PESTEL Analysis of TATA Steel

Political
1. As part of their business expansion, Tata Steel made some high risk investments in
countries such as Bangladesh, Iran. For example: the plan set up in the Bangladesh is
getting delayed by the question of gas supply, whereas the issue of lease of the
mining of the iron ore in the Iran country is responsible for the increase in the cost of
the production. 2. By improving the infrastructure of the country, Tata Steel and
other steel companies can save some amount, as they spend huge amounts on the
freight and transportation. 3. There are no quantitative restrictions on import of iron
and steel items. The only mechanism regulating the imports is the tariff mechanism
.Advance Licensing Scheme allows duty free import of raw materials for exports. Iron
and Steel industry has been included in the list of `high priority' industries for
automatic approval for foreign equity investment up to 100%. Price and distribution
of steel were deregulated from January 1992. 4. The government acts as a resource
allocator (the mining policies of the Government), as Competitor (the public sector
steel companies) and as Regulator to TATA Steel.

Economic
1. Due to the subprime crisis in US, European markets faced the problems of the
recession this creates the bad impact on the Tata steel as the Netherlands, United
Kingdom and Germany are the main markets for the CORUS. 2. Steel industry may
got affected because of the cyclical economic condition because many industries like
automobiles, appliances and construction depends on the steel industry and if
industries faces any kind of downturn in the economy Tata steel also may also face
the losses . 3. Steel production process are completely dependent on the energy
market which can affect the Tata steel in the economic manner. With the acquisition
of CORUS company gained the growth prospective in nature but, the cost of
acquisition goes beyond the financial expectations. 4. The Government introduced
‘Special Economic Zones’ (SEZ) in June 2005, with the aim of creating competitive
economic regions. TATA Steel plants in the SEZs are not subject to restrictive normal
laws for the purpose of export operations and also receive additional advantages
including tax holidays. Freedom to source inputs domestically or externally without
any specific approval or duty payable and sales tax reimbursement on domestic
purchases.

Socio-Cultural
1. Tata Steel got awarded for the commitments in the business ethical behaviour and
improving the lives of the employees and their families. For this purpose Tata steel
got awarded by the GOLDEN PEACOCK GLOBAL AWARD. 2. Tata Steel also focused
to create the social environment. They constantly made the improvements in the
health issues, economic wellbeing and education facilities provided to the nation.
This policy works out in near 800 villages in Jharkhand .Orissa and Chhattisgarh. 3.
Hospital on wheels is the basic innovation of the Tata’s whereas Tata is also
responsible for the habitation in slum areas in urban developing cities. 4. ‘Operation
Muskaan’, a project initiated by Tata Steel, under which hundreds of people born
with cleft lips or cleft palates were operated for free of cost.

Technological
1. ‘METAL JUNCTION’, an e-portal system started by Tata Steelwhich is helpful for not
only to Tata steel but also to entire industry. With the help of this technology e-
market is the biggest market for the purchasing and selling of the steel in the world.
2. To reduce the emission of the co2 in the environment Tata steel has invested
hugely with the research of the ultra-low carbon steel. 3. Tata is also engaged with
the objective of the energy conservation schemes where Tata is doing research to
reduce the energy consumption in the production process. 4. Captive iron ore is one
of the biggest competitive advantages of Tata Steel. But this raw material has
phosphorus content at .080 per cent, which is not acceptable by many buyers. By
changing the converter blowing regime, bottom injection practice, and the lance
geometry, Tata Steel took the level down in stages, thus using technological
innovation to build on the competitive advantage.

Environmental
1. The Dhamra port is the joint venture of the Larsen & Toubro and Tata Steel, which
came into existence for the protection of the Olive Ridley sea Turtles. Dhamra port is
also supporting for the saving in the saltwater crocodiles as well as it is contributing
the help to save the wildlife in India. It is also providing the breeding grounds for the
horse shoe crabs and other rare species of the reptiles and amphibians. 2. TATA steel
aims to reduce CO2 emission from 1.8 to 1.5 tonnes per tonne of liquid steel (9%) by
2012, under its global initiative called eco-citizen. 3. The Company raises 400,000
saplings every year across various locations and it involves the local community in
this process of sapling plantation in the area. Tata Steel Rural Development Society
(TSRDS) has created and supported many ‘Save Forest Groups' in Noamundi and
Joda, to safeguard existing forestland. TSRDS has encouraged local people to protect
the forest as a valuable sustainable resource.

Legal
1. Tata Steel, with its captive mines in Orissa and Jharkhand meet its entire
requirement of iron ore and 65 per cent of its coal needs. 2. Mines and Minerals
(Regulation and Development and Regulation) Bill, 2010, requires mining companies
to share 26% of its profit with local inhabitants. Royalties accounted for 3.4 per cent
of Tata Steel's stand-alone expenses last year. The new charges could account for
nine per cent of their total expenditure and cost them 5-6 per cent of their operating
profits. 3. Tata steel ensures the EHS (Environmental health and safety) under which
each and every employee’s activity is managed by the EHS framework. 4. Unstable
government in Jharkhand and various tribal protestors are creating some legal issues
for the Tata steel to set up 12 MTPA green field plant.