Steel
• Jyoti Anand (05) Jitender Kumar Jain(19) Rohit Kumar(25)
Part A (Industry Analysis) • • • • • •
Size(World, India) Growth Rate(World, India) Major players in the World Major Players in India Your Strategic Group- 3 major player in your group
Industry • • • • • • • •
Key Economic Features Industry driving forces KSF/CSF for the Industry Industry attractiveness Porter’s 5 forces competitive model Value Net Industry structure How to compete-options
Part- B(Company Strategic Analysis) • Along with one competitor(Strategic Group) • Reactive/ Relative SWOT • Resources and Capabilities • Core Competencies • Activity Systems View • How sustainable competitive advantage is built up • Last 5 years financials and key data
Part C • Strategic Challenges facing the company today and next 5 years • Strategic Options and Pros and Cons of each • Your strategic recommendations and your rationale thereof •
Industry Analysis • Size – Total crude steel production for the 66 countries reporting to the IISI in January 2009 was estimated to be 85.8 million tonnes, a drop of 24% on January 2008.(source -www.steelonthenet.com)
Steel Industry • Accounting for 6% of GNP • Total Production in India of finished carbon steel – 1991-92 - 14.33 million tonnes – 2001-02 - 30.11 million tonnes
• Demand for steel is adversely affected by a slowdown in real estate and auto sectors since September 2008. (Source – CMIE) • Low demand, cheap imports and destocking could put pressure on prices of flat steel products in March quarter.
Steel Industry • Production of finished steel in (000 tonnes) – Aug 2008 – 4602 – Sep 2008 – 4577 – Oct 2008 – 4471
(source – CMIE Jan 2009)
Key players in the World Name Production ArcelorMittal (Global) 116.4 Mton Nippon Steel (Japan) 35.7 Mton JFE (Japan) 34.0 Mton POSCO (South Korea) 31.1 Mton Shanghai Baosteel Group Corporation (China) 28.6 Mton Tata Steel (India / Global) 26.6 Mton LiaoNing An-Ben Iron and Steel Group (China) 23.6 Mton Shagang Group (China) 22.9 Mton HeBei Tangshan Iron & Steel Group (China) 22.8 Mton United States Steel Corporation (United States) 21.5 Mton Wuhan Iron and Steel (China) 20.2 Mton Nucor Corporation (United States) 20.0 Mton Gerdau (Brazil) 18.6 Mton Gruppo Riva (Italy) 17.9 Mton Severstal (Russia) 17.3 Mton
Key Players in India 1. 2. 3. 4. 5. 6. 7.
Steel Authority of India Ltd(SAIL) Rashtriya Ispat Nigam Ltd(RINL) Tata Steel ltd(TSL) JSW Steel Ltd Essar Steel Ltd Ispat Industries Ltd Jindal Steel & Power Ltd
Two Routes to Steel Making 1.Classical route or primary route Based on blast furnace (BF) and basic oxygen furnace (BOF) 2.Modern route or secondary route Based on electric arc furnace (EAF), using steel scrap or sponge iron i.e. Direct Reduced Iron (DRI) as basic raw materials.
• Ten main rolled steel products Hot Rolled Coil Hot Rolled Plate Cold Rolled Sheet Coated Sheet Wire Rod Sections and Beams Rebar Merchant Bar
Tata Steel – Facts and Figures • Employee Strength = 35870 • Golden Peacock Award 2009 for its CSR activities • Earned the distinction of being the lowest cost steel producer in the world (source – CMIE) • Expanding production capacity by 50% to approx 7.4 mn tonnes by FY 2011 (source – CMIE) • Acquisition of Corus, 2nd largest steel maker in Europe.
Tata Steel • Tata Steel is engaged in mining, production and distribution of steel and steel products in several countries across the world. • The company’s operations are segmented on the basis of its holding and subsidiary companies operations including: Tata Steel, Corus Group, NatSteel, Tata Steel Thailand and Tata Metaliks Limited.
Products of Steel Division
Tata Steel Who’s Who • • • •
Chairman – Ratan Tata MD - B Muthuraman CEO - HM Nerurkar CFO - Koushik Chatterjee
Tata Steel presence • National National Jharkhand Chhattisgarh Orissa Kalinganagar, Dharma Port – Tamil Nadu
• International
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Vietnam Oman South Africa Australia Mozambique Ivory Coast
Key Success Factors • Improved cost structures • Good Top Management • Technological expertise
Top Competitors for Tata Steel • • • • • •
ArcelorMittal Essar Group N.V.Daido Steel Co., Ltd. Steel Authority of India Ltd. Jindal Vijaynagar Steel Ltd.
Challenges • Tata Steel faced many challenges in respect of quality, global cost competitiveness, capacity expansion and modernization, overstaffing, change management and transformation into customerdriven culture, and shift in focus from steel commodity business to Tata Steel brand products
Responses to challenges • Tata Steel responded proactively to these challenges by way of process innovation, continuous improvement in business processes, employee-friendly HR management practices, creating and spreading new performancedriven culture, and creating value for customers and shareholders.
Competitive Landscape • Demand comes largely from the manufacturers of durable goods like motor vehicles, machinery, containers, and construction steel. The profitability of individual companies depends largely on efficient operations, because most products are commodities sold based on price. Big companies have large economies of scale in production. Accordingly, most producers of secondary products buy raw metal from the large producers. Small companies can compete by operating efficient local mini-mills or producing specialty products. The industry is highly automated: average annual revenue per worker is close to $300,000.
Strategy of Tata Steel in Future • • • •
Emphasis on costs Emphasis on operational efficiency Ensuring cheaper resources Enhancing revenue through better premium in products
Strategy for future • Emphasis on 3 aspects – Branding, product mix, costs (B Muthuraman in an interview)
Value Net
References 1.www.tatasteel.com (Tata Steel) 2.www.steel.nic .in (Ministry of Steel) 3.http://jpcindiansteel.nic.in/tech30sep.as p 4.www.economictimes.indiatimes.com 5.www.worldsteel.org 6.CMIE – Monthly review of Indian Economy 7.www.worldsteel.org 8.http://www.steelonthenet.com/producti
9.http://www.researchandmarkets.com/ reportinfo.asp?report_id=690579 10.http://www.ieindia.org/publish/mm/ 1003/oct03mm2.pdf
