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. Steel Authority of India Ltd(SAIL)
2. Rashtriya Ispat Nigam Ltd(RINL)
3. Tata Steel ltd(TSL)
4. JSW Steel Ltd
5. Essar Steel Ltd
6. Ispat Industries Ltd
7. 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 Division

Hot Metal Crude Steel Saleable Steel

 Tata Steel Who’s Who
• Chairman – Ratan Tata
• MD - B Muthuraman
• CEO - HM Nerurkar
• CFO - Koushik Chatterjee
 Tata Steel presence
• National • International
– National – Vietnam
– Jharkhand – Oman
– Chhattisgarh – South Africa
– Orissa - Kalinganagar, – Australia
Dharma Port – Mozambique
– Tamil Nadu – 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
customer-driven 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
performance-driven 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.asp
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/production.html
9. http://www.researchandmarkets.com/reporti
nfo.asp?report_id=690579
10.http://www.ieindia.org/publish/mm/1003/oc
t03mm2.pdf