TABLE 1.

1 PEST ANALYSIS FOR Tata Steel Limited

CATEGORY DISCUSSION SOURCE
INVESTMENT IN THE Tata Steel invested in nations like Bangladesh, Iran, and Thailand UKEssays. November 2018. PESTEL Analysis
UNSTABLE POLITICAL even though doing so included a significant level of risk. The of Tata Steel. [online]. Available from:
COUNTRIES corporation made these investments in order to expand its business https://www.ukessays.com/essays/economics/a-
and flourish as a whole. As an illustration, the gas supply issue is pestel-analysis-of-tata-steel-economics-
delaying the plan put in place in Bangladesh, whilst the lease issue essay.php?vref=1 [Accessed 5 October 2022].
pertaining to the extraction of iron ore in Iran is to blame for the rise
in production costs.
INFRASTRUCTURAL The government is now introducing a number of programmes to
DEVELOPMENT IN THE INDIA develop the transportation and road infrastructure. With the
introduction of various infrastructure-related programmes, companies
like Tata Steel and other steel industries in India could be able to
reduce the amount they spend on freight and transportation. Tata Steel
and other steel industries in India spend a lot of money on freight and
transportation every year.

POLITICAL EFFECTS OF THE The government's numerous liberalisation initiatives, which were
LIBERALIZATION introduced after the Indian economy was opened to the rest of the
world in 1991, are to blame for the enormous expansion in a number
of industries, but especially in this one. The following features can be
discussed:
The licencing is no longer necessary for the capacity creation.
Up to 74% of foreign equity ownership was permitted.
Import and tariff reductions decreased from 105% in 1992–1993 to
30% in 1996–1997.
In addition, import and export limitations have been loosened.
These are a few key aspects of the liberalisation strategy that put Tata
Steel on a development trajectory.
In addition, the government's mining rules and other policies assisted
Tata Steel in reducing import and export duties as well as other items
that contributed to the industry's rapid expansion worldwide.
ECONOMICAL SUBPRIME CRISIS The SUBPRIME CRISIS, which hit every strong economy in a very
severe way two years ago, hit the US economy hard. Regarding
liquidity, there was a very significant risk during this time period on
the global stock markets. Due to the decreased trust in liquidity and
investment returns in 2007, several international investments and
stocks saw a downturn. Since the Netherlands, the United Kingdom,
and Germany are the key markets for the CORUS COMPANY, the
subprime crisis in the US caused European markets to experience the
effects of the recession, which has a negative effect on Tata Steel.
Because numerous businesses, like construction, vehicles, and
appliances depend on the steel industry, the steel industry may be
negatively impacted by the economy's cyclical nature. If the economy
experiences any form of downturn, Tata Steel may also suffer
financial losses. The energy market, which has an economic impact
on Tata Steel, entirely determines how much steel is produced. The
corporation improved growth prospects with the acquisition of
CORUS, however the cost of the transaction exceeded financial
projections.
SOCIAL business ethical behavior TATA STEEL received recognition for its dedication to upholding
corporate ethics and enhancing the quality of life for both its
employees and their families. Tata Steel received the GOLDEN
PEACOCK GLOBAL AWARD in recognition of this. TATA STEEL
also prioritised fostering a positive social atmosphere. They made
continuous improvements to the nation's educational, economic, and
health-related infrastructure. In Jharkhand, this approach is effective
in around 800 villages. both Chhattisgarh and Orissa. Tata is also
responsible for the habitation in slum regions in urban emerging
cities. Tata's primary idea is the hospital on wheels.
TECHNOLOGICAL E-PORTAL system Technology should always have the capacity to adapt to changing
conditions. In the middle of 2000, Tata Steel and the Sail (India's steel
regulator) launched the E-PORTAL system. This technology,
sometimes referred to as the METAL JUNCTION, benefits not only
Tata Steel but the entire industry as a whole. With the use of modern
technology, the world's largest market for buying and selling steel is
the internet. Tata Steel is working on developing ultra-low carbon
steel in an effort to lessen CO2 emissions in the environment. Tata is
also working toward the goal of energy conservation programmes,
doing research to lower the amount of energy used during production.
 TABLE 1.2 RISK MANAGEMENT
Sl. No. Key Risk Areas Strategies to Mitigate Risk
1. Macroeconomic Risk Product Diversification
Global Imports/competitors impacting steel price, Creation of Different markets
financial prospects and profits
2. Economic Risks To Maximize operational cash flow
Variation in exchange and volatility in business Considerable amount of Debt Refinancing of Debt
Deterioration of Assets Appropriate foreign exchange hedging policies
Liquidity Management
3. Regulatory Risks Noncompliance of environment norms Non-renewal of mining leases Focus on compliance Legal/Consultancy services
Elimination of trade procedures Time for regulatory changes

4. Operational Risks Enhancing training from experts

Increase in cost of supplies and energy Failure of critical information systems Violation of safety Availability of raw materials from another countries
standards leading to Committed to Zero- Safety drives
injury of personnel, and resources
5. Market Risks Focus on Product differentiation and cost reduction
Industry volatility affects financial position. Enhancement of Sales and Service
Rivalry from competitors and suppliers affects the viability of the business, Establishment of Contracts arrangements
Threat from new Entrants
6. Environmental Risk Sustained environmental projects.
Environmental regulations relating to pollution and Greenhouse Gas emissions Tie up for collaborative research projects on environmental concerns.
Restrictions affecting firms survival and growth
7. Human Resources Risks Industrial dispute or labour unrest Attract new talents Building relations with key person
Succession planning for Senior Management
Strategies for employee motivation and retention
Talent acquisition

Table 1.3 SWOT Analysis

S-Strength
 Captive raw material sources.
 Highly trustworthy management
group.
 Adaptability
 Brand worth
 Relying on possibilities.
 Strong position in the market.
W-Weaknesses
 Huge 10.2 billion USD debt load
 High rate of attrition
 Negative rating downgrade from
stable to negative
 Financial emergency

O-Opportunity T-Threats
 Indian and international expansion  International and Indian businesses
strategy are in competition.
 Presentation of cutting-edge  Restrictions on the environment.
technologies
 Infrastructure opportunity
Acquisition opportunity
 Changes on the value chain front

Source: Singh, Choudhary; Business Strategies For Sustainable Growth Of Indian

Steel Industry: Sail Vs. Tatasteel
 TABLE 1.4 Comparison of Business Strategic Model of SAIL & TATA Steel
SAIL TATA Steel
Basic Competitive Strategic Options (A Company's First Strategic Option)

Broad Differentiation Low Cost Provider

Complementary Strategic Options (A Company's Second set of Strategic Choices

Alliances, Joint Ventures

Collaborative Use of
partnership, Internet as a Merger,
Joint Ventures Distribution Acquisition
Channel
Mergers, Outsourcing
Expansion, of Value Chain
Modernization Activities

Functional Area Strategies to support the above strategic choices

(A Company’s third set of strategic choices)
Production, R & D, Production,
Marketing Human Resource

Timing a company Strategic Moves in the Marketplaces

(A Company’s fourth set of strategic choices)

Late Mover Fast Follower

Source: Singh, Choudhary; Business Strategies For Sustainable Growth Of

Indian Steel Industry: Sail Vs. Tatasteel
 Table 1.5: Complementary Strategic Options

 Tata Blue Scope Steel in Nov'2005 on 50:50 basis

 Tata NYK Shipping Pvt. Ltd. in Dec' 2006 on 50:50 basis
 S&T Mining Company Pvt. Ltd in Sept' 2008 on 50:50 basis
JOINT VENTURES
 With Riversdale, Mozambique in November 2007 on 40:60 basis
 Tata Steel Cote d'Ivoire in Dec'2007 on 85:15 basis
 With Oman Limestone Project in Jan'2008 on 70:30 basis
ALLIANCES/PARTNERSHIP  With Carborough Downs Coal Project, Australia for an underground coking coal project
 Acquisition of Millennium Steel, Thailand in Rs. 780 crores to acquire 67.11% stake in Dec'2005
MERGER/ACQUISITION  Acquisition of Corus in Rs. 56,150 crores in April'2007
 Merger with Hooghly Met Coke and Power Company Ltd. (HMPCL) from 1st April, 2009
USE OF INTERNET AS A DISTRIBUTION CHANNEL  Yes
 In 2005, Tata Steel proposed to establish three Greenfield facilities in Orissa, Chhattisgarh and Jharkhand with an aggregate capacity of 23 million tons by
EXPANSION/MODERNIZATION 2015 total estimated investment of Rs 70,000 crores.
 Brownfield project at existing Jamshedpur plant from 5 MTPA to 10 MTPA by Dec'2011
OUTSOURCING OF VALUE CHAIN ACTIVITIES  Outsourcing of value chain activities was being done to subsidiary companies
Source: Singh, Choudhary; Business Strategies For Sustainable Growth Of Indian Steel Industry: Sail Vs. Tatasteel