BUSINESS STRATEGY - TATA STEEL

Unit 7: Business Strategy

[DATE]
Contents
Introduction .................................................................................................................................................. 2
1.1 Defining the Mission, vision, objectives, goals and core competencies of TATA Steel UK ................. 2
1.2 Factors associated with strategic planning ......................................................................................... 2
1.3 Evaluating the strategic planning techniques used in strategic planning........................................... 3
TASK 2: Formulating a new strategy ............................................................................................................. 6
2.1/2.2 Analyzing the position of TATA Steel UK by SWOT analysis and carrying out the external audit
using PESTAL. ............................................................................................................................................ 6
2.3 Stakeholder analysis and importance of stakeholders analysis ......................................................... 7
2.4 New strategy to reshape the future of TATA Steel UK ....................................................................... 8
3.2 Justification of new strategic plan of TATA Steel UK .......................................................................... 9
3.1 Evaluating the other Strategy’s appropriateness relating market entry ............................................ 9
TASK 3: Implementation of a chosen Strategy ........................................................................................... 11
4.1+4.2+4.3 Presentation on implementation of proposed strategies .................................................. 11
Conclusion ................................................................................................................................................... 22
Introduction
To achieve the goal of any company following a business strategy properly is very important.
Business strategy is defining the techniques and system what a company uses to achieve its long
time goal or target. Business strategy defines the mission, vision, objective and so on and also
describes the plan to achieve those. As business is expanding in the whole world, taking and
maintaining marketing strategy is very important now a days. Here the mission, vision,
objectives, goals and marketing strategy of TATA Steel UK will be discussed by which it will
achieve its new strategic goal for African and Asian markets. TATA Steel wants to see them as
an idol in steel industry by providing improved product.

1.1 Defining the Mission, vision, objectives, goals and core competencies of TATA Steel
UK

Mission is goal of a specific work for a short time. The goal for a specific project is called
mission. The specific goal of a specific task or project is mission. Mission is a prime target of a
business organization what will not change over time. TATA steel’s mission is to make the
industrial base powerful through utilizing the resources and workers.
Vision is the stage where the owner wants to see his organization after a long time period. It is
the final goal of an organization. Vision is the reason of existence of an organization. TATA
Steel UK has a vision to make TATA Steel a global successful brand and the idol in steel
industry.
Objective is a structured and systematic goal what is attainable by following some steps.
Objective has established way to reach. TATA Steel’s objective is to provide more improved
product in the market. It is building the way to achieve that objective by improving the workers.
Goal is the aim an organization wants to reach in a specific time period. It is not as specified as
objective. TATA Steels goal is to create a long term value.
Core competencies are the special abilities by which it can achieve its goal. It is a strength of an
organization what makes it special in the industry. TATA Steel operates in a way that is safe for
people and also respectful for the environment. It also has an enviable record of behaving
responsibly and show care to the peoples living around as a result of their well-organized plants
which is rare in steel industry.

1.2 Factors associated with strategic planning

Strategic planning is a systematic direction of the organization to reach the goals. Strategic
planning makes adjustment between the resources and the targeted outcome. Strategic planning
sets the goal and tells what is to be done to achieve specified goal. At the time of formulating a
strategic plan managers faces some factors or problems. Those are-
Internal factors: There are many internal factor to be considered at strategic planning like
management structure, core competencies, raw materials to be used, financial status and workers
capability and so on. Though TATA Steel has a strong core competencies it needs to look over
the raw materials as it is not available in UK. TATA Steel will have to import raw material from
other countries.
External factors: A business needs to take care of the external factors related to the business
when formulating strategic planning. Some external factors are- targeted customer’s behavior,
environmental forces, economic and political condition of the country and social acceptance and
so on. As TATA Steel is entering in UK market it has to make adjustments to present business
strategy to match with the UK’s economic and political condition.
Business level factors: To gain a position in the existing market an organization needs to
generate a high standard strategy what can face the competition. As TATA Steel is new comer in
UK market they have to know their strength and weakness to have a place in the market. They
have to utilize their innovation power and make their product more improved to win the
competition. It also look over the competitor’s strength and weakness.

1.3 Evaluating the strategic planning techniques used in strategic planning

Techniques used in development of strategic planning are many. The strategic plan will be
effective if the appropriate techniques are chosen. Most popular two techniques of strategic
planning are SPACE and BCG Matrix. Here this two are described-

SPACE technique: The full form of SPACE is Strategic Position and Action
Evaluation. It is one type of analyzing tool used very often by the managers to take the
appropriate strategic plan. SPACE techniques analyze the position of the company in the market.
There are four dimensions in SPACE techniques, two internal and two external.
 Figure: SPACE techniques
Source: (www.differentiateyourbusiness.co.uk, 2011)

 External factors: This factors evaluates the organizations strength and the stability of the
business environment.
 Internal factors: This factors analyze an organization’s own financial strength and
competitive position.

BCG Matrix: The most popular techniques used in strategic business planning is BCG
Matrix. BCG Matrix shows which business unit is more profitable to invest. It analyzes the
contribution of business units in the profit. It indicate the more profitable business.

Figure: BCG Matrix

Source: (www.valuebasedmanagement.net)

The four category of BCG Matrix give us the information about a company’s profitable business
units. Such as-
Star: It has a growing market and also holds a big share of investment. The investment is safe
and profitable as the market growth is high.
Cash Cows: It hold high market share but the market is not growing as a result it is not so
profitable.
Question Mark: This hold a low investment but the market is expanding. There is a possibility
that it ca be profitable but it is not certain.
Dogs: The market share is low and also the market is not growing. So it will be better to
liquidate the business to save the investment.

After analyzing the two techniques, it can be said that SPACE technique is more
appropriate for TATA Steel UK. As they are entering in a new market, they should focus
on their position as well as competitor’s position and should search the competitive
advantage for their company. As BCG Matrix give us the information to choose the more
profitable investment it is not appropriate.
TASK 2: Formulating a new strategy
To
Board of Directors
TATA Steel UK
Subject: Proposal of new strategic business plan.

Sir,
According to your suggestion I am here to present the new strategic plan for TATA Steel UK.

2.1/2.2 Analyzing the position of TATA Steel UK by SWOT analysis and carrying out the
external audit using PESTAL.

To develop a strategic plan of a company one have to know the internal position (strength,
weakness, threats and opportunities) of a company. One can know about that by using a tool
name SWOT analysis. Then one must analyze the external position of the company to do so
PESTEL is very popular tool.

SWOT Analysis: SWOT is a tool to analyze company’s internal position. It shows a company’s
internal strength, weakness and external opportunities, threats.

Strengths Weakness

 The Brand loyalty of the company  Though it is a big successful

is very strong.
 Environment friendly plant
 Can produce and supply different
product for different area market
 extensive engineering capabilities
 Skilled manpower
company, the operational
excellence is not fully achieved
yet.
 Another weakness is the
increased debt-equity ratio.

Opportunities Threats

 Globalizing is expanding the  Huge competitors

market  Low cost china product
 Global economic development  UK maintains a limit of CO2
 Technological support emission
 PESTEL analysis: this is tool to analyze the external position of the company. PESTEL
consists of five factors like Political, Economic, Socio-cultural, Technological, Environmental
and Legal factors.

 Political factors: There is a upcoming vote to decide whether UK stays in European

Union or not. If it does not stays in EU it will be a problem for TATA Steel to export to
EU countries.
 Economical factors: The economic growth of EU is not satisfying. The upcoming
budget will increase the tax rate as a result TATA Steel will face loss of profit.
 Socio-cultural factors: The society rule regulations and culture affects the product
markets of a country. The culture of UK and India is so different. But as TATA Steel has
a large number of products it will not create so much problem.
 Technological factors: Technology is changing very frequently and UK stays updated
with technology. Tata Steel is also developed company technologically.
 Environmental factors: Environment is very important issue for today. To save the
environment every country follows a limit of CO2 emission. TATA Steel is also very
aware about the environment and it uses environment friendly plants.
 Legal factors: There are several laws and rules one company needs to follow to do
business in UK. So TATA Steel will have to follow all the laws.

TATA steel will have to pay more attention on Political, Economical and legal factors as it
affects TATA Steel’s strategic plan a lot. The other factors need less attention.

2.3 Stakeholder analysis and importance of stakeholders analysis

Stakeholder: Stakeholder are those persons who has a relation with the company. Stake holders
are the owner, the labor, Government and the investors and so on. Stakeholders and the
organization are internally related. Any change in one side has an effect on other.
Stakeholder analysis: the technique used in identification of people or groups of people those
who can affect the organization or be affected by the organization. This analysis classifies the
stakeholders on basing the impact they have on the organization. It shows who is more related to
the organization and who is less related.
There are four steps in stakeholder analysis;
 Defining stakeholders
 Giving priorities over stakeholders
 Choosing the key stakeholders
 Stakeholder engagement
Importance of stakeholder Analysis
The role of stakeholders at forming the organization’s strategy is very important. All stakeholders
are not same to the organization as their impact over organization is different. So they need to be
classified to form an effective strategy. The reason making this analysis important are-

 This analysis identifies the stakeholders by their impact. Determines which stakeholder has
bigger impact and which has the lower impact.
 Managers can treat different stakeholders on basis of their priority.
 Before making any business strategy or plan one must know who are related to the
organization, by this analysis one can get those information.
 This analysis has influence on other stakeholders
 Company can classify its stakeholders by priorities.

As TATA Steel is going to form a new business strategy it is very important to know and
understand its stakeholders and their priorities. Also have to identify their external and
internal stakeholders.

2.4 New strategy to reshape the future of TATA Steel UK

Industry analysis: In Steel industry TATA steel was in a good position but after opening TATA
Steel UK it is facing loss in its UK branch. With 4000 workers TATA Steel UK is renowned as a
biggest plant in UK. But, during last six years TATA Steel is facing unprecedented condition of
market. Financial loss estimated in December 2015 is £68 (Grandhi, 2016). As a result cut 1050
workers and preparing to sell the business. As China provides cheap Steel in the market it has
become a great challenge for TATA Steel. To face this challenge TATA Steel needs an effective
business strategic plan.

Proposal of new Strategic business plan for TATA Steel UK

SPACE analysis shows that TATA Steel has a good competitive advantage but it is going in a
financial crisis results from recent loss. But it can handle that crisis. On construction purpose UK
has a great demand of steel what makes the business attractive to all. Environment factors will not
create problem as TATA Steel maintains environment friendly plants.
Economic factors needs to be rechecked by TATA Steel also the economic factors to recover that
current loss. By providing low cost product China, South Korea and Russia is ruling the industry.
This is a government issue to be handled by the UK government and the government willing to
take 25% stake.

It would be the best strategy for TATA Steel to face the loss by making alliance with other
Steel companies in UK to challenge the import of low cost steel from other countries.

3.2 Justification of new strategic plan of TATA Steel UK

The economic system of UK is free market economy. That is why business can be done by anyone
having less government interference. Other countries can provide low cost steel as they have an
advantage of low labour cost and low raw material cost results in low production cost than UK.
The new strategy of making alliance will reduce the cost of production and the price can be
decreased. As TATA has a high brand value and quality product TATA Steel can face the
challenge as the production cost comes close to China or other countries.

3.1 Evaluating the other Strategy’s appropriateness relating market entry

Here some market entry Strategies are discussed:

Organic growth: The strategy to expand the business by developing new product and by
expanding the output of own business. In this strategy business does not depend much on the
supplier or other business related to business. Organic growth is slower than the external growth
strategy.

Growth by merger: When two companies merge themselves to achieve growth is called growth
by merger strategy. The business run in a new company name.

Acquisition Strategy: When an organization purchase or obtain another to achieve growth or the
targeted market is called acquisition strategy.

Strategic alliance: When more than one company makes agreement among them to achieve the
target or objectives is called strategic alliance. The companies remains independent.
Substantive growth strategy: two different substantive growth strategy is available. Those are
related diversification and unrelated diversification.

In related diversification businesses related to each other makes alliance to achieve goal or growth.
For example- Hotel business is related to farming as they sell cook hens or fish collected from
respective farms.

In unrelated diversification businesses unrelated to each other makes alliance to have some
advantages of cost reduction which gives growth to a business. For example- any business makes
alliance with transport service to reduce the transport cost.

Limited growth Strategy: Two types’ limited growth strategies are available such as market
development and market penetration.

Entering the market with a low price to have a position in the market is called market penetration.
It is used by the Chinese companies very broadly.

When a company want to widen the market of its current product rather changing the product is
called market development. Following this strategy TATA Steel can widen their market in
America or Africa.

Retrenchment Strategy: It is a turnaround or liquidation strategy. In this strategy the business

owner restructures the business or liquidate the business to overcome the industrial sickness.
Company restructures the business to make the business profitable.

Liquidation is selling the business to save the investment from loss.

TATA Steel should expand its market by entering new market that is a market development
strategy or can liquidate the business to overcome the sickness of UK market.

Regards,

Strategic Manager

TATA Steel UK

Date: 16-06-2016
TASK 3: Implementation of a chosen Strategy

4.1+4.2+4.3 Presentation on implementation of proposed strategies

Slide 1:

Welcome everyone to the new business strategy for TATA Steel UK

Slide 2:

Proposed Strategies:

From the various business strategies here two strategies are proposed for TATA Steel UK. The
proposed strategies are selected by running the SPACE analysis. Those strategies are-

1. Market Development Strategy and

2. Turnaround Strategy

Market development strategy is the strategy of widening the market of a product by entering new
market. For example- TATA Steel can expand their market in America or Africa or Asia.

Turnaround Strategy is restructuring the business to make the business profitable when it is facing
loss continuously. For example- TATA Steel can redesign its structure, working procedure and so
o to be profitable.
Slide 3:

Implementing the Market Development Strategy:

To implement the market development strategy one have to do some work, such as- choosing the
appropriate market for the product, a PESTEL analysis have to be run by the strategic manager to
fulfill the requirements demand of the government of new market.

Implementing the Turnaround Strategy:

To implement turnaround the strategic managers first have to analyze the position to understand
the situation by he comes to know whether there is a need of turnaround strategy or not. If needed
whether the strategy will be effective or not.

After that if needed the manager will develop a restructured design for the organization.

Than strategic manager will restructure the organization according to design and will control and
monitor the new strategy.
Slide 4:

Roles and Responsibilities of Strategic managers:

There are a lot of roles and responsibilities a strategic manager have to perform. Some of them is-

Roles: Major roles are-

1. The manager need to interpret the future of the organization.

2. Activating the new strategy is one major role of strategic manager.
3. Controlling and monitoring the new strategy is also the role of strategic manager.

Responsibilities: Major responsibilities are-

1. Catching the problem related to strategy immediately is the responsibility of strategic

manager.
2. After recognizing the problem next responsibility is to develop a new strategy.
3. Making adjustment to the strategy
4. Taking the higher leve manager’s advice is another responsibility.
Slide 5:

Different roles and responsibilities: Roles is what a strategic manager have to do in a given
situation. Roles is the work already decided. Responsibilities are the works what a strategic
managers should do in a situation. Roles and responsibilities are-

1. Arranging board meeting to let everyone know the current situation of the organization.
2. Presenting the need of new strategy before managerial board.
3. Presenting the new strategic plan
4. Collects feedback from different level managers.
5. Gives answer to the question raised.
6. Start the strategic plan in the business.
What requires to implement strategic plan: Three kinds of resources have to be managed to
implement a new strategic plan within the organization. Such as-

1. Human resources
2. Financial Resources
3. Time and material resources

Without these resources new strategy implementation is not possible.

Human Resources: Man power is needed to do any kind of work.so for new strategic plan
implementation we need human resources. Like-

1. Need concern from the higher level managers

2. Need a strategic manager who will perform these jobs.
3. Mid-level manager and workers will follow the strategic plan and implement it in
reality.
Financial Resources: Money is also needed to bring a change in the organization.these money
can be supplied from internal or external sources.

Internal sources are retained earnings and can be collected by issuing share or bond and so on.

External sources are taking loan from bank or financing by lease and so on.
Time and Materials requirements: As implementation of stratey is a process it needs time and
some materials.

The whole implementation process will take 90 days to be activated in the whole organization.

The materials needed to implement strategic plan is- Finance or money, human resources,
technology and raw materials and so on.
Here is the time schedule for this implementation work.
Slide 12:

Wishing all of u a very good day.

Conclusion
Strategic planning is an important element for a business to become success and implementing that
is a tough work. The roles and responsibilities of strategic managers are very important in this
case. This report says about different kinds of strategic plan an formulation and implementation of
strategic plan.