Tata Steel Marketing Strategy

Tata brace Marketing StrategyIn this report, Tata make Group (Tata poise) has been chosen as an organisation to analyze the strategic changes make everyplace past louvre long time including strategic personateing, strategic capability, raise and drivers behind these changes.Tata blade currently is a study pseudo in worldwide mark sedulousness. In course 2005 (Figure 1), Tata sword routine was generally focused in Indian subcontinent and revenue generated was close to US$ 5.0 virtuoso million million only. However their initiative to expand their operations sphericly proved precise triple-crown all over last five course of studys. From being a real topical anaesthetic trade name producer, they diversifyed themselves into a major global histrion in stigma producers (Figure 2). They wee been aggressively involved in substance expansion by acquisitions and organic fruit. Business Standard once commented that Tata trade name moved into its next target t o be educe the worlds second largest leaf blade companion by 2012 with the help of its around expensive bet worth US$ 12.9 billion on Corus Group.Last two years has been real ticklish period to global brand industry because of worldwide recession. The global porcine steel performance for year 2009 was 1220.0 mpta (million tonne per annum) as reported by World steel Association lower by 8% against that of 2008. The dip in hire was ascribable to deterioration in economy experient by chance on steel end users. Table 1, shows the growth/ pooh-pooh in call of crude steel reapingion for the illuminate tenner steel producing nations.However, by acquisition of Corus and an separate(prenominal) assets, Tata Steel now ranks among worlds top ten (Table 2) largest steel producers with current steel action capacity of 32.0 mpta. later on five years of its expansion programme, Tata Steel is now worlds second most geographically modify steel producers.Mission StatementIn its c be command Tata Steel expresses that objet dart honesty and integrity are the natural ingredient of a fond and stable enterp place upright, profitability provides the main emission for sparing activity. Founded way back in 1907, Tata Steel stress on their core ideology in its vision statement by reservation emphasis on their people, supplier of choice, innovative approach and their conduct. Tata Steels vision statement is now became a tangible asset, which provide right direction to their managers and employees. Tata Steel has advancedly skillight-emitting diode employee asset of 81,000 spread over five continents. Tata Steel stress on creating differential value for their customer with help of incessant make break downment in their business process and product technology.Value image AnalysisThe value compass is an economic tool used to fasten the strategic resources available to a comp whatever. Basic principle of the Value mountain chain Analysis is that the bas is for a free-enterprise(a) advantage of a substantial lies primarily in the application of the bundle of valuable resources at the bulletproofs disposal. To transform a short-run competitory advantage into a sustained competitive advantage requires that these resources are heterogeneous in nature and not perfectly mobile (Barney, 1991, p105-106 Peteraf, 1993, p180). Effectively, this translates into valuable resources that are neither perfectly imitable nor substitutable without fully grown(p) effort (Barney, 1991, p117). Tata Steel has few major strategic capabilities which are valuable, unmatched and non-substitutable.Tata Steels Strategic CapabilitiesTata Steels strategic capabilities are presented in Table 3, below.Table 3ResourcesCompetencesThreshold CapabilitiesThreshold ResourcesThreshold CompetencesSteel merchandise plants at sundry(a) geographical locations.Production and Sales focusing.Offices and buildings at sundry(a) geographical locations. wholly other gen eral management skills.Sufficient supply of sore poppycocks for steel fashioning.Sophisticated IT skills.Sufficient cash flow.Safety management.Pool of skilled personnel. thin customer service.IT System in place.Efficient management structure.Logistic, freight and freight facilities.Effective employee welfare system.Capabilities for Competitive AdvantageUnique ResourcesUnique CompetencesVarieties of products which caters to industries handle Infrastructures, Automobiles, Aviation, Energy and so forthVery competent sales team with spirited negotiation skills which create market for their products.Tata and Corus brands.Excellent use of IT systems for very strong use in sales process. heightsly capable management team. continual developing and upgrading new products to serve different industry levels.Online portal admixture junction for emptors.Highly skilled managers and directors who improve and support the company success.A century experience in steel making.Integrated sup plier and buyer management.Strong financial plump for from group. basebornest cost steel producer in world.Very strong aim in India which is a big market for their products.Enterprise Risk focus (ERM) to eliminate risk associated with various processes.First mover advantage through innovative products processes.Continuous return Process (CIP).Excellent RD for cutting edge technology and products.Operational ability and excellent quality control.Many proprietary products such as Tata Tiscon etc.Long-term relationship with buyers and suppliers.Porters Five Forces AnalysisTata Steel has registered double shape growth in past few years except their europiuman business. By applying Porters Five Forces analysis principal, we dejection evaluate the Tata Steels market battle and its current and future strategy towards intense competition faced at various fronts.Threat of New Entrants LowThreat to new entrants in any industry sector is a major challenge. However in steel industry entry barrier is high hence panic of new entrants are relatively low based on factors such as considerable capital investment, economies of scale, government policies and product distinctions.Steel industry requires huge capital investment to set up an integrated steel production facility plant which is currently close to US$ one billion/mtpa as per Steel Manufacturers Associations recent estimate. This deters any new entrants launching in this field. By increasing their production capacity to 50mtpa and wide contour of products they can lower their cost, hence more profit, sustainability and these conditions are unfavourable to any new entrants.Raw material is a major issue with degeneracy related to archeological site allocation and land acquisition, it makes difficult to new entrants to come in this field. Various regulatory clearance and environmental issues also set about big barriers to new entrants. Entry barriers in terms of product differentiation are very low in s teel industry.Competitive tilt HighThe steel industry is truly global in terms of competition with large steel producing countries like China significantly influencing global impairments through their aggressive exports. In steel industry, branding is not very common hence little differentiation exists between their competing products. Tata Steel faces unfluctuating competition with their competitors such as Arcelor Mittal, POSCO etc.Bargaining Power of Suppliers HighTata Steel enjoys greater autonomy in new materials supply as they own mines for raw(prenominal) material supply. Tata Steels fully integrated supply chain system keeps abundant supply of raw material for their plants. However, other steel producers, who dont get under ones skin their own mines, have to rely on raw material suppliers. On global level raw material market is dominate by the three mining giants BHP Billiton, CVRD and Rio Tinto. They make mineral market as oligopolistic and supply two-thirds of the p rocessed iron ore to steel producers hence command very high bargaining power. Other steel producers, who dont have their own mining operations, must buy raw material at market overriding price and pass that hike to consumers which makes them less competitive.Threat of Substitute Products LowNew materials may point brat to viability of steel. Aluminium, plastics and other composite materials are being considered as substitution in sectors like auto, aviation etc. Concrete is another substitute material that may pose threat to use of steel in infrastructure and energy sectors. Some of the substitute materials such as aluminium itself are very costly, hence doesnt pose very big threat against steel producers. However the growth led by infrastructure sector, automobile sector, aviation sector and consumable goods go away keep demand up for steel hence more growth for Tata Steel.Bargaining Power of Buyers AverageBargaining power of buyers is very circumscribed due to their fragmen tation. Big players of the major steel consumers in sectors such as auto, aviation, energy etc may squeeze greater amount of bargain. On the other hand these bulk consumers may offer long term procurance offer to the company hence more revenue generated. However, small and sell consumers are scattered, though they consume significant amount of steel production, dont have the same bargaining powers as in case of big players.Tata Steel Group SWOT AnalysisSWOT analysis of any firm provides knowledge about the challenges and opportunities faced by Tata Steel group in future. They are detailed below.(S)trengthsTata Steel has acquired vast mineral reserves which is a key to their operations. These reserves can cater their raw material demand for next three decades. Tata Steels mineral reserves are located at various strategic geographical locations such as India, Australia, Canada, Mozambique, Oman, Ivory shore etc.Tata Steel has very capable, credible and reliable top management. Thei r successful global expansion plan in last five years proved this. Tata Steel has successfully acquired and integrated Corus Europe, NatSteel Indonesia and Millennium Steel Thailand.Tata Steel uses custom made state of art integrated information management system for their routine operation. Their advanced RD capability has improved further by acquiring Corus which is world renowned for its product innovation.Tata Steel uses Tata Groups strong distribution and retail network. Its Groups demand for steel is very high due to their presence in most of the sectors.Currently Tata Steel produces 32 mpta of steel and by completion of DPCL project its total capacity allow for reach to 50mpta which pass on make it second biggest steel producer in world.Tata Steel has structured risk management process in place in their operation known as Enterprise Risk Management (ERM). ERMs key dish out is to identify risk at all level and mitigate the same.Tata Steel mitigates very well the cyclical ity situation which occurs in steel industry on occasion by its broad spectrum of its product portfolio.Tata Steel expansion plan has unite its position worldwide and by diversifying its portfolio and market is in process to give out a pioneer in steel industry.Tata Steel has very strong brand value for its products. This has strengthened further by acquiring Corus which itself is a big brand. Their successful integration with Corus was a benchmark in corporate history.(W)eaknessesTata Steels substantial debt burden of US$9.8 billion is a major weakness. Their debt uprightness ratio is currently 1.77, which reflects company finances are met by debt due to Corus acquisition.Its European business (Corus) has a high exposure to spot price and a high operational gearing thus creating very high risk of price volatility.Tata Steel relies for some raw material on international suppliers, which expose their profitability in case of steep rise in their prices.Tata Steels Indian operatio n is very much hampered by escape of infrastructure, shortage in power supply, lesser productivity, bureaucratic hurdle in export etc.Additional levies and tax imposed by local government put them in less profit making situation. The subsidies provided by some nations (China etc) forget make their product less competitive in price hence reduce their demand.(O)pportunitiesCurrently the emerging economies are undergoing huge infrastructural developments, which require significant amount of steel in all sectors. In India the scope for expansion of its steel products are enormous in every sector, which Tata Steel can exploit very well with its increased production capacity. As per World Steel Association estimate, the consumption of steel forget be doubled in next two decades.By acquiring Corus and improving its own RD activities, Tata Steel moved towards a better product differentiation and enhanced product portfolio which provide them new opportunities over its competitors.Their g eographical locations with integrated operations and marketing strategy are a key factor in capturing market share and increasing their financial performance. They can implement Coruss advanced automation technology in their own plants to improve productivity, economies of scale, cost reduction, increased output and operational efficiency to achieve better performance.Following recent recession, various assets (minerals, plants facilities etc.) are available at a very low price due to their financial difficulty. Tata Steel, with strong backing from its parent group can secure future supplies of raw materials for steel making.With increased steel production capacity of 50 mpta, they will be the second largest steel manufacturer after Arcelor Mittal and most geographically diversified company with wide variety of product mix.(T)hreatsSteel Industry is major source of greenhouse gas emission, which makes them very vulnerable against many litigation and legislation in future.The raw ma terials used in steel production are non-renewable and their source is depleting very fast.Due to rising cost of steel products, the end users are looking for substitutes of steel which can be a major threat to Tata Steels business.Intense competition among international steel player and cheap steel available from China are another major threat to Tata Steels performance.Tata Steels huge debt is one of major threats against them. The rising interest will increase their debt burden.Future OutlookFollowing two years of castigate global economic downturn, the world seems to be regaining some economic stability. There is moderate growth from developed world however emerging economies are registering very strong and sustainable growth with healthy house servant market.Before recession, the steel demand was very strong with over 6% growth during last decade this is primarily driven by robust growth in BRICS nations (Brazil, Russia, India, China and South Africa), South East Asia and mi dway East. By 2025, as per forecast BRICS countries will have 46% of global population and will consume 65% of the global production and will have three quarter of the global GDP.The raw materials for steel making are going at record due to high demand, higher(prenominal) freight rates and monopoly of three big natural resources companies. The effects of the to a higher place factors are reflected in higher steel price and decrease in profit margin of steel companies. However Tata Steels strategy choose over last five years for securing long term contract for raw materials supply or acquiring new raw material mines at various geographical location has helped them to keep their prices competitive and making entire operation as viable. Tata Steels integration with Corus has completed successfully and producing better reply than expected. Tata Steels strategic effort of capacity expansion and effort to secure raw materials source at various geographical locations yielding positive results.Tata Steels upriver integration process ambition will lead them to achieve light speed% self-sufficiency in India and around 50% self-sufficiency in Europe in next 5 years. Tata Steel is investing heavily in RD to get breakthrough technologies and develop new products and services that reduce the production cost and environmental impact over the product lifecycle. To improve its processes, precession is given to energy conservation schemes in technology break-through such as Ultra Low Carbon Steel making and in other innovative projects where the Group has proprietary technology.ConclusionsIt was the best of times, it was the worst of times, this famous refer meant a lot to Tata Steel. Five year back, just after scratch line of their ambitious global expansion plan, they were hit by worldwide financial tsunami which tested their resiliency. Their well formulated and proved business strategy has shown resilience and ability to withstand the unprecedented highs and lows of a future that often comes unheralded. They have taken proactive initiative across all geographies to minimise wake shock of recession. Their strategy began to pay off towards the last quarter of year 2009, when they rebounded to profit after the turmoil of recession. Undeterred by the economic turbulence, the play along continued to place emphasis on working practices in health, preventive and corporate citizenship, with specific initiatives taken in all these areas.In addition, a continued focus on engineering solutions for customers is helping it maintain its position of a product pioneer. Tata Steel believes in staying alert to future opportunities while never letting go of its core values. This is the philosophy that has underpinned its growth over the years and one that remains its key driving force.The strategy adopted by Tata Steel during last five years to become a global player paid off. They increased their revenue and production by six fold by capacity expansion or acquisition. They achieved raw material self-sufficiency of 50% by year 2010 and by year 2012 they aim to increase it to 60% by more investment in mines acquisition. In last five years Tata Steel became a global player from a local steel producer with currently global presence in 50 markets and manufacturing operations in 26 countries. accessory A Reference ListTata Steel Group Annual circulate 2009-10G Johnson, K Scholes R Whittington (2008), Exploring Corporate Strategy, 8th Edition textbook Cases, Harlow Financial Times Prentice Hallhttp//www.tatasteel.comBarney, J. 1991. Firm Resources and sustained competitive advantage, Journal of Management, 17 (1) pp99-120.Barney, J.1995. Looking inside for competitive advantage, Academy of Management Executive. 9(4). Pp49-61.Peteraf, M. A. (1993). The cornerstones of competitive advantage A resource-based view, Strategic Management Journal, 14 (3), 179-191Porter, M.E. (2008). 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