Strategic Management Accounting

This document analyzes the business strategy of Tata Steel Europe using theoretical models such as the Ansoff Matrix. It also evaluates the corporate social activities and business operations of the company.

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Strategic management accounting
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Table of Contents
Introduction................................................................................................................................2
Answer (A).................................................................................................................................2
Answer (B).................................................................................................................................5
Answer (c)..................................................................................................................................7
Answer (d)................................................................................................................................10
Conclusion................................................................................................................................13
Reference..................................................................................................................................14

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Introduction
Tata Steel Europe that is the leading producer of steel from Europe supplies the high
quality strip steel products to the demanding market including automotive, construction,
engineering and packaging. It is one of the most diversified global steel products with its
operation in 26 nations and having its commercial presence in more than 21000 employees
and 50 nations. Main purpose of the task is to analyse the business strategy of the entity
through theoretical model and analysing how key factors incorporated in the business of Tata
Steel Europe have impact on the business strategy of the entity. Further, the report will
critically evaluate the corporate social activities and business operations of the company. The
report will further state the usage of balanced scorecard for measuring its performance and
delivering its commitments towards corporate responsibility (Tatasteeleurope.com, 2019).
Answer (A)
Analysing the current business strategy of the business through theoretical model
One theoretical model used for analysing the business strategy of Tata Steel Europe is
Ansoff Matrix. Igor Ansoff who is best known as father of the strategic management
developed the strategy. The Ansoff market mix or product mix is the tool used for assisting
the business to decide the market and product growth strategy. Ansoff strategy recommends
that the attempt of the business for growing the dependency on whether the company markets
existing or new products in existing or new market (Dawes, 2018). Traditional 4 box grid or
matrix of Ansoff model includes market development, diversification, market penetration and
product development. However, the revised Ansoff matrix includes 3 x 3 or total 9 matrixes
or grid box that includes market development, market expansion, market penetration, partial
diversification, limited diversification, product expansion, diversification, partial

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diversification and product development. Ansoff matrix is used by the marketers who have
the growth objectives as their main objective. It further offers the strategic choices for
achieving different objectives. 4 major categories for the purpose of selection are there those
includes – market penetration, market development, product development and business
development or diversification (Schawel & Billing, 2018).
Market penetration – existing products, existing market
Here the existing products are marketed to the existing customers. This means
increasing the revenue through promoting the existing product or repositioning the same.
However, the product is not altered. Main objectives of this strategy are –
 Increasing or maintaining the market share of the products. It can be achieved through
combining the competitive strategies for pricing, sales promotion, advertising, and
dedicating more resources to the personal selling (Yin, 2016).

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 Secure dominance for the growth markets
 Restructure the mature market through driving out the competitors. It will require
much more promotional campaign aggressively and shall be supported by the pricing
strategy designed to make the market as unattractive for the competitors (Gurcaylilar-
Yenidogan & Aksoy, 2018).
For Tata Steel Europe Ferro alloys and mineral division of Tata Steel Europe will be
considered for market penetration. Production of this division amounted to 1,270 kilo tonnes
for the year ended 2018 and sales were amounted to 1,241 kilo tonnes. Reason behind
increase in the demand of stainless steel was increase in the infrastructural investment all
over Asia. Further, exports of chrome alloy including the charge chrome from the Tata Steel
KZN touched the highest global market share (Tatasteeleurope.com, 2019). Higher revenues
at the Ferro alloys and mineral division from the Ferro chrome and Ferro manganese along
with Wires and Tubes division also contributed to the increase. EBITDA from the Indian
operation amounted to Rs 15,800 crore that was 32% higher as compared to previous year.
The increase was due to improvement in the steel margin that is attributable to higher
realisation and volumes. Hence, through aggressive promotional campaign the sales of this
product can be increased (Tatasteeleurope.com, 2019).
Market development – existing product, new product
Under this, the existing products are ranged in the new market. It means the product is
same but the same product is marketed to the new customers. Exporting of the product or
marketing the same in new region are included in the market development strategy. Market
development is a name provided for growth strategy where business sells the existing
products into the new markets (Rezaei, Khavarian & Ghafurzadeh, 2016).

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For Tata steel Europe, steel division of the company shall be considered for market
development. Production of the steel division for the year ended 2018 was amounted to
12,237 thousand tonnes and sales for the same period amounted to 12,151 thousand tonnes.
Though the sales were lower than production, sales for the year 2018 increased to 12,151
thousand tonnes as compared to 10.973 thousand tonnes for the year 2017. Hence, marketing
this product to the new region will develop its market (Tatasteeleurope.com, 2019).
Product development – existing market, new product
Under this strategy, new products are introduced in the market to the existing
customers. Here, the entity develops new product that offers new product to replace the
existing product and are marketed to the existing customers. The company focussed into
commercialisation of new product like high-utensil HR grades for the purpose of structural
uses and revenue generated from new products amounted to Rs. 1,987 crores
(Tatasteeleurope.com, 2019).
Business diversification – new market, new product
Here completely new products are launched in completely new market. There are 2
types of diversification, namely – unrelated diversification that is the company enters into
new industry or market and related diversification that is the company remains in the industry
or market. No new product recently launched by the company for new market (Bamford et
al., 2018).
Answer (B)
Business strategies of the entity is focussed for 5 priority areas as follows –
 Customer focus – marketing and sales approach of the company is focussed into most
demanding market in the world that includes infrastructure, packaging, engineering

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and automotive sector. Hence, the company is investing into the projects for
improving the product mix and transforming the internal supply chain for enhancing
level of customer service (Özcan, Mondragon & Harindranath, 2018). Further, the
team closely works with the customers to gain the knowledge regarding their needs
that dictate the delivery activities, supply chains and production.
 Innovation – the company is pursuing the strategy for market differentiation that
involves maximisation of proportion for differentiated service and products in sales
those are not offered by anyone else. The company conducts the research programme
with the objective of developing the cutting edge manufacturing (Price, 2017).
 Operational excellence – the company is investing on continuous basis for upgrading
the distribution and manufacturing facilities for improving the cost and performance
competitiveness. Further, they aim for establishing best practices in the production
plants, delivery activities and management of supply chain for optimising the services
to the customers.
 People – safety to the employees is the 1st priority and the entity is committed to
people who are instrumental to the success of the employees. Further, the entity
engages its employees and develops the capability through providing training (Mithas,
S., & Arora, 2015).
 Responsible behaviour - the entity responsibly acts towards environment of all the
activities and focussed on the usage of sustainable raw materials, energy and water
conversation, emission reduction, land reclamation and waste utilisation (Hodgson &
Brooks, 2018).
Considering the above strategies of the company it can be stated that the market
penetration strategy will be appropriate for the business of the entity. The reason behind that
is the under this strategy the specific product operates under the high growth industries like

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Tata Steel Europe that maintains high share in the market. Further, it includes both cash users
as well as cash generators (Algehaili et al., 2018). These are considered as the primary users
for investing as sales of these products are likely to become high and likely to generate the
positive cash flows. It is identified that the Ferro alloys and mineral division of Tata Steel
Europe are considered for market penetration as production of this division amounted is
significantly high as compared to other division of the entity. High demand of this sector
generated due to increase in the infrastructural investment all over Asia (Sharma, 2017).
Further, higher revenues at the Ferro alloys and mineral division from the Ferro chrome and
Ferro manganese along with Wires and Tubes division also contributed to the increase. The
increase was due to improvement in the steel margin that is attributable to higher realisation
and volumes. Hence, the company shall concentrate more on its Ferro alloys and mineral
division to sustain its growth rate for the long term period (Tatasteeleurope.com, 2019).
Answer (c)
Corporate social activities and business operations of Tata Steel Europe
Corporate social responsibilities (CSR) are the business approach that seeks
sustainable development through delivering social, environment and economic benefits to all
the stakeholders. Concept of CSR differs for different entities and different nations. Further,
the CSR concept is abroad concept that focuses on various issues related to corporate
governance, human rights, environment impacts, safety and health, contribution to the
economic development and working conditions of the employees. Irrespective of whatever is
the definition, the objective of CSR is driving changes towards sustainability (Crowther &
Seifi, 2018). Different theoretical frameworks used for analysing the CSR of any company
are Milton Friedman – the profit maximisation view, Charles handy – the stakeholder view
and Davies and Pitt Watson – The new Capitalists view. Among this entire model, Charles

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Handy - the stakeholder view model will be used for analysing the corporate social activities
and business operation of Tata Steel Europe.
Charles accepts as well as argues that ‘creating of value where nothing existed’. In
accordance with his view the 1st and foremost requirement of any organisation is meeting the
expectations of stakeholders. Main purpose of the business is not making profit, it is making
profit which in turn will do something better that will become the real justification for the
business (Andriof & Waddock, 2017). Consistent with the approaches of stakeholders, the
firms are not accountable only to the shareholders but they are also obliged to consider the
contrasting interests of other stakeholders those may impact or may be impacted by the
achievement of the organisational objectives. This theory is used for analysing the group to
whom the organisation shall be responsible (Wang et al., 2016). The organisations shall be
operated for the benefit of all the shareholders who have stake in the organisation. Therefore,
as the shareholders invest the money into the entity, in the same way customers invest trust,
employees invest intellectual capital and times and communities offer infrastructure and the
education for the future employees (Epstein, 2018).
One of the most crucial choices that is made by any entity is to utilize scarce
resources and balancing the requirement of stakeholders through building the sustainable
development objectives into all aspects of business activities (Andriof et al., 2017) Reviewing
the sustainability overview of the entity it is identified that the steel is only material that is
truly closed to the recycling loop as steel is not consumed and it is used on cyclical basis
without tampering its strength or quality (Tatasteeleurope.com, 2019). As one of the leading
steel producers in the world, sustainability is the main objective of the entity and they are
dedicated towards managing the operations and continuous improvement responsibly (Jones,
Wicks & Freeman, 2017). Further, the entity is proud member of ULCOS (Ultra-Low CO2
Steelmaking) that is a pioneering partnership for 48 European organisations those were

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committed towards reduction of CO2 emissions of the steel production by 50% by the year
2050. Further, the entity is committed towards designing of the more sustainable products
that contributes to the solutions; those are lighter, use lower level of resources for the purpose
of production and are last longer (Andriof & Waddock, 2017). Tata steel further goes to
designing of most sustainable transport infrastructures and buildings in the world and
supports performance of most efficient vehicles in the market. Moreover, the company
operates in such a way that is safe for the people and that is respectful to environment. The
company behaves responsibly and with due care for the communities impacted and
surrounded by its operations (Tatasteeleurope.com, 2019).
Further, the performance associated with different sustainability aspects are reviewed
at corporate levels as well as board levels. Further, at the corporate level different committees
analyses sustainability as well as the initiatives of governance (Tatasteeleurope.com, 2019).
These initiatives include Apex Environment Committee, Apex Safety Committee, Apex CSR
Committee, Apex HRD Committee, Quality and Production Meeting and Apex R&D
Committee. These committees are headed by managing director and CEO or CFO and
executive director. During the FY 2017-18 the company strengthened governance structure to
address social, environmental and people associated to the material issues and mitigating the
associated risks (Miles, 2017). Further, the new Safety, Health and sustainability division
created and led by the dedicated VP for safety, health and sustainability is focussed on review
and action planning. A team including 80 sustainability champions developed for creating the
capabilities for the integrated approach and for driving the sustainability issues all over the
organization (Tatasteeleurope.com, 2019). Apart from that, life cycle assessment (LCA) team
is responsible to conduct the LCA studies for products and processes of the entity were
integrated with corporate sustainability group. For keeping them updated with changing
global environment, the emerging shareholders requirements and the risks and opportunities

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associated with that the entity undertaken extensive materiality assessment and stakeholder
engagement (Andriof et al., 2017). Hence, it can be stated that the business operations of Tata
Steel Europe has delivered the corporate responsibility commitments towards society
(Tatasteeleurope.com, 2019).
Answer (d)
Balance scorecard (BCSs)
Balance scorecard is the strategic management and planning system that is used by
the organizations for –
 Communicating what the entity is trying to accomplish
 Prioritize the products, projects and services
 Aligning day to day work that is done by everyone aligned with the strategy
 Monitoring and measuring the progress towards the strategic targets (Tan, Zhang &
Khodaverdi, 2017).
The system is used to connect the dots among the big picture strategies including the
mission that is the purpose, vision that is the objectives, core values that is the thing in which
they believe in, areas of strategic focus that is the results, themes or goals and more
operational objectives including continuous improvement for activities and measures those
are used to track the strategic performances, and initiatives (Kalender & Vayvay, 2016).
Strategic objectives are used for continuous improvement activities those are to be
implemented for the purpose of success, strategy elements of high level provides the high
level contexts, measures are used for tracking the organisational performances, targets
represents desired level of the performance for each of the measures and strategic initiatives
are projected for reaching the targets. BCSs are used in worldwide for the industry and

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business, government and non-profit organizations (Fooladvand, Yarmohammadian &
Shahtalebi, 2015). More than 50% of the major entities from Europe use BSC for achieving
their targets. BSC is focussed on 4 strategies as follows –
 Financials – it determines the revenue mix, improves the operational efficiencies and
improves the financial health of the company
 Business processes – it determines that the company shall develop the new products,
understand the customer segments, reduce the cycle time, shift to the appropriate
channels and cross-sell product lines (Salmon et al., 2018).
 Customers – this strategy is focussed into providing the service excellence to the
customers and becoming the trusted business partner for them
 Learning and growth – this strategy is focussed into hiring the key technical talent,
implementing the cross-training, delivering access to the transaction information,
increasing the employee’s productivity along with aligning the personal goals (Tizroo
et al., 2017).
Looking into the BSC strategies of Tata Steel Europe it can be identified that it
implemented the strategies as follows –
 Financial – turnover of the company for the year ended 2018 amounted to $ 13,21,558
as compared to $ 11,22,994 for the previous year. Accordingly the gross profit has
been increased to $ 723,589 in 2018 as compared to $ 661,332 for the previous year.
Further, the net profit increased to $ 134,343 in 2018 as compared to loss of $ 41,686
for the previous year. Hence the entity has improved in its financial aspects as
compared to the previous year (Tatasteeleurope.com, 2019).
 Customers – the company has diversified base for the customers. Major customers of
the company belong from the construction, automotive, consumer goods and

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engineering industries. Further, the company is increasing its marketing efforts in
various industries including ship building, railways and defence
(Tatasteeleurope.com, 2019)
 Internal business processes – some of the major themes used by the entity as
improvement processes conducted by the entity includes value-in-use, throughput,
opportunistic plays, energy efficiencies, supply chain and logistics. The company
adopts the national voluntary guidelines for enforcing the transparency, care for
community and ethics (Tatasteeleurope.com, 2019).
 Growth and learning – presence of 4 research centres support the cutting edge in
research and development for steel. Tata steel Europe processes the improvement
team to deploy the continuous deployment procedures (Tatasteeleurope.com, 2019).
Conclusion
From the above discussion it can be concluded that the best suited theoretical model
for the company is market penetration as it generates significantly high level of revenues
from Ferro alloys and mineral division and through aggressive promotional campaign the
sales of this division can be increased. Further, the company is committed towards designing
more sustainable products that contributes to the solutions those are last longer, lighter, and
uses lower amount of resources for producing. Further, it seeks to operate in such way that is
safe for its employees and is respectful towards the environment and communities impacted
and surrounding by the operations. Using the stakeholder theory it can be stated that the
business operations of Tata Steel Europe has delivered the corporate responsibility
commitments towards society. Moreover, the balance scorecard can be used by the company
to formulate its strategies and improving the performances.

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