Arjun Bhargava (2016PGP015)

Operations Strategy for Competitive Advantage

JSW Steel Limited
1. Brownfield Expansions To compensate for the lack of greenfield plants, JSW has
planned to double the capacity of its plant in Karnataka (Vijayanagar) to 20 MT by
2022 through brownfield expansion, at Dolvi, Maharashtra by taking over ISPAT
aiming at a capacity of 15 MT and Welspun Maxsteel

2. Strategic Acquisitions The JSW group has acquired the following companies:
a. ISPAT Steel in 2010
b. Aims to acquire the distressed assets of Tata Steel in the UK

3. Out of the box Innovation The JSW group has planned to lay a highly optimistic
project of the slurry pipeline from Goa to Vijayanagar, a 500 km stretch, costing
around Rs. 2000 Crores to address the constraint of iron ore for its plant at
Vijayanagar. This project is also expected to bring about a reduction in the freight
costs by Rs. 2000 Crores each year for the organization.

4. JSW has in the past relied on the strategy of incremental growth instead of the big
bang theory through its plants at various places in India like in Toranagallu
(Vijayanagar), Dolvi (Maharashtra) and Salem (Tamil Nadu).

5. JSW Steel Limited (JSW) believes in generating sustainable growth while

balancing utilization of natural resources and social development in its business
decisions. The Corex manufacturing unit is an example of its commitment towards
the environment.

6. Highest Capacity Utilization Around 90 percent

7. Operating Profits Lower than Tata but higher than SAIL though the net profits
stoop down to the lowest
Tata Steel Limited
1. Greenfield Operations The Greenfield operations of Tata Steel Limited are coming
up and expanding in the states of Jharkhand and Chhattisgarh

2. Corporate Level Strategy

a. Acquisitions
i. NatSteel in 2004 (Singapore)
ii. Millennium Steel in 2005 (Thailand)
iii. Corus in 2007 (UK)
iv. 2 Rolling mills in Vietnam in 2007
b. Joint Ventures and Associates
i. TM International Logistics Limited (TMILL)
ii. Jamshedpur Injection Powder Limited (JAMIPOL)
iii. Jamshedpur Utility and Service Company Limited (JUSCO) to name a
few among many others

3. Capacity Utilization Around 80 percent due to raw material shortage

4. Operating Profits More than JSW and highest net profits in Steel sector

5. Tata Steel has diversified into many products maintaining quality to the extent that
it was awarded the Deming Application Prize in 2008 for excellence in Total Quality
Management and Deming Grand Prize in 2012.

6. Turnaround Strategy This includes the companys improvement projects.

a. Product portfolio optimization (improve the total contribution by altering
the product mix to suit productivity and contribution/tonne)
b. New product development (focused on introducing special bar quality
products)
c. Operations cost reduction (addressing overall KPI of billet cost)
d. Procurement cost savings ('Group buy' idea in high budget products).
Operation Strategy Matrix (JSW)
Resource Usage

Quality Once the capacity of Logistics of steel The one most The organization
an individual mill is products is a important thing would be the
reached, quality is the critical part of would be process decision-making
focus. Generally, both maintaining technology for steel body in this
go hand in hand. quality. industry. case.
Speed Very high; more the Extremely large; Process-technology Swiftness of the
capacity faster would supply-network with greater speed decision
be the product should be huge to is preferred to determines the
available for delivery increase the increase the speed of
to customers. delivery speed of production. projects.
product.
Dependability The capacity of the Again, faster and The technology More
plant increases the bigger the supply- determines the development,
dependability network, better breakdown time, more the
the dependability thereby dependability
dependability
Performance Flexibility The capacity of a plant Need to be The technology A dedicated
Objectives is fixed, thereby the flexible to adjust drives the flexibility team will be
capacity doesnt to the customers of a plant to meet more flexible if
affect the flexibility. demand. the customers all employees
requirements. For have minimum
ex: size and necessary skills
technicalities
Cost Very high, the larger Making and Every new Dedicated team
the number of creating an technology will lead will be highly
warehouses the efficient supply to increased cost paid and thus
higher the cost network will lead but the long-term will be
to lower cost benefits would be expensive
eventually. high too
Capacity Supply Process Development
Network Technology and
organisation

Decision Areas
 VUCA Analysis
JSW Steel Limited
Complexity:
The larger the organization, greater would be the
complexity. Thus, the focus should be towards the
reduction in the complexity of the functioning.
The hierarchy and functioning of JSW as an
organization is complex.
Ambiguity:
JSW has no iron ore mining sites thereby it faces a
major ambiguity issue with respect to the sourcing
of iron ore which is the basic raw material to
produce steel.
The plant at Dolvi faces a lot of ambiguity issues
with the labor union of Maharashtra.
Tata Steel Limited
Complexity:
Tata Steel operates in a variety of segments apart
from steel like tubes, bearings, Agrico to name a
few. This increases the complexity of functioning of
the organization thereby reducing the effective
functioning and concentration on one unit.
Ambiguity:
The Tata Group faces ambiguity from its top
leadership. The Tata is segmented in so many
sectors that the top leaders might not be able to
concentrate on one issue.
The unstable management is also a case of
ambiguity with Tata Steel for example the Cyrus
Mistry case.
Volatility:
The major issue faced by production units with respect to
volatility is the breakdown of machinery and thereby the
production volume.
Other issues maybe the transportation of raw materials and
finished goods.
Lastly, the Government regulations also have a major impact
on the volatility of steel plant functioning.
Uncertainty:
The demand of steel in the market is a basic uncertainty
that the steel industry faces.
Since JSW exports a lot of its steel, the Dollar-Rupee
exchange rate also poses a great uncertainty risk to the
organization.
Mishaps and accidents, leakage of hazardous gases,
unforeseen circumstances.
Volatility:
The volatility for Tata Steel remains the same as for JSW Steel.
Breakdown of the machinery leading to volatility in
production.
Government regulations.
Effective transportation of raw materials and finished
product.
Uncertainty:
The demand for steel in the market is one major
uncertainty the entire Steel sector faces.
Accidents and mishaps taking place within the vicinity
of the plant.