BUSINESS STRATEGY
[Name of Writer]
[Date]
1
Table of Contents
Introduction
Learning Outcome 1:
1.1
Business missions, visions, objectives, goals and core competencies in-form strategic
planning.
1.2
Factors that have to be considered when formulating strategic plans. Evaluate the
effectiveness of techniques used when developing strategic business plans
2.1
Strategic positioning of a given organization by carrying out an organizational audit
2.2
Carry out an environmental audit for a given organization.
2.3
Significance of stakeholder analysis when formulating a new strategy
2.4
Present a new strategy for a given organization
3.1
Alternative strategies relating to market entry, substantive growth, limited growth or
retrenchment for a given organization.
3.2
Justify the selection of a strategy.
4.1
The roles and responsibilities of personnel who are charged with strategy
4.2
The estimated resource requirements for implementing a new strategy for a given
organization.
4.3
Contribution of SMART targets to the achievement of strategy implementation in a given
organization.
Conclusion
References
Tata Steel Europe
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Business Strategy of Tata Steel Europe
INTRODUCTION
Nowadays, internationally, the core element of majority of the firms is the business strategy.
Before entering into the market, majority of the organizations research market, the targeted / new
segments, other successful organizations, latest trends of customers and their strengths and
weaknesses, market trends to make suitable strategies to build a business. The main factors in
building a successful business strategies are mission, vision, goals and objectives and core
competencies. These factors will play a major role in analysing and evaluating different aspects
and segments of business and its strategies. These factors, furthermore, will also help in
demonstrating different functions of businesses like SWOT, PESTLE, and Poster 5 Forces.
This report provides the information and will help in demonstrating different functions of
businesses like SWOT, PESTLE, and Poster 5 Forces. This report will pay more attention to the
strategic planning, environmental factors, stakeholders’ analysis, availability of the resources,
and different techniques used in formulating different strategies. This report will also forecasts
the possible outcomes and will highlights the major strengths and weaknesses to improve their
current performances.
Overview of the Company
The second largest steel maker company in Europe is Tata Steel Europe (formerly Corus). This
company not only operates in Europe but also is operating actively in U.K and especially in
central Europe. Tata Steel is also one of the world’s biggest geologically steel producing
company, having commercial offices in more than 35 countries and operating offices in more
than 25 countries. (Shuen, 2008) This company is the merger of British Steel and
KoninklijkeHoogovens in 1999, and Tata Steel Europe was than acquired by Tata Steel in
January 2007. Tata steel is not the biggest steel producing company but also this company has
entered internationally in many other demanding market segments involving in automotive and
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constructive industries, aerospace, security and defence, power and energy, lifting, customer
products and packaging. Tata Steel understands that every customer’s needs varies in every
market. The approach the company follows which makes them different from the market (Alai,
2006). To build a success, the strength is the main aspect of the company which build a
collaborative relationship in creating new customers.
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Learning Outcome 1:
1.1
Business Missions, Visions, Objectives, Goals and Core Competencies Inform
Strategic Planning
Mission: The desire of organizations to meet the expectations of stakeholders and the
commitments the organizations makes is the mission statement. The mission statement defines
about the organizational approach, how they will identify their customers, what techniques they
will apply to serve their customers, how they run their businesses, identification of
products/services. For example: Amazon provides a mission statement by being the most
customer-centre company in the world, where they can buy online anything they want, while
Provide a global trading platform where practically anyone can trade practically anything
(Madhuri, 2008).
Vision: The vision statement explains the ideal condition of what the organization perceives, and
how well the problems can be tackled in the future. For example: Citi Group’s vision is to be the
most component, innovative and financial organization in the world. While, Barclays provides
the vision as to achieve the growth timely by diversifying the business, and increasing its
presence in the different market segments that are growing rapidly.
Goals and Objectives: The business attempts to build a specific result in a specific period of
time is known as objectives and goals. Objectives can be best describes as expressing more
details in short-term plan, a step to gain the goals, while, on the other hand, goals are long-term
plans with proper general statements (Murray, 2002). For instance: Levis Strauss’s organizational
goal represents the value towards human rights, providing security and safety to their workers
and to their families, while, GAP Inc. Represents by striving to create the organization more
effective by proving diversity in workforce, open discussions, and availing of opportunities.
Core Competencies: The process of identifying core values of the organization in defining the
position of the company in the current market and having competitive advantage of it. For
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instance: the core competency for PUMA is openness, passion and beliefs, and that of Adidas, its
passion, performance, diversity and integrity.
1.2
Factors That Must To Be Considered When Formulating Strategic Plans
The business faces many factors and concerns while developing a suitable business
strategy which can impact the strategic business planning. These strategic planning involves
many factors including SWOT, PESTLE analysis, organizational environment (internal and
external), risks involves in evaluating internal and external factors, advantages and disadvantages
of current market condition and future market to hold, organizational environment, internal and
external audit, budgeting, controlling, organizational structure and its cultural background,
management and leadership styles, new inventions in the competing market, human resource
management, production and improvement in any other area. These factors plays an important
role in increasing the market of business and can help in managing the strategies.
Organizational Framework: Managers can set the goals for their subdivisions after the
organizational framework has been set. This will support the overall business strategies. These
responsibilities and functions can serve as a general framework when allocating the written goals
and tasks to their employees.
Employees: Clear, authentic, objective, relevant, strategically proven and understandable tasks
and goals should be given to employees.
Culture: Goal alignment helps the organization in establishing accurate pay-for-performance
culture by providing top-class rewards methods both individually and in team.
Management: Strategic planning and goal orientation helps the organization to strengthen their
leadership qualities. This will allow management to provide the better understanding of
responsibilities attached to specific goals, and to communicate efficiently, boost employees with
clear and continuous feedback.
1.3
Effectiveness of Techniques Used When Developing Strategic Business Plans.
To use the strategic business plans effectively, companies should follow the below techniques /
models to get more advantages, develop more effective business plans and acquire the bigger
market segment. These models are: SWOT Analysis, PESTLE Analysis, Porter’s five force
Model and the McKinsey’s 7S’ Model.
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GE McKinsey’s 7S Model
The 7-S model of McKinsey can be applied to the elements of an organization or a team as well.
The placement of the model can describes regardless of how the company decides to state the
possibility of the regions the company wants to learn.These 7S model can be categorized as
either “hard" or "soft" elements:
Hard Elements
Strategy
Systems
Structure
Soft Elements
Super-Ordinate Aims
Skills
Staff
Style
Advantages and Disadvantages of McKinsey’s 7S Model
The management can easily influence these "hard" elements in their strategies which are also
easy to identify and can be described easily. These elements can be described as the statements of
the strategies, reporting lines, formal procedures, organization charts and IT systems. While, on
the other hand, “soft" elements, are more influences by the principles, challenging to describe,
and are less concrete. Though, if the organization is successful in making business and adopting
new trends, these hard and soft elements plays a vital role in making the company more
prosperous.
BCG Matrix Analysis of Tata Steel Ltd:
BCG Growth matrix analysis is developed by Boston Consulting Group of USA and universally
known as BCG Matrix takes a two dimensional views. Those are industry growth rate and
relative market share. Tata companies are significantly involved in other segments like: Tata
Steel, Tata Motors, Tata Power, Tata Global Beverages, Titan, Tata Chemicals, Tata Consultancy
Services, Tata Teleservices, Tata Communications and Indian Hotel Companies.
Star: The minerals division and specially Ferro-Alloys in TATA (Tata Steel Ltd.) would fall into
the group of stars of the BCG Matrix. It is the largest steel producing company, annually
producing 25.3 million tonnes of crude steel.
Cash Cow: The overall sale of the company is 6.170 million tonnes, producing about 6.439
million tonnes.
Question Mark: Tata Steel’s tubes and bearing division falls in the question mark category. This
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division is having a rapid growth-rate in the market but with a low product-share. This division
have the potential to become star and cash cow when the market growth rate is slow.
Dog:All the divisions of the Tata Steel cannot be categorized in the Dogs, because every division
have a good market growth rate and its share.
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Advantages and Disadvantages of PESTLE Analysis
The PESTLE Analysis tool helps the organizations in developing the business, strategic and
marketing plans, product development, research and better understanding of the external
environment and technological factors. This tool will assist the organizations in providing easyto-use backgrounds for the external research, helps in moderating and reducing the impact of the
risks and the possibility of the coming threats. PESTLE tool also helps the organization in
developing the potential strategic rationales within the organization, helps in exploring new
market trends, opportunities, norms and cultural expectations. While on the other hand,
disadvantages of using this tool are many. The organizations can easily generalized the data and
can simply skip the main information. To use this tool more effectively, it has to be updated
regularly. Majority of the data which is used by this tool is on the assumption basis. Because of
the time and cost management, organizations are restricted to the quality external data collection.
As the market condition is changing drastically, it is very difficult to exercise this tool to
anticipate the market and the latest developments.
Advantages and Disadvantages of Porter’s Five Force Model
Though the Porter's Five Forces model have manyadvantages for using this model but there are
someconcerns the company should keep it in mind. Many organizations find it difficult to
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function in current market situation because of the change in facts and figures and the market
structures. Through this model the company can discover the speed of change management and
stagnant market structure. This will only provide the blur image of the environment because it is
very challenging to state the industry condition in the external market. It is totally based on the
competitive market idea and can be applied in analysing the simple market structures (Porter,
2008). This model has a difficulty in inter-relating the current market with group of products of
the organizations. Porter model is unable to incorporate the importance and implication of
resources, skills and strategies of the organization to gain more opportunities in more effective
way. To formulate organizational future strategies, this model delivers a foremost approach in
gathering the aptitudes and research which will help the management in evaluating their current
market environment.
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Learning Outcome 2:
2.1
Strategic Positioning Of A Given Organization By Carrying Out An Organizational
Audit.
The main objective of organizational audit is to provide the in-depth, independent, competencies
in the market-share, reasonable guarantee of the risks that can be taken by the company, control
processes of the firm, and the main objective of the company, the target, shares, and their
stockholders. Organizational audit plays an important role in highlighting the value-added
designs to the originations, helps the business in improving their processes, controls of the firms
in functional and economical areas.
SWOT ANALYSIS
SWOT is an abbreviation which is used for describing specific strength, weakness, opportunity,
and threat of specific organization to examine their strategic factors which the company faces
during its operational pried of time. A SWOT analysis is important for Tata Steel to evaluate its
current position and formulate strategies to tackle its competitors.
Strengths and Weaknesses of Tata Steel
Tata Steel is one of the pioneer steel business in Europe. The company is under different
segments and enjoys its brand-equity (Starrou, 2005). This gives the company an edge over other
steel manufacturing companies and gives an advantage of value-chain competencies, whereas,
the companies can increase their productivity by producing more raw materials form its sistercompanies and can increase their production. While on the contrary, increasing debt-to-equity
ratio is the biggest weakness of Tata Steel. In long-run business, it is very risky that the company
financed its resources by debts. For producing business and new market, Tata Steel mainly
depends on local and international market to increase their market-shares. The over-dependency
of Tata Steel proves to be more fatal in cost-effective difficulties
Opportunities and Threats for Tata Steel
Tata Steel diversifying its business in overseas market. Tata Steel signed an agreement with one
of the largest group Corus Group, which will also give access to the company yin the European
Tata Steel Europe
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market. Now, Tata Steel can have the privilege to exploit the copyrights of Corus Group and the
research and development facilities. The company can now explore the new markets and
technologies and can acquire the advantages from the current situation. Whilst, it is the biggest
threat is the sudden exposure of the overseas markets (Sull, 2009a). The time, when company
wants to starts its business in European market, the main threat will be the maintenance of Co2
emission standards, and lastly the economic slowdown challenges which the company has to
face.
The strengths and opportunities of Tata Steel can take the company at different level and can take
advantage by anticipating the impact in the market. The company can easily identify its
opportunities which can help the organization in acquiring new and creating different market
segment. They can easily anticipate their threats and can make appropriate strategy to deal with
the coming risks. On the other hand, if the business focuses more on their strengths, they will
lose their business and cannot be able to produce. This will create many hurdles and cannot
provide proper information about the market condition or cannot help in giving substitutes.
2.2
Carry out an Environmental Audit for a Given Organization.
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PORTER’S FIVE FORCE MODEL
In the past few eras, the steel industry has been in the list for a remarkable growth across the
world by a healthy volume as well as a by having a good recognition. In the steel manufacturing
industry, this situation was not safe for the industries, but, in actual fact, these industries had an
upper-hand in having a massive growth rate of double-digit growth-rate (Watson, 2008). The
liquidity rates in the steel producing industries seems to be very Though, the current liquidity
crisis seems to be unsettled, so, in this scenario, we have to look into the matter and have some
understanding to analyse the market situations of steel industries by using Michael Porter’s Five
Force Model. This model can help in giving the rational understanding of the Tata Steel, so that
the company can take those steps to compete with their competitors and knows the market
situation. These five factors are:





Entry Barriers: High
Competition: High
Bargaining Power of Suppliers: High
Threat of Substitutes: Low
Power of Consumers: Mixed
Porter’s model relates to 5 factors that determined the type of competition in their industry areas:
supplier power, buyer power, threat of new entrants, threat of substitute products and intense
Tata Steel Europe
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rivalry among existing players. The threats for Tata Steel are many, and if the company want to
maintain its position in the market, the company have to focus on the following five forces of
Porter’s, which can help in determining the type of competition in their specific areas,
specifically:

Threats of entering new entrants: The capability and willingness of organizations to enter
into a new market / segment depends on the entry barriers which they have to face. Tata
Steel faces such barriers including: government policies, economic scale-rates, capital




2.3
requirements, government policies and product differentiation.
Existing competitors and their strengthsin the field of competition
Bargaining power of suppliers
Threat of substitute products, and
Bargaining power of buyers
Significance of Stakeholder Analysis when formulating a new Strategy.
The process of gathering and analysing the qualitative research and information in a systematic
way is by taking into account of who will develop and implement the specific policy and
program. There are three types of stakeholders: Primary, Secondary and Key Stakeholders.



Directly affected: Stockholders and |Employees
Indirectly affected: Media and Government
Mostly affected: Those who are mostly influencedby either of the groups.
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The Stakeholders’ Grid:
The stakeholders are kept in 4 classes so that the stakeholder has their accurate privilege and
obligations in address of the making the concepts for the association which will be directed for
the betterment of the association (Wolff, 2010). Tata Steel has mapped the stakeholders; interest
Tata Steel Europe
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in association with the placement that the stakeholders’ buying power and interest to increase the
organizational profit.
2.4
Present a new Strategy for a given Organization
In alignment to confound the market, Tata Steel needs new planning and new divisions which
can be obliging for them to grow the market. So, by considering the future market situation, Tata
Steel with the help of their R&D division, they can discover the latest trends in the competitive
market and can develop new products to expand their services and capture a new market
segment.
Learning Outcome 3:
3.1
Alternative Strategies Relating To Market Entry, Substantive Growth, Limited
Growth Or Retrenchment For A Given Organization.
Market Entry Strategy
Organic Growth: organic growth is when the company achieves its development over other
enterprise that it equally related to it, than it is rewared as organic development strategy. Merger
and Acquisition: When one company takes over another and when the buyers become the sole
proprietor, this act is known as the merger and acquisition. This take-over happens when the
target-company don’t want to get purchased by any other company. In legal terms, to survive in
the market, the target-company terminates and end-up with acquisition. Example: On January
2007, Tata Steel acquired Anglo Dutch Steel producer Corus Group for US$ 12 billion. Corus
was 2 times bigger than the Tata Steel, which results in acquiring Corus after 8/9 rounds of bids.
This acquisition comes to an end by the biggest acquisition overseas. After the acquisition Tata
Steel gets the benefits from Corus through the supply-chain in Europe.
Strategic Alliance: In the steel manufacturing sector, Tata Steel has the proficiency steel-making,
and also having the proficiency in the manufacturing of steel at low-cost.
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Limited Growth
Market Penetration means that penetrations are compatible by benefiting the customers;
segmentation has the word of honour for Tata Steel to develop the market b geographically
increasing the enterprise and returning to the purchasers, development gains the attention of
customers by the allotment of services or goods diversification that are appealing to the
customers and lastly, innovation suggests that searching exclusively new market (inside and
outside) would like by the customers, it can help in replacing the innovatory goods or services to
meet the specific requirement.
3.2
Justify the Selection of a Strategy
Tata Steel should follow the Growth Sustainable Growth Strategies to expand their endeavours.
Two biggest contributors to in the growth of Tata Steel will be the tactically targeted mergers and
acquisitions (Integration Strategy). The use of modern equipments makes them the cost-leader in
the market. This strategy has two main subdivision; Integration strategy and Diversification
Strategy
Integration Strategy
Horizontal Integration
Vertical Integration
Major Acquisitions
 Acquisition of Labrador Iron
 NatSteel, Singapore
Mines to improves the security
 Millennium Steel, Thailand
of raw materials and reducing of
the
transportation
cost.
 Anglo Dutch steel producer
(backward integration)
Corus
 Steel-cum-mining, Orissa
 Greenfield integrated steel plant
Major Mergers
in
the
Bastar
region,
 Tata Metaliks Limited (TML)
Chhattisgarh
 Five-percent interest in the
and Tata Metaliks Kubota Pipes
Carborough
Downs
coal
project, Australia
Limited (TMKPL)
 Corus was a formed by a
merger between British Steel
and Koninklijke Hoogovens
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Diversification Strategy involves Plant modernization projects, Packaging projects, Mining
coal, Greenfield projects, Energy and Power projects and Consumer Goods.
External Audit
To minimize the effect of possible threats and to maximize the advantages form the external
environment, organizations should counter offensively or defensively. The purpose of external
audit is to identify the major external factors that can response to actions effectively. Those
forces are:
1. Economic
2. Social, Cultural Demographic & Environmental
3. Political, Governmental & Legal
4. Technological
5. Competitive
Internal Audit
The internal audit works closely with the external audit. The internal audit provides objective and
independent statements to the Executive and Audit Committee and to the Board of the TSE
Group which provides a disciplined, systematic and effective approach in improving and
evaluating the risk management, governance procedures, and the control of all the functional
areas. The internal audit involves in many categories to analyse the data and the company’s
details. Those categories are: marketing, organizational management, accounting and finance,
research and development, production, and MIS operations. To determine the strengths and
weaknesses of their organization, managers and employees are involved in assisting in collecting
the data.
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Learning Outcome 4:
4.1
Roles and responsibilities of personnel who are charged with strategy
Functional Area
Corporate

Financial management

Expertise in strategic
regulation,
and
management
of
companies

Encouraging
and
coordinating business
components effectively
Information Management

Decision
making
process used in a
comprehensive way
Research and Development

Ability in elementary
research
Product Design

Design competence
Marketing

Brand
management
and promotion

Promotion
and
reputation for the
quality of the goods

Understanding and the
responsibilities
regarding the market
trends

Executing the
effectively
executing it.

Efficiency and speed
of implementation
Sales and Execution
4.2
Roles & Responsibilities
sales
and
Estimated resource requirements for implementing a new strategy for a given
organization.
To evaluate and understand the resources of Tata Steel, the company should decide, what are
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their specific goods, where they will place them, what product provides what services. Tata Steel
is one of the best service-provider company, and that can only happens when the company
prioritize its human resources. The quality of the service and large number of man-power can
fulfil their customers. In the given state of dealings, Tata Steel is economical in their resource
designing and evaluating the resources totally to give the best service. Therefore, the company
expands its large quantity by instructing, educating and developing their employees’ talent to
produce effective service quality within the operational sector. By validating the durability and
safety of the goods, quality maintenance, and timely delivering the products to its end-users, the
company still enjoys the edge in the market.
4.3
Evaluate the contribution of SMART targets to the achievement of strategy
implementation in a given organization.
Tata Steel’s method for cost-reduction is totally on the strategic procurement, dependent upon
their annual purchase and value of presentation.
CONCLUSION
We can conclude here after reviewing the company’s background, their market competencies that
Tata Steel Industry plays a vital role and is one of the biggest and strongest player in steel
producing industry. Tata steel puts its very effort in making the market more dynamic. The
company sets its goal to become world’s largest steel producing company by following every
aspects of SWOT, PESTLE and Porters’ factors in its private division. Business strategic is
important to define the growth of business. There are many important factors that impact to the
business strategy such as organization structure, leadership style, and human resource. Besides
we also apply effective tool such as SWOT analysis, PESTLE analysis, and Porter’s five force
model. These factor will contribute for the success of business.
0
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