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Strategic Management of Tata Steel

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Strategic Management of Tata Steel

  1. 1. 1 INTRODUCTION Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian multinational steel-making company headquartered in Mumbai, Maharashtra, India, and a subsidiary of the Tata Group. It was the 11th largest steel producing company in the world in 2013, with an annual crude steel capacity of 25.3 million tonnes, and the second largest private- sector steel company in India (measured by domestic production) with an annual capacity of 9.7 million tonnes after SAIL (Steel Authority of India) The Tata Group is almost 100 years old. It currently comprises 96 operating companies, which together employed some 357,000 people worldwide and had revenues of US$ 72.5 billion (Feb 2009) billion in 2008-09. Tata is active in seven major business lines: information systems and communications, engineering, materials, services, energy, consumer products and chemicals. Its 28 publicly listed companies have a combined market capitalization of US$47.6 billion that is the second highest among Indian business houses in the private sector, and a shareholder base of over 2 million. Tata Steel has manufacturing operations in 26 countries, including Australia, China, India, the Netherlands, Singapore, Thailand and the United Kingdom, and employs around 80,500 people. Its largest plant is located in Jamshedpur, Jharkhand. In 2007 Tata Steel acquired the UK-based steel maker Corus which was the largest international acquisition by an Indian company till that date. It was ranked 486th in the 2014 Fortune Global 500 ranking of the world's biggest corporations. It was the seventh most valuable Indian brand of 2013 as per Brand Finance. On 12 February 2012 Tata Steel completed 100 years of steel making in India. The Tata Steel Group’s vision is to be the world’s steel industry benchmark in “Value Creation” and “Corporate Citizenship” through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency.
  2. 2. 2 In 2008, Tata Steel India became the first integrated steel plant in the world, outside Japan, to be awarded the Deming Application Prize 2008 for excellence in Total Quality Management. In 2012, Tata Steel became the first integrated steel company in the world, outside Japan, to win the Deming Grand Prize 2012 instituted by the Japanese Union of Scientists and Engineers. Tata Steel Thailand is the largest producer of long steel products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5 MTPA mini blast furnace project in Thailand. NatSteel Holdings produces about 2 MTPA of steel products across its regional operations in seven countries. Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market. The iron ore mines and collieries in India give the Company a distinct advantage in raw material sourcing. Tata Steel is also striving towards raw materials security through joint ventures in Thailand, Australia, Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed an agreement with Steel Authority of India Limited to establish a 50:50 joint venture company for coal mining in India. Also, Tata Steel has bought 19.9% stake in New Millennium Capital Corporation, Canada for iron ore mining. Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferro-chrome plant in South Africa and setting up of a deep-sea port in coastal Orissa are integral to the Growth and Globalisation objective of Tata Steel. Tata Steel India is the first integrated steel company in the world, outside Japan, to be awarded the Deming Application Prize 2008 for excellence in Total Quality Management.
  3. 3. 3 HISTORY Tata Iron and Steel Company was established by Dorabji Tata on 25 August 1907, as part of his father Jamsetji's Tata Group. By 1939 it operated the largest steel plant in the British Empire. The company launched a major modernization and expansion program in 1951. Later in 1958, the program was upgraded to 2 Million metric tonnes per annum (MTPA) project. By 1970, the company employed around 40,000 people at Jamshedpur, with a further 20,000 in the neighbouring coal mines. In 1971 and 1979, there were unsuccessful attempts to nationalise the company. In 1990, it started expansion plan and established its subsidiary Tata Inc. in New York. The company changed its name from TISCO to Tata Steel in 2005. It was the vision of the founder; Jamsetji Nusserwanji Tata, that on February 27, 1908, the first stake was driven into the soil of Sakchi. His vision helped Tata Steel overcome several periods of adversity and strive to improve against all odds. The company was originally constructed for a capacity of 160,000 tonnes of pig iron, 100,000 tones of ingot steel, 70,000 tones of rails, beams and shapes, and 20,000 tonnes of bars, hoops and rods. The plant essentially consisted of a battery of 180 non-recovery coke ovens and 30 by- product ovens with a sulphuric acid plant, two blast furnaces (each of 350 tonnes per day capacity), one 300 tonnes hot metal mixer, four open hearth furnaces of 50 tonnes capacity each, one steam engine driven 40-inch reversing blooming mill, one 28-inch reversing combination rail and structural mill with re-heating furnaces, and one 16- inch and two 10-inch rolling mills. Besides, the steel works had a power house, auxiliary facilities and a well-equipped laboratory. The cost of the plant as erected came to around Rs.23 million.
  4. 4. 4 MISSION Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen India’s industrial base through the effective utilization of staff and materials. The means envisaged to achieve this are high technology and productivity, consistent with modern management practices. Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.
  5. 5. 5 VISION Diversity enriches any large organisation and enhances its collective capabilities. A clear, shared vision is a key requisite for successful diversity management “Our vision is to be the global steel industry benchmark for value creation and corporate citizenship.” We will achieve our vision through:  Our People By fostering teamwork, nurturing talent, enhancing leadership capability and acting with pace, pride and passion.  Our Offer By becoming the supplier of choice, delivering premium products and services and creating value for our customers.  Our Innovative Approach By developing leading edge solutions in technology, processes and products.  Our Conduct By providing a safe workplace, respecting the environment, caring for our communities and demonstrating high ethical standards.  Business Ethics "We do not claim to be more unselfish, more generous or more philanthropic than others, but we think, we started on sound and straightforward business principles considering the interest of the shareholders, our own health and welfare of our employees... the sure foundation of our prosperity" – J.N. Tata QUALITY VISION 2016 We aspire to be the most trusted and preferred domestic supplier of value added steel with world class quality of products and services.
  6. 6. 6 THE TATA CODE OF CONDUCT The values and principles, which have Governed Tata Steel’s business for a century, have been deployed through the implementation of the Tata Code of Conduct ( TCOC), often referred to as the 'Code' ), which was first formally articulated in 1998. This was intended to serve as a guide to each employee on the values, ethics and business principles expected of him or her in personal and professional conduct. The TCOC is a testament to Tata Steel’s determination to help its employees in every way to understand their duties and commitments towards shared values and principles. The comprehensive document serves as the ethical roadmap for Tata employees and Group companies. In the context of Tata Steel’s increasing global presence the Tata Code of Conduct has been reviewed to accommodate required and appropriate modifications. This has ensured that diverse cultural and business related issues are addressed universally across the Group. The Tata Code of Conduct was launched in Tata Steel (Thailand), Tata Steel Singapore in July 2007 and in Tata Steel Europe in January 2009. The month of July is celebrated as ‘Ethics Month’ in Tata Steel every year, with numerous programmes and activities across locations.
  7. 7. 7 TATA STEEL VALUES The values of Tata Steel have been embedded integrally into the Group's century old tradition and continue to be a pointer to the way the Company conducts all its business activities. The Tata Group has always been driven by five core values:  Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.  Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.  Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.  Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.  Responsibility: We must be responsible and responsive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
  8. 8. 8 TATA STEEL TODAY As a result of innovations and technological upgradation, Tata Steel, has become a well-run ultra modern plant - one of the best in the world. Fundamental changes in some metallurgical parameters have brought about this remarkable transformation. Necessity became the mother of invention and numerous innovations invoked improvement. The metallurgical changes introduced were essentially centered around:  Reducing alumina level in sinter from 4.4 to 2.5 %.  Improving in coke quality  Making changes in the fluxes used in sinter making essentially to decrease the alkali input.  Adopting the optimum LD vessel configuration and blowing conditions to accommodate the high slag volume required to deal with high silicon and phosphorus in Indian hot metal.  Increasing the yield during LD steelmaking  Introducing continuous casting (CC) instead of ingot casting to increase the net yield. All these factors have made Tata Steel internationally cost competitive. In terms of hot metal costs, Tata Steel is amongst the lowest in the world and has a clear advantage over other major integrated producers. The cost of conversion from hot metal to a finished product such as hot rolled coils where Tata Steel has not been very competitive so far would be taken care of in the near future as investments already made to achieve the results foreseen. High ash in coke, poor room temperature and high temperature strengths of coke, high alumina in the iron oxide feed, high silicon in hot metal, low yields during steelmaking, low yield of finished products, high energy consumption, high manpower, etc. have been the weaknesses not only of Tata Steel but of the Indian Steel industry as a whole. Appropriate steps taken by the Company have already resulted in better yield lower energy consumption, lower silicon in hot metal, lower silicon in hot metal, lower lime consumption in steelmaking, higher vessel life, etc., all of which augur well for the Steel Company in future.
  9. 9. 9 BUSINESS DIVISIONS OF THE COMPANY  Bearings Division : Manufactures ball bearings, double row self-aligning bearings, magneto bearings, clutch release bearings and tapered roller bearings for two wheelers, fans, water pumps, etc.  Ferro Alloys and Minerals Division : Operates chrome mines and has units for making ferro chrome and ferro manganese. It is one of the largest players in the global ferro chrome market.  Agrico Division : Tata Agrico is the first organized manufacturer in India of hand tools and implements for application in agriculture.  Tata Growth Shop (TGS) : Has designed, developed, manufactured, erected and commissioned thousands of tonnes of equipment ranging from overhead cranes to high precision components, including a rocket launch pad for the Indian Space and Research Organization.  Tubes Division : The biggest steel tube manufacturer with the largest market share in India, it aspires to strengthen its market presence by expanding and modernizing its commercial and precision tube manufacturing capacity.  Wire Division : A pioneer in the manufacture of steel wires in India, it produces coated and uncoated wires, branded as Tata Wiron. The division also operates a wholly owned subsidiary in Sri Lanka.
  10. 10. 10 OPERATIONS Indian Operations Tata Steel founded India’s first industrial city, now Jamshedpur, where it established India’s first integrated steel plant in 1907. The Jamshedpur Works currently comprises of a 9.7 mtpa crude steel production facility and a variety of finishing mills. Two new Greenfield steel projects are planned in the states of Jharkhand and Chhattisgarh. Kalinganagar project is underway; it is set to augment production capacity by 3 MnTPA in the first phase. Mines and collieries in India give the Company a distinct advantage in raw material sourcing. Iron Ore mines are located at Noamundi (Jharkhand) and Joda (Odisha) both located within a distance of 150 km from Jamshedpur. The Company’s captive coal mines are located at Jharia and West Bokaro (Jharkhand). European Operations Tata Steel Europe (erstwhile Corus) has a crude steel production capacity of 18 mtpa. Tata Steel Europe has manufacturing operations in Western Europe, plants in UK, Netherlands, Germany, France and Belgium, backed by a sophisticated global network of sales offices and service centres. South East Asian Operations Tata Steel started its operations in SEA in 2004 with investments in NatSteel Singapore (Tata Steel Singapore) and Millennium Steel (Tata Steel Thailand). With over 40 years of Steel making experience, Tata Steel Singapore is one of the most prominent steel producers in the Asia Pacific region. It caters to the growing construction industry through its manufacturing presence in Singapore, Thailand, China, Malaysia, The Philippines and Australia. Tata Steel Thailand is the largest producer of long steel products in Thailand.
  11. 11. 11 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 tonnes 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 tonnes 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 Companhia Siderúrgica Nacional (CSN) launched a counter offer for Corus at 475 pence per share, valuing it at £4.5 billion. On 11 December 2006,
  12. 12. 12 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 Vinausteel 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 tonnes per year bar/wire rod mill operated by SSE Steel Ltd and a 180k tonnes per year reinforcing bar mill operated by Vinausteel Ltd.
  13. 13. 13 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
  14. 14. 14  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 optimisation, new product development, operations cost reduction and procurement cost savings. Here are some of the projects in detail: • Product portfolio optimisation: A production planning model was implemented to improve the total contribution by adjusting the product mix to suit the productivity and contribution per tonne 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 tpm 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 optimisation 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.
  15. 15. 15 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. TSL PRODUCTS: Finished and Semi-finished Steel Segment Products TSL’s finished steel products are produced at its Indian facilities, as well as in various Asia Pacific countries by NatSteel and in Thailand by Tata Steel Thailand. TSL’s finished steel products can be principally divided into flat products and long products, including wires. In addition, TSL also produces relatively smaller quantities of semi-
  16. 16. 16 finished steel, rings, agricultural tools, and steel equipment. The following table lists the various finished and semi-finished products TSL produces, as well as the principal uses for these products and their principal markets: Products Types Principal end usage Principal market Flat Hot Rolled Various equipment, machinery, boilers, pressure vessels, and civil projects Flat products produced by Tata Steel Indian operations are sold principally to the Indian automotive, appliances, construction, general engineering, packaging, and, furniture industries. Cold Rolled Exposed steel applications that require high surface quality. Galvanized Sheets Automotive underbodies, appliances, metal buildings and storage tanks. Long Products Wire Rods Conversion into wire Long products produced by Tata Steel operations are sold principally to the Indian construction and automotive industries while Tata Steel Thailand’s long products are used in the Thai construction industry NatSteel’s long products are also principally sold to the construction industries in the various Asia Pacific countries where NatSteel has operations. Rebars Structural support in construction Wires Coated and Uncoated Wires Motor type bead, low relaxation pre-stressed concrete, pre-stressed concrete, cable armor, conductors and galvanized iron wires. Indian construction and automotive industries. Others Semi-finished Steel Billets, slabs and blooms that can be made into flat or long products Indian steel industry Rings Forged and rolled rings for bearings and automotive components Indian automotive industry Agricultural tools Hand tools and other agricultural implements Indian agricultural industry Steel Equipments Overhead cranes and high precision components Indian construction industry
  17. 17. 17 Ferro Alloys Segment Products TSL’s ferro alloys segment produces chrome ore, pyroxenite and manganese ore as well as ferrochrome and ferro manganese. Ferro chrome and ferro manganese are used by the steel industry to create stainless steel products. TSL is the leading manufacturer of ferro chrome in India and the leading manufacturer of chrome ore internationally. CORUS PRODUCTS Corus has four main product segments: (1) Strip products; (2) Long products; (3) Distribution and building system products; and (4) Aluminum Strip Products Uncoated strip products comprise hot rolled, cold reduced and electrical steels, which are sold both in coil form and, cut to length, in sheet form. Corus is one of the market leaders in the manufacture of coated strip products. Long Products Long products comprise sections and plates, and rods. Engineering steels also form part of the long products division and are produced by the electric arc method as opposed to the basic oxygen steelmaking method in the United Kingdom at Rotterdam. 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
  18. 18. 18 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 Mjunction. 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. Mjunction 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 Mjunction in the month of February 2002 and since then has sold 221,259 MT. The products that Tata Steel has sold through MJunction 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 Mjunction have been reflective of the market situation. The entire cycle time of selling materials has been reduced by the speed and
  19. 19. 19 efficiency with which on-line competitive bidding events has been created and managed by Mjunction. 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 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 Mjunction 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 programme 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 programme. 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.
  20. 20. 20 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.
  21. 21. 21 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.
  22. 22. 22 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 centres impart majority of the training programmes. (Technical Institute & Management Development Centre).
  23. 23. 23  Employees are also deputed to other organizations and training centres in the country such as ITI and abroad for specialized training.  Officers are trained into business managers through special general management programmes 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 programmes 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.
  24. 24. 24  Housing facilities: Subsidised 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.  Holiday Homes: Tata Steel has five holiday homes for benefit of employees during vacation.  Tata Steel Officer's Beach Club: All officers of Tata Steel are eligible to be members of the Beach Club that offers holidays in elite hospitality chains.  Family Benefit Scheme: In the tragic case of a fatality in the Works, a monthly pension equal to the amount of the last drawn salary of the deceased is given to the legal heir until the time the deceased would have attained the age of 60.  Developing People Valuing its people as a great asset, Tata Steel is committed to their development, both in order to benefit the individual and to benefit the Company through increased knowledge and skills. In order to leverage maximum potential of human resource to achieve business objectives the Company recognises that enrichment of people will help retain a motivated workforce in a competitive environment.  Skills Development - Non-officers Skills training is a process that begins at the time of an employee joining the company and continues throughout his or her career. Employees work in clusters of multi-skilled workers and move across and within clusters on improving their skills levels. The Technical Training Institute imparts vocational and basic skills training; the departments impart on-the- job training. In order to promote self-directed learning, the Company has introduced e-learning whereby employees can access electronic courses from their departmental e-Learning centres.  Skills Development - Officers Tata Steel Management Development Centre conducts a number of managerial and functional competency based programmes for officers and supervisors. The objectives of these programmes are:
  25. 25. 25  To build individual capability by enhancing managerial and functional competencies which are critical to operations, service and support functions.  To build a leadership pipeline in the organisation to prepare the people to meet the challenges of growth, globalisation and change.  Equal opportunity practices Tata Steel is an equal opportunity employer and does not discriminate on the basis of race, caste, religion, colour, ancestry, marital status, sex, age or nationality. The Company’s Affirmative Action Policy promotes equal access to its employment and opportunities and all decisions are merit based. Respect for equal opportunities as set out in the Tata Code of Conduct is followed. The HR Policy and Affirmative Action Policy are monitored by the Ethics Counsellor and supported by an effective grievance redressal mechanism. Tata Steel encourages female employees to advance their career with initiatives dedicated towards personal development and professional advancement. The Women Empowerment Cell examines and addresses the issues and concerns of female employees and ensures that they do not miss out on any growth opportunity  Freedom of association and collective bargaining Tata Steel respects the employees right to exercise freedom of association and collective bargaining and provides appropriate support for this. There is an established system of joint working and collective bargaining, which ensures that every employee is able to exercise this right without any fear. Pioneering the concept in India, a system of Joint Consultation has been in place in Tata Steel for more than 50 years.  Safety Tata Steel is committed to ensuring zero harm to its employees, contractors and the communities in which it operates. This is integral to our business process and is laid down in our health and safety policies, standards and working procedures. Ensuring safety in all its operations has always been a strategic priority for Tata Steel. The Group has adopted the outstanding safety programme of M/s. DuPont Safety resources for establishing safety culture by inculcating safe behaviour among its
  26. 26. 26 employees. Every activity in Tata Steel is carried out not only with a cost efficient, quality conscious purpose but also with the highlight always on safe practice. The Group's Lost Time Injury Frequency Rate for Financial Year 2013-2014 was 0.56, an improvement of 7% over the previous year. Workplace fatality is addressed separately through the Fatality Risk Control Protocol, which aims at eliminating potential fatality hazards. Given the nature of steel-manufacturing operations, Tata Steel has launched the Safety Excellence Journey, to which new aspects of safety are added every year, and the Wellness@ Workplace programme. These are designed to provide an injury-free working environment for a healthy and happy workforce. The Safety Excellence Journey has also been extended at Group companies in India. In its endeavor to address the issue of community safety, Tata Steel India is working with external consultants to drive systematic domestic safety management and safety education initiatives for school and college students in Jamshedpur and at the different mines and collieries. In Tata Steel Europe health and safety improvements are embedded in the business strategic plan (OGSM) and these were delivered well in the Financial Year 2012-13 enabling 18% reduction in Lost Time Injuries. Two enabling strategies were launched to move to a mature safety culture - Health & Safety Excellence for senior leaders and positive safety conversation training and implementation for all employees. Operations in South East Asia at Tata Steel (Thailand) and NatSteel are strengthening their safety practices particularly in the areas of positive isolation, stock yard management and employees involvement through train the trainers programme. These are carried out through theme based onsite visits, reviews, recommendations and trainings.
  27. 27. 27 SWOT ANALYSIS OF TATA STEEL A SWOT analysis is important for Tata Steel to evaluate its current position and formulate strategies to tackle its competitors. Strengths of Tata Steel Tata Steel is the pioneer of steel business in India and thus enjoys brand equity. Tata Steel has a multiple companies under the same banner, which gives it an advantage of value-chain efficiency, whereby the company can utilize products made in its sister companies to process raw materials and increase efficiency. Weaknesses of Tata Steel The biggest weakness of Tata Steel is its increasing debt-to-equity ratio. Most of its assets are financed by debt, which can be dangerous in the long-run. Tata Steel largely depends on domestic and a few international markets for generating business. This over-dependence can prove to be fatal in times of economic crisis. Opportunities for Tata Steel Tata Steel is branching out to overseas market. The company has recently signed a deal with Corus group, which provides access to European markets. Tata Steel will now be in a position to utilize the R&D facility and the patents owned by the Corus group. Exposure to new technologies and markets is a big advantage for the company. Threats to Tata Steel In the current scenario, the biggest threat for Tata Steel is to maintain the Co2 emission standards when it starts its operations in Europe. The sudden overseas exposure along with a possible economic slowdown is the biggest challenge faced by Tata Steel in the present circumstances.
  28. 28. 28 COMPETITORS The steel industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports. Steel, being a commodity it is, branding is not common and there is little differentiation between competing products. The 4 major domestic rivals are SAIL, JSW, ISPAT & ESSAR STEEL. Rest are all small mills which together accounts for 30 % of the total market share. All the major domestic competitors like SAIL, ESSAR, JSW, JSPL have announced massive expansion plans recently:  SAIL has announced that it will achieve production capacity of 40 Million Tons by 2020.  JSW plans to expand its production to 32 Million Tons by 2020  Other players such as JSPL, ESSAR have similar production expansion plans which will contribute in overall achievement of 200 Million Tons steel production by the year 2020.
  29. 29. 29 FUTURE STRATEGIES Tata, Nippon to jointly set up steel plant at Jamshedpur Tata Steel Limited, India's leading steel manufacturer, in alliance with the Japanese steel firm Nippon Steel Corp are planning to set up a Rs 15,000 crore facility at Jamshedpur in Jharkhand with an initial production capacity of three million tonnes a year. It is understood that Tata Steel will have 51 percent stake in the joint venture and the Japanese firm would share its technology for producing high grade cold rolled steel sheet for automotive application such as skin panels and high tensile steels. According to a Tata Steel senior official that the two firms have not yet decided on the modalities of how they are going to take things forward and added: "Any further co operation between the two firms may be part of an ongoing conversation in the future but no decision has been taken in that regard." The two firms are already in pact to jointly produce auto grade steel at Jamshedpur in Jharkhand. Meanwhile, agency report quoting Nikkei Business Daily says that Nippon Steel Corp and India's Tata Steel Ltd are in talks to set up a blast furnace facility in India through a joint venture. What is more, the proposed furnace, to be set up with an estimated investment of 200-300 billion yen and with a production capacity of three million tones per annum, is likely to start production in 2013, the paper said without citing any sources. Nippon steel is eyeing the venture to increase its production in the country and other emerging markets and to offset the negative impact of a strong yen as the company seeks to tap overseas demand. The joint venture could follow up with a second furnace if demand increases. Similarly, Tata steel also expects to boost its production of high-end steel material used in automotive industry through the joint venture. The Indo-Japanese steel giants have already agreed to produce automotive cold-rolled steel sheet, with Tata Steel taking a 51 percent stake and Nippon Steel obtaining 49 percent. The venture is aiming at setting up a facility by the end of fiscal 2012 that will be capable of producing 600,000 tonnes a year at a Tata Steel factory in Jamshedpur.
  30. 30. 30 Expansion plans Tata Steel has set a target of achieving an annual production capacity of 100 million tons by 2015; it is planning for capacity expansion to be balanced roughly 50:50 between Greenfield developments and acquisitions. Overseas acquisitions have already added an additional 21.4 million tonnes of capacity, including Corus (18.2 million tonnes), NatSteel (2 million tonnes) and Millennium Steel (1.2 million tonnes). Tata plans to add another 29 million tonnes of capacity through acquisitions. Major Greenfield steel plant expansion projects planned by Tata Steel include:  a 6 million tonne per annum capacity plant in Kalinganagar, Odisha, India;  an expansion of the capacity of its plant in Jharkhand, India from 6.8 to 10 million tonnes per annum;  a 5 million tonne per annum capacity plant in Chhattisgarh, India (Tata Steel signed a memorandum of understanding with the Chhattisgarh government in 2005; the plant is facing strong protest from tribal people);  a 3 million tonne per annum capacity plant in Iran;  a 2.4 million tonne per annum capacity plant in Bangladesh;  a 10.5 million tonne per annum capacity plant in Vietnam (feasibility studies are underway); and  A 6 million tonne per annum capacity plant in Haveri, Karnataka.
  31. 31. 31 ACHIEVEMENTS/ RECOGNITION:  Tata Steel awarded the prestigious BML Munjal Award- Jamshedpur, Friday, April 11, 2014  Tata Steel bags National Safety Awards for two mines- Jamshedpur, Wednesday, November 21, 2012  Tata Steel bags Prime Minister’s Trophy for best performing Integrated Steel Plant- New Delhi, Monday, August 27, 2012  Tata Steel tops list of India's 50 most admired companies- Jamshedpur, Sunday, April 22, 2012  B Muthuraman conferred Padma Bhushan by President Pratibha Patil- Jamshedpur, Thursday, April 05, 2012  Tata Steel among World's Most Ethical Companies- Jamshedpur, Saturday, March 17, 2012  Tata Steel acknowledged as the most admired Indian company- Jamshedpur, Tuesday, March 13, 2012  Mr B Muthuraman conferred with Padma Bhushan Award- Mumbai, Wednesday, January 25, 2012  Tata Steel Bags Prime Minister’s Trophy- Jamshedpur, Friday, January 20, 2012  Tata Steel stall bags first prize in 'Heavy Industry' category at Udyog Mela-2011, Ranchi Ranchi, March 17, 2011  Tata Steel has won `The Business world Most Respected Company Award 2011’ in the Metals category.  World Steel Dynamics has ranked Tata Steel as the world's best steel maker (for two consecutive years) in its annual listing in February 2006.  Tata Steel has been conferred the Prime Minister of India's Trophy for the Best Integrated Steel Plant five times. It has been awarded Asia's Most Admired Knowledge Enterprise award five times in 2003, 2004, 2006, 2007 and 2008.  Corporate Sustainability Report of Tata Steel hailed by United Nation's Environment Programme (UNEP) and Standard and poor as strongest, submitted by any corporate house from emerging economies.
  32. 32. 32 CONCLUSION After going through the development of this project and application of various strategic concepts on TATA Steel, we found that TATA Steel being the fifth largest producer of steel in World and may grow and spread its geographical footprint, embracing different cultures; it will not lose sight of its great heritage of social and community responsibility. Driven as much by its commitment to society as by its performance and profits, the Tata Steel Vision aspires to make the Group the global industry benchmark for both Value Creation and Corporate Citizenship. The key drivers of the Group Vision will manifest themselves in the goals and objectives the Group sets for itself in the coming years.
  33. 33. 33 BIBLIOGRAPHY 1. Strategic Management- Michael Vaz- Manan Prakashan- August 2014 2. 3. 4. 5. 6. 7. jamshedpur_10_2010_postedby_jayashankar-menon 8. 9. 10.