CASE STUDY

TATA GROUP OF CAMPANIES:

TATA STEELS

Name- Anmol Amrit Chaudhary

Prn- 18030122119
Batch-2018-21
Sem- IV
Institute- SICSR
Date- 20-03-2020
STATEGIES ADOPTED BY TATA STEEL

CORPORATE LEVEL STRATEGIES

 ACQUISITIONS

 NatSteel in 2004:
In August 2004, Tata Steel agreed to acquire the steel making operations of the Singapore
based NatSteel for $486.4 million in cash. NatSteel had ended 2003 with turnover of $1.4
billion and a profit before tax of $47 million. The steel businesses of NatSteel would be run
by the company through a wholly owned subsidiary called NatSteel Asia Pte Ltd. The
acquisition was completed in February 2005. At the time of acquisition, NatSteel had a
capacity of about 2 million tons per annum of finished steel.

 Millennium Steel in 2005:

Tata Steel acquired a majority stake in the Thailand-based steelmaker Millennium Steel
for a total cost of $130 million. It paid US$73 million to Siam Cement for a 40% stake
and offered to pay 1.13 baht per share for another 25% of the shares of other
shareholders. For the year 2004, Millennium Steel had revenues of US$406 million and a
profit after tax of US$29 million. At the time of acquisition, Millennium Steel was the
largest steel company in Thailand with a capacity of 1.7 million metric tons per annum,
producing long products for construction and engineering steel for auto industries.
Millennium Steel has now been renamed to Tata Steel Thailand and is headquartered in
Bangkok. On March 31, 2013, it held approx. 68% shares in the acquired company.

 Corus in 2007:
On 20 October 2006, Tata Steel signed a deal with Anglo-Dutch company, Corus to buy
100% stake at £4.3bn ($8.1 billion) at 455 pence per share. On 19 November 2006, the
Brazilian steel company Compamia Siderúrgica Nacional (CSN) launched a counteroffer
for Corus at 475 pence per share, valuing it at £4.5 billion. On 11 December 2006,
 Tata preemptively upped its offer to 500 pence per share, which was within hours
trumped by CSN's offer of 515 pence per share, valuing the deal at £4.9 billion.
The Corus board promptly recommended both the revised offers to its shareholders.
On 31 January 2007, Tata Steel won their bid for Corus after offering 608 pence
per share, valuing Corus at £6.7 billion ($12 billion). In 2005, Corus employed around
47,300 people worldwide, including 24,000 in the UK. At the time of acquisition, Corus
was four times larger than Tata Steel, in terms of annual steel production. Corus was the
world's 9th largest producer of Steel, whereas Tata Steel was at 56th position. The
acquisition made Tata Steel world's 5th largest producer of Steel.

 2 Rolling mill companies in Vietnam in 2007:

Tata Steel through its wholly owned Singapore subsidiary, NatSteel Asia Pte Ltd,
acquired controlling stake in two rolling mill companies located in Vietnam: Structure
Steel Engineering Pte Ltd (100% stake) and Vina steel Ltd (70% stake). The enterprise
value for the acquisition was $41 million. With this acquisition, Tata Steel got hold of
two rolling mills, a 250k tons per year bar/wire rod mill operated by SSE Steel Ltd and a
180k tons per year reinforcing bar mill operated by Vina steel Ltd.
 JOINT VENTURES AND ASSOCIATES:

 Tinplate Company of India Limited (TCIL)

 Tayo Rolls Limited
 Tata Ryerson Limited (TRYL)
 Tata Refractories Limited (TRL)
 Tata Sponge Iron Limited (TSIL)
 Tata Metaliks
 Tata Pigments Limited
 Jamshedpur Injection Powder Limited (Jamipol)
 TM International Logistics Limited (TMILL)
 TRF Limited
 Jamshedpur Utility and Service Company Limited (JUSCO)
 The Indian Steel and Wire Products Limited (ISWP)
 Tata BlueScope Steel Limited
 Dhamra Port Company, Orissa
 Hooghly Met Coke & Power Company
 Lanka Special Steel Limited
 Sila Eastern Company Limited
 NatSteel Holdings (NSH)
 Tata Steel Thailand
 Tata Steel KZN- South Africa
 Tata NYK : A joint venture with Nippon Yusen Kabushiki Kaisha
 TURNAROUND STRATEGY

The Turnaround Plan at Tata Steel Thailand

During the Financial Year 2011-12, Tata Steel Thailand (TSTH) launched the
'Turnaround plan' in Thailand, which included most of the Company's improvement
projects. These improvement projects covered the areas of product portfolio optimization,
new product development, operations cost reduction and procurement cost savings. Here
are some of the projects in detail:

• Product portfolio optimization: A production planning model was implemented to

improve the total contribution by adjusting the product mix to suit the productivity and
contribution per ton across the three plant sites.

• New product development: This specifically focused on introducing special bar

quality products in the Thailand market and attained consistent sales of 2500 tam in the
very first year. It also covered the development of high-end wire rods hitherto not made
at TSTH and imported in Thailand.

• Operations cost: This covered the conversion cost elements directed at addressing the
overall KPI of lowest billet cost.

• Procurement area: A project was launched to improve the reliability in domestic scrap
collection and optimization of blending in various grades to help in reducing the total
billet cost. In addition, the 'Group buy' concept in high spend product categories like
bearings, electrodes has been initiated.
FUNCTIONAL STRATEGIES

 MARKETING STRATEGY

 4 P’S OF MARKETING
1. PRODUCT:

The Company’s products consist of TSL products, produced by the Company’s Indian operations
and its NatSteel and Tata Steel Thailand operations, and Corus products, and produced in the United
Kingdom and The Netherlands. TSL’s products can be divided into three main categories:
1. Finished and semi-finished steel products.

2. Ferro alloys products; and

3. Other products and services, including tube products, bearing products, refractory
products, pigments, municipal services and investment activities.

Corus has four main product segments:

(1) Strip products.

(2) Long products.

(3) Distribution and building systems; and

(4) Aluminum.

2. PRICING STRATEGY:

A pricing strategy must be conceived in relation to overall business objectives and marketing
strategy. The success of any business depends upon a blend of long run profit, growth and
survival objectives. Price, because of its influence on unit sales volume and profit margins,
affects long run profit objectives. And maintaining profitability through sound pricing
practices is necessary to ensure the firm’s survival over time. The pricing strategy adopted by
Tata Steel is the Market Penetration Strategy. This strategy is based on the assumption that
demands for the product is highly elastic. By setting relatively low
 price Tata Steel has managed to obtain large market share. The advantage of this kind of
pricing is that it discourages competition since there is less opportunity to reap unusual
benefits on investment. Since Tata Steel is in control of large iron ore deposits it has
increased its capacity manifold and so enjoys economies of scale. It has thus maintained
prices of its products lower than of its competitors and has increased the scale and
efficiency of operations, since it has lower production costs.

3. PLACE:

Place represents the location where a product can be purchased. But in industrial
marketing place is often referred to as the distribution channel.

Distribution channels at Tata Steel:

Tata Steel Limited delivers steel products to Indian customers through:

1) Direct supply channels,

2) 21 stockyards,

3) 25 consignment agents,

4) 15 external processing agents

TATA Steel main distribution channel is selling branded steel through Junction. It provides
cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is
India's largest e-Commerce company and the world's largest e-Marketplace for steel. Junction
offers a wide range of selling, sourcing and knowledge services that empower businesses
with greater process efficiencies. Tata Steel initiated the first online e-Sale through Junction in
the month of February 2002 and since then has sold 221,259 MT. The products that Tata
Steel has sold through Junction are: HSM Defectives, HSM POR, GP Coils, LP
Defectives, Prime Billets and Secondary Products. The results have been extremely
encouraging for Tata Steel, with products being sold to customers all over the country.
The prices obtained by Junction have been reflective of the market situation. The entire cycle
time of selling materials has been reduced by the speed and
 efficiency with which on-line competitive bidding events has been created and managed
by Junction. Through intensive market-making efforts and the use of technology, it is bringing
in both, greater efficiencies to processes and greater focus to the sale of non- core
products of Tata Steel.

Full Service on a business process outsourcing(BPO) mode Mjunction.com takes end-to-

end responsibility of selling client's low 'value' and/or standard products. It undertakes
market research and market-making activities to generate buyer leads. It also creates
suitable market lots to ensure maximum participation from buyers. Some of the other
services provided by Junction are conducting auction event fulfillment services, undertaking
collection of payments, like earnest money deposit and principal, ensuring fast and secure
handling of money. It has tied up with Citibank and HDFC Bank for collecting sales tax
documents and managing customer complaints.

4. PROMOTION:
In B2B marketing advertising, promotions and publicity plays an important role in the
communication strategies. Hence, to contribute to the overall effectiveness of the
promotional strategies utmost care must be taken by the companies.B2B promotion is
used to create awareness of the company, to increase the sales of the product and to
increase the overall effectiveness of the selling efforts. The promotional program
begins with carefully developed advertising objectives that must be formulated from
corporate and marketing objectives in such a manner as to set the direction for creating,
co-coordinating, and evaluating entire promotional program.

Promotional activities undertaken by TATA Steel:

Branding Steel Based on Customer Focus
As one of India’s most successful companies, Tata Steel represents a great example of a
strongly branded B2B company. In 2001and 2005, Tata Steel was ranked the world’s best
steel company in studies carried out by World Steel Dynamics Inc., USA (WSD), a
leading steel information service provider.
Branding Steel
The profitability of the steel industry in India is generally linked to business cycles,
reaping profits when economy is going well and eroding them when it is in depression. In
the late 1990s, the Indian steel industry was experiencing a glut in the market which
strongly affected the profit margin of all related companies. To reduce its dependence on
the external environment and business cycles, Tata Steel adopted a strategy which
stressed the following two points:
1) Branding its products
2) Moving to high value-added products.

The company soon realized that a strong customer focus is essential if any branding
approach was to be successful. It soon began to introduce Internal Campaigns in order to
bring the customer-centric message to its employees. In the late 1990s, the company
launched several Internal Marketing Programs to emphasize customer focus and service. The
programs had taglines such as: ‘Customer first ± har haal mein´ (Customer comes first in
any case), ‘Customer first ± har haal mein, her saal´ (customer comes first in every case,
every year), ‘Customer ki kasam ± hain taiyaar hum´ (We pledge to the customer that we
are ready for him).
To achieve this Tata Steel set up a branding task force in January 2000 to explore
the possibilities of branding Tata Steel products.

Only three months later, the task force evolved into a brand management department.
Within this department they created the distinct sub functions market development order
generation and order fulfillment which were computerized, enabling Tata Steel to reduce
its customer response time significantly. The company also initiated the concept
of customer account managers who were authorized and empowered to solve specific
customer grievances immediately. The company furthermore sought to increase customer
interaction in order to better understand customer needs and to explore new and improved
ways to meet these needs and expectations. Tata’s second area of key focus was to shift
into the domain of high value-added products. In April 2000, Tata Steel launched its first
branded product, along with the commissioning of its CRM plant.
 Tata Shaktee is their brand for galvanized corrugated sheets. Eight months later the
company introduced its second brand, Tata Tiscon (re-bars) for rods used in the
construction industry. In February 2003, Tata Steel launched another product brand Tata
Steelium. By September 2003, Tata Steel had three products as well as three generic
brands in its brand portfolio.
The leader of the company had decided that branding the commodity steel would provide
them a unique selling proposition in a great way. Branding Steel would help Tata Steel in
two big ways:
1) It would help stabilize the flow of revenues even during business downturns.
2) It would make premium pricing possible.

The communication tools used for the brand launches were primarily Print ads Outdoor
advertising. Yet, they also created TV commercials that portrayed signs of happy
customers and employees reveling in the concern the company had for them. ³We also
make Steel´ was the punch line that signaled the triumphant finale of that TV ad. Because
of these initiatives undertaken by Tata steel had put them well ahead of their competitors
in promotional activities.
Because the corporate brand Tata was already associated with various products and
attributes the company decided not to put the main focus on it but to create sub brands
with separate identities, supported by the corporate brand as co-driver. They had learned
from the European competition that specialty product offerings and strong brand
associations had guarded the market against the low-cost importers from the Far East.

 HR STRATEGY
Human resource policies of Tata Steel:

 Manpower Planning
Manpower planning enables HR department to project its short to long term needs on the
basis of its departmental plans so that it can adjust its manpower requirements to meet
changing priorities. The more changing the environment the department is in, the more
the department needs manpower planning to show:
  The number of recruits required in a specified timeframe and the availability of talent
 Early indications of potential recruitment or retention difficulties
 Surpluses or deficiencies in certain ranks or grades
 Availability of suitable qualified and experienced successors

 Performance Appraisal
Performance appraisal assesses an individual's performance against previously agreed
work objectives. Performance appraisal is normally carried out once a year. They assess
key result areas of their employees, workers and supervisors. Since it is a joint
responsibility of the individual and the supervisor; every individual in TISCO are co
prime to each other. It also enables management to compare performance and potential
between employees and subordinates of the same rank. Rating of employees is done by
their performances. It is given as per ranks very good, average, and average to medium
and below average. On the basis of these rankings highest reward of the year is given to
best suitable worker. The better performing employee gets the majority of available merit
pay increases, bonuses, and promotions.

 Training and Development

 The Technical Education Advisory Committee guides employee development and
training in line with strategic goals of the company and long-term objectives. The in-
house training centers impart majority of the training programs. (Technical Institute &
Management Development Centre).

 Employees are also deputed to other organizations and training centers in the country
such as ITI and abroad for specialized training.
 Officers are trained into business managers through special general management programs
such as at CEDEP (Centre for the Development of People), France.
 They are trained to know the changes in environment, market, and in steel prices.
 They also get training of problem-solving techniques, conflict management, etc.
 Compensation Planning
 It depends on financial capabilities.
 Yearly increments are given.
 Compensation for inflation is common for all employees. (flat rates)
 It is decided by union and management where various demands are negotiated.
 It is paid as per other industries.
 Individual performance bonus is also given.

 Development of Employees
At Tata Steel, there is a continuous effort of staying in touch with employees to ensure
that there is the right culture to engage them in consistent performance improvement.
There are well-established and effective arrangements at each business location for
transparent communication and consultation with Works Councils and Trade Union
representatives. Further, the Company has always registered steady quality improvement
and productivity enhancement through dedicated efforts of the Company Performance
Improvement teams, focused on technical best practice transfer and the value of
knowledge networks.

Towards the well-being of employees Tata Steel has put into practice many initiatives,
events and programs that have helped to create not only an enduring loyalty amongst employees
but also enabled them to have a more fulfilled life.

 Special Benefits Provided To Employees

 Medical facilities: Free medical facilities for employees and their family, which
continues even after retirement.

 Housing facilities: Subsidized electricity, water and housing facilities to all employees.
 Higher studies: Monetary incentives to employees acquiring higher qualifications in a
related field along with study leave, scholarships etc. when necessary.