Tata Steel's Business Model Innovation

This assignment provides an in-depth analysis of Tata Steel's business model innovation, including its corporate governance report and sustainability efforts. The report discusses the company's vision, mission, and values, as well as its sustainability pillars and press releases. It also includes a review of relevant literature on business model innovation, co-opetition, and managing distributed innovation. The assignment requires students to analyze Tata Steel's business model innovation and provide specific details about the company's corporate governance report and sustainability efforts.

GLOBAL CORPORATE
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Portfolio, integrated organisational perspectives and competitiveness.......................................1
Question Two...................................................................................................................................5
Business model innovation and technological innovation through strategic alliances and
M&As..........................................................................................................................................5
Question three..................................................................................................................................7
Corporate governance, CSR, sustainability and leadership........................................................7
Question four.................................................................................................................................10
Personal reflection on learning..................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In the present global environment for business, it has become important for companies to
operate their activities in a more strategic manner. Globalisation not only empowered
organisations to expand their business but it has brought cut throat competition in the market
among firms. In order to sustain business in this kind of environment, it is necessary for firms to
have a global corporate strategy (Amit and Zott, 2012). It is a strategic guide to globalisation that
addresses certain questions like what must be the stretch of market presence in world, how to
construct necessary global existence, etc. Tata Steel is one such company that deals in the
business of steel making from the year 1907. This report highlights the ways in which Tata Steel
is operating its business. It also showcases the environment that is present globally for the steel
making as well as factors that has led business to fail and grow in many areas. The ways in
technological innovations have felicitated companies performance over the years have been
illustrated here.
QUESTION 1
Portfolio, integrated organisational perspectives and competitiveness
Portfolio
TATA Steel Limited is one of the largest steel manufacturers of the world. It was
established in the year 1907 by J.N. TATA in Jamshedpur, Jharkhand, India. It was formerly
known as TISCO (Tata Iron and Steel Company). It comes in the Fortune 500 global company. It
has generated a revenue of 18 billion US $ in 2016 with an operating income of around 1.2
billion US dollars. Company has gone in loss of around 500 million US $ in the financial year of
2016. Its total assets are worth around 25 billion US dollars. Under the roof of this company,
approximately 74000 workers are employed (Sustainability pillars. 2017). Its acquisition is
namely NatSteel (singapore) in 2004; Millenium steel (Thailand) in 2005; Corus (U.K.) in 2006
and two rolling mills in Vietnam in 2007. Its marketing headquarter is in Kolkata, Westbengal.
Its product range includes steel, flat and long products, wires, etc.
History of company
After its establishment in the year 1907, it has operated the largest steel plant in whole
British Empire. It has gone for modernisation and expansion plan in the year 1951. extent of its
business can be understood by the fact that around 60000 people were alone in the region of
1

Jamshedpur. There was an attempt in the year 1971 and 1979 to nationalise this company. Later,
in the year 1990, it has begun its expansion plan with its subsidiary Tata Inc. in New York. In the
year 2005, it has changed its name from TISCO to TATA steel.
Integrated organisation perspective
Integrated organisational perspective is termed as the way company aims to achieve its
goals and objectives through business.
Mission of TATA steel
They aim to stay with the vision of their founder Jamsetji Tata and hence, strives to
strengthen India's industrial base through effective utilisation of resources. They want to achieve
this by using the best technology, high productivity and being consistent with modern
management practices (Vision, Mission & Values. 2017).
Objectives of TATA steel
This company recognises that honesty and integrity are essential ingredients of strong and
stable enterprise as well as profitability is the main spark for economic operations.
Vision of TATA steel
They aspire to be global steel industry benchmark for Value Creation and Corporate
Citizenship.
Competitiveness
In order to understand its competitiveness, there are certain things that are to be
considered which are mentioned as below:
List of Competitors
2

Apart from this worldwide competitors of TATA steel includes:
 ArcelorMittal
 Nippon Steel & Sumitomo Metal Corporation (NSSMC)
 Hebei Iron and Steel Group
 Baosteel
 Wuhan Iron and Steel Group
 Posco
 Jiangsu Shagang
 Hyundai steel
 JFE Steel Corporation
This company has several competencies using which it is able to fight with the
competitors. Some of them are as follows:
 Variety of product range
 Excellent IT systems.
 Competent sales teams having high negotiating skills
 Continuous up-gradation of products through innovation
 An experience of century in steel making
 Integrated buyers and suppliers management
 Lowest cost steel producer in the world
 Excellent research and developmental cell
 Its best competency is its quality products
In order to understand the competitiveness, an analysis of its market is as follows: Threat of new entrants: This is on the lower side as the investment that is required for
entering in this industry is high (Bock, and et. al., 2012). It is estimated that to set up a
steel plant, a company requires an investment of one billion US $. Competitive rivalry: Even this market is big, still the competition that is present in this
industry is high. Its competitors like ArcelorMittal and POSCO are giving a highly
competitive environment. Bargaining power of suppliers: It is on the higher side as TATA steel has its own mines
and other raw materials and hence, it does not have to depend on external suppliers.
3

 Threat of substitute products: It is average as the other material like Aluminium
manufacturing requires higher cost and steel is on the lower side (Gnyawali and Park,
2011). Where the competitor's products are valuable and hence posing a greater threat to
steel making.
 Bargaining power of buyers: It is also average as they are very limited to their
fragmentation. The large consumers have long term procurement with the company.
However, small and retail consumers are scattered.
In order to fight with its competitors, the basic strengths of company are:
 It has acquired big mineral reserves in many parts of the world.
 Capable, reliable and credible top management
 Customised information management system
 Advanced R&D labs
 Strong distribution and retail network
 Strong brand image due to its CSR policies and quality of steel it is making
 Worldwide positioning.
Question Two
Business model innovation and technological innovation through strategic alliances and M&As
It has been one of those steel making companies that has made continuous improvements
in the product ranges and models of business it takes to become successful (Bogers and West,
2012). Innovations has led this company to change its portfolio and the product, services that it
offers to its clients over the century. This has resulted in stronger market base as well as
satisfying the needs of the consumers. Regular innovative strategy has helped company in
reaching to new market places like the steel door segment with the name 'Pravesh' which has
made positive response in between customers. This company has made made changes in the
working mechanism over the years. When the steel making was just a mater of more number of
labourers then it was one of the largest employers in the world and when the industry has gone
for the means of technology the company has adopted all the technological advancements that is
present in the world.
This company has large amount of resources in the present times so as to make higher
profits. For making the innovations process faster it has taken the roads of strategic alliances as
4

well as the concept of merger and acquisition. One of the acquisitions that was made in the year
2007 Of Corus which is itself a pioneer in the innovation process has made company the second
largest steel producers of the world. In the countries of south east Asia it has used many strategic
alliances with the companies that have undertaken the process of innovation. In the views of
market researchers they believe that company is self capable of making innovations as the
resources this company has s large.
One of the basic strong point of the Tata steel is its Research and development cell. It has
fostered the speed of innovations for the company. It has invested a lot in the Research activities
which is the driver of innovation. This company has adopted all the technological advancements
that is present in the industry (Mithas and Arora, 2015). These technological advancements has
speeded up the process of innovation. For this purpose they have shut all the plants that used old
technologies and replaced them with the modern ones. Technological advancements are the
reasons that it is the lowest cost producer of steel I the whole world.
It has changed its business model over the years. In the modern business model there is
essence of technology. Its acquisitions like Corus has made the business model to change
completely as the executives of the two company has made a group and the decision making has
been changed completely. It uses one the best ICT in the modern business so as to make its
management processes more efficient and productive.
Since the base of the company's stakeholder is large and hence company has higher scope
of making changes in the product range as if any threat occurs it has a strong support of them. Its
suppliers and distribution network has large market reach which has helped them in collecting
the informations related to the market demand as well as the future requirement of the company.
There is a mix of resources that this company has and hence they are capable of bringing
the technologies like digital and mobile technologies together so its business can expand in
multi-fold. It has been proven with its previous records that this company has capability of
implementing new technologies in the business process. These technological advancements helps
company in making a global profit by achieving all its set targets, goals and objectives. There are
several companies of the Tata group that have done an excellent business in the field of mobile
communication which has can be easily used by the company to become the best in the
information management system.
5

Its new product that is added in its port-folio 'Pravesh' has a higher demand in the market
and has based on the fact that making oceans red with throat cutting competition can never help
company in its growth and hence the companies should use the strategy of Blue ocean. It focuses
more on making competition irrelevant and highlights principle and tools Tata Steel can utilise to
generate and capture their own blue oceans. Pravesh also accounts for the same as the company
uses for extending to the new market of costumed home products and steel door segments. More
such type of innovations in future has helped company in extending to the new market place and
target the new segments (Srivastava, Mithas and Jha, 2013). More number of products in its
portfolio helps company to increase its financial condition. Which in last few years have came
down due to strategic mismanagement. These loses have increased the need of the company to
make business model innovations on a continuous basis so that they not face any such kinds of
problems in the coming future.
In the early part of the company's history it was mainly focusing on the internal business
with the use of technological advancements it has but after 2000 it has acquired a strategy of
acquisition which has helped company in reaching new global markets.
6
source 1: Innovations at tata steel, 2017

Question three
Corporate governance, CSR, sustainability and leadership
Apart from the activities that are purely related to the profit making. Tata steel is known
to be pioneers in managing the stake holder's theories. Its mission always includes the benefits of
its stakeholders and the society in which it is operating. It as created a global benchmark in the
value creation as well as managing its corporate social responsibilities.
Corporate governance of TATA steel
In the corporate social governance this company has made a name that too in a long run.
With its operation of over century years have showcased that company is focused towards
making the lives of the people in the society excellent.
It has its own corporate governance philosophy which advocates a creation and
enhancement of long term sustainable value for the stakeholders (Chakraborty and Swain,
2011). This is achieved through business process that is ethically driven. Its affairs are managed
in fair and transparent manner. They are determined To evolve and follow not just the mentioned
guidelines for corporate governance but also global best practices. They also understands the
their responsibility to disclose adequate, accurate and timely informations regarding finance and
performance as well as about leadership and governance of the company. Guidelines ensures that
board will have necessary authority and processes to review and evaluate the firm's operations.
These board of directors can make decision independent of the management as it is the core of
the governance and protects long term interest of all our stakeholders as they believe that active,
well functional and independent board members can ensure the best standards of corporate
governance.
Corporate Social Responsibility
Tata steel has made its name for making profits while ensuring the benefits of the society
in which it is operational. From the year of its establishment it has done many works in India that
supports the society. The whole city of Jamshedpur is maintained by the company and it does
every thing that is for the welfare of the people. It has opened many schools and colleges in the
rural belts where there are coal mines so as raise the standards of the quality of education the
society is getting. Apart from this, there are many hospitals that has been run by the company
which offers best and cheapest medical facilities to the society. Where ever the company is
operational it has its own hospital that works for the medication facility of its employees.
7

Through the changing global environment it has learned many years before that there is a
requirement of reducing the pollution level and decreasing the amount of waste that is being
generated in the process of production. Sustainable business approach has supported the initiate
of making society a better place to live (Ramamurti, 2012). The employees of the company is on
the higher side and it follows all the rules and regulations made by the government where it is
operational. Result of this can be seen by the quality of life its employees have been spending. It
is the CSR activities that makes the company brand image better in the market. It can also be
seen in its tags lines that states “Values stronger than steel” and its punch line “ we also make
steel”. Apart from this they have supported many sports activities like Archery, Football etc. by
making the coaching camps.
Sustainability
It has adopted the processes that leads company towards making the sustainable
development. It has survived so many years of up and downs in the steel industry as well as state
of great depression in the world economy. Through the strategies of merger and acquisition it has
expanded in many market and have been able to survive in the competition (Nodoushani and
Nodoushani, 2012). It has decided to buy Corus which has estimated to be an win win deal but
after a few years of operation together it has not been so beneficial and hence there can seen as a
decrease in the overall revenue and the profit margin of the company.
Apart from this its sustainability has four pillars:
8
source 2: tata leading sustainability, 2017

 Innovation: Company has a view of constantly enhancing the efficiencies, improve
quality and thereby achieving better performance benchmarks in all areas of its
operations.
 Sustainable mining: Responsible and sustainable mining is the fundamental to their ethos.
 HR practices: It aims to have boundless growth opportunities with global exposure and
on the job learning experience.
 Health and safety: They aim to ensure the health and safety of their workers at all there
work places. Recently the company has been spending a whole lot on the safety of the
workers.
 Community care: They aim to build and nurture safe and healthy atmosphere for all
stakeholders and dependents.
 Environmental excellence: They are committed to proactively addressing the issue related
to climate change through sustainable use of resources.
Leadership
This company has been known for its excellent leadership producing excellent leaders.
This was the reason of the leadership quality of Ratan Tata that company has expanded it
business at a faster rate in the last few decades b using merger and acquisition strategies ( Press
releases. 2017). Recently the company has announced series of executive appointments as a part
of its strategic business objectives. TV Narendran will be its next managing director of Tata steel
south asia pacific.
9
source 3: safety first at tata steel, 2017

Question four
Personal reflection on learning
During the study of the environment of the steel industry I have learned that the demand
of the steel industry have increased. There are several companies that have come up in the
business of making steel. This has increased the competition to a level that is throat cutting and
the sustainability has been an issue. While I was examining the case of Tata steel I have found
that even after taking many strategic decision this company has made many kinds of loses. It can
be tackled with the series of initiatives like strategic alliance with different partners as well as it
can take use of merger and acquisition to expand its business. But one of the factors that can
support best in this is innovations in terms of technology and business modelling. In steel making
this company has pioneered itself in the corporate leadership. What I feel that using the policies
related to CSR this company has made its brand name that helps in the successful business of the
firm.
CONCLUSION
From the above based report it can be concluded that steel industry is facing higher
competition. Even after this companies related to this industry is making higher profits as the
market for this is ever expanding. Taking the use of innovations related to technology and
business model company can increase its profit margins. It is important for the companies like
Tata steel to maintain its ethics and policies related to corporate governance and CSR activities.
It can achieve the corporate leadership by making the effective strategies for the company's
business. Tata steel has a whole lot of resources as well as large amount of base customers and
stakeholders that helps company in making these changes and can convert its business loses into
profits.
10

REFERENCES
Books and Journals
Amit, R. and Zott, C., 2012. Creating value through business model innovation. MIT Sloan
Management Review. 53(3). p.41.
Bock, A.J. And et. al., 2012. The effects of culture and structure on strategic flexibility during
business model innovation. Journal of Management Studies. 49(2). pp.279-305.
Gnyawali, D.R. and Park, B.J.R., 2011. Co-opetition between giants: Collaboration with
competitors for technological innovation. Research Policy. 40(5). pp.650-663.
Bogers, M. and West, J., 2012. Managing distributed innovation: Strategic utilization of open
and user innovation. Creativity and innovation management. 21(1). pp.61-75.
Mithas, S. and Arora, R., 2015. Lessons from Tata's Corporate Innovation Strategy. IT
Professional. 17(2). pp.2-6.
Srivastava, S.C., Mithas, S. and Jha, B., 2013. What is your global innovation strategy?. IT
Professional. 15(6). pp.2-6.
Chakraborty, M. and Swain, S.C., 2011. A Study of Vendor Management Inventory with
Reference to TATA STEEL. Anvesha. 4(1). p.12.
Ramamurti, R., 2012. Competing with emerging market multinationals. Business Horizons.
55(3). pp.241-249.
Nodoushani, O. and Nodoushani, P.A., 2012, January. Strategy and Structure: The Case of Tata
Group. In Competition Forum (Vol. 10, No. 1, p. 142). American Society for
Competitiveness.
11

Online
Vision, Mission & Values. 2017. [Online]. Available through:
<http://www.tatasteel.com/corporate/our-organisation/vision-mission-values/>.
[Accessed on 2th November 2017].
Sustainability pillars. 2017. [Online]. Available through:
<http://www.tatasteel.com/sustainability/#sustainability-pillars>. [Accessed on 2th
November 2017].
Press releases. 2017. [Online]. Available through:
<http://www.tatasteel.com/media/newsroom/press-releases/india/2013/tata-steel-
announces-new-leadership-structure-and-executive-leadership-appointments/>.
[Accessed on 2th November 2017].
ANNEXURE 4 – CORPORATE GOVERNANCE REPORT. 2017. [Online]. Available through:
<http://www.tatasteel.com/investors/annual-report-2015-16/html/corporate-governance-
report.html>. [Accessed on 2th November 2017].
12