Comprehensive Strategic Analysis of Tata Steel UK Operations

This report provides a comprehensive strategic analysis of Tata Steel UK. It begins with an executive summary that highlights the importance of strategy in a competitive market. The report then delves into the external environment using PESTLE analysis, examining political, economic, social, technological, environmental, and legal factors impacting Tata Steel's operations. Subsequently, it analyzes the internal environment employing SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats. The analysis also evaluates Tata Steel's approach to innovation and provides detailed recommendations, such as focusing on research and development, technological advancements, and stakeholder engagement to improve competitive advantage and meet stakeholder needs. The report concludes with a summary of implications for stakeholders, emphasizing the importance of strategic planning for long-term success in the steel industry.

Strategy
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EXECUTIVE SUMMARY
Strategy is linked with the overall plan along with the actions which supports organization to
operate efficiently in the market. Further, Tata steel of UK carries out operations in the market
where competition level is quite high and in turn large number of hurdles are present which
prevents company from accomplishing desired goals. Therefore, it has become important for
business for operate efficiently in the market. Further, external analysis has shown that various
challenges have to be faced by business but its overall strength allows to deal with the range of
issues. Moreover, with the presence of strong financial base company is performing efficiently in
the market. Apart from this, some recommendations have been provided to the business such as
focusing on research and development activities along with the technological advancement so that
more superior quality products can be delivered to the target market. Along with this, it can support
business in gaining competitive advantage where large number of hurdles can be faced easily.
Moreover, considering stakeholders in development of strategy can be beneficial for organization as
firm can easily meet with their needs in every possible manner. Therefore, in this way business can
efficiently perform in the market where overall operations are being carried out.
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Table of Contents
EXECUTIVE SUMMARY..................................................................................................................2
INTRODUCTION ...............................................................................................................................5
TASK 1.................................................................................................................................................5
Analysis of the Tata Steel UK external environment and impacts its choice of strategic position 5
2. Analysis of the internal environment of the firm and its strategic position.................................7
3. Evaluation of the outcomes that shows Tate steel addresses innovation strategy.......................8
RECOMMENDATIONS......................................................................................................................9
SUMMARY ON THE IMPLICATIONS FOR STAKEHOLDERS BASED ON ANALYSIS.....10
CONCLUSION..................................................................................................................................12
REFERENCES...................................................................................................................................13
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INTRODUCTION
Strategy is the direction to run business in the long run to fulfil the needs of stakeholders.
This is planned by company to achieve the goals under dynamic environment of market (Hill,
Jones, and Schilling, 2014). It also helps to indicate the available resources which are the
determined actions to accomplish one or more goals of organisation. It is a high level thinking
process which is planned by the upper level of management. In strategy, organisation can conduct
various activities such as technical skills and recruitment and reward system in order to make
effective environment at the work place. A method has been choosen to bring about desired future
changes and also to solve the problem in the current situation (Ward and Peppard, 2016).
Organisation involves activities such as strategic planning and strategic thinking for having
innovation in the existing and new products.
As per the given scenario, Tata steel is taken into consideration that identifies and
appreciates the challenges faced by company. Tools and framework will be applied to determine the
strategic level in the company. After analysing, Tata steel can make a clear and innovative strategy
that would explain different challenges that firms face in the competitive environment.
TASK 1
Analysis of the Tata Steel UK external environment and impacts its choice of strategic position
Pestle model is used to analyse the external macro environment in which Tata steel operates
there business activity. It is an marketing tool which monitors the various factors and their impact of
organization. These factors are beyond to control or influence the business function (Slack, 2015).
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Illustration 1: PESTEL Analysis
(Source:- Coombs, 2015)
Political: Political aspects includes Taxation policy in which the government impose various tax on
import and export which can helps the Tata steel growth (Rothaermel, 2015). Another political
aspects is international trade regulations by which the government UK decides various rules and
regarding the international trade done by Tata steel Europe. Under this policy, the special incentives
are designed by the UK government. Such incentives cut in duty, Zero duty on imports, provision of
the land and other infrastructure facilities are provided for steel group. Organization directly affect
by political factors. Various legislations directly or indirectly impact on business operation and its
practices. It is very important that organization would be able to react and respond on such laws and
regulations (Bettis and et.al, 2016).
Economic: Economical factor impact on profitability of the company. There are so many factors
like interest rates, inflation, income level of consumers etc. affect the operations of business. Tata
steel Europe Corus group PLC has the largest producer of steel fifth largest Steel making company
worldwide. The economic stability and growth of this region has direct impact on the profit of Tata
steel group UK (Bettis and et.al, 2014). Economic stability of UK increase the living standard and
high employee rates leading to gain in disposable income of consumer. The steel market is
increased the sales in order to gain the number of spending individuals which is rise from last
decade. There are micro and macro economic gactors which affect business; macro elements
involves taxation policy of government, expenditures etc and micro factors involve buying power of
customers. Both these factors need to focus by an organization to get success (Hair and et.al, 2012).
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Social: It is also known as Socio-culture factor. This involves culture of society, attitude os
customers towards organization (Vogel and Güttel, 2013). It help to understand the needs of market
so that company can design its produict as per the requirement. Demographic factor such as age,
sex, gender influence a business offering and the survival of the business due to reduction in sales.
Tata steel analyse cultural trends in order to ensure the company maximises its revenue. This is
essential aspects to analyse the industry and impact of the particular on the society. Steel industry
encourage to the permanent employee in order to understand the beliefs, moral value of the country
(Boyd and et.al, 2012).
Technological: Tata steel is upgrading the techniques or machinery in the production processes
which encourage the trading of the Steel. Tata introduces online trading or E-portal of the steel.
With the help of this technology Steel group is the biggest market for the purchasing and selling of
the steel in the world. Tata steel research and produce ultra low carbon steel which reduce the
immersion of carbon into the environment (Yorio, Willmer and Moore, 2015).
Environment : This means how the company protect the environment from pollution and other
business activity. Tata steel design a programme in which company is able to reduce the Carbon
immersion by 20%. DHAMRA port is ventured with Tata steel which protect the Olive Ridley Sea
Turtles. This project support and saving the sea water crocodile as well as contributing to save the
wildlife in UK (Mahoney and Qian, 2013).
Legal: This provides a legislative framework in which company is being able to provide safety to
their employee at the work place of Tata Steel. The Steel group of UK establish law for the
employee safety and health which increase the efficiency and motivation of employee. Special
health incentives are introduced by steel industry in order to enhance the working of the employee.
This also increase the firms operations, its costs and demand of the steel on online portal.
Porter's five forces analysis will help to identify opportunities and threats available in new
marketplace. Major factors included in Tata steels are as follows-
Bargaining power of buyers:- Bargaining power of buyers is mixed as steel consumption
sector like auto mobiles , shipping and power generation gets favourable deal. But small scale
retailr do not enjoy benefits of getting resonable deal so bargaining power of buyers is mix.
Bargaining power of suppliers:- Bargaining power of suppliers is low as they have their own
manufacturing plants and mines which reduces bargaining power of buyers. The steel
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manufacturing plant of company is implanted with capacity of 18 mtpa.
Threat of new entrants:- major international steel manufacturing companies are expanding
their business operations in Europe and some of them include POSOCO and Mittal steel. Threat of
new entrant is high as all the companies are entering by developing a effective marketing strategy.
Rivalry among existing players:- rivalry among existing players is high as steel industry is
getting global in its approach. Market share of existing companies is high and all are trying for
expanding their business.
Availability of substitutes:- Availability of substitutes is high as there are already major
players working in steel industry in Europe. Steel is getting replaced by RCC pipes and PVC pipes
which creates challenge for the company.
Micro analysis of company's internal factors:- company has capability to manufacture steel
with capacity of 18 million per annum. It is one of the largest steel manufacturing company of the
world with having its own manufacturing plants. Employees of the company are selected by using a
tough recruitment and selection process which gives the firm a pool of talented work force,
company uses new technology in its manufacturing plants which makes its operational process
easier and productive. Employee welfare program of the company works to satisfy basic needs of
employees and motivate them by giving performance based compensation.
2. Analysis of the internal environment of the firm and its strategic position
Swot analysis is used by the Tata steel for evaluating the Micro environment in which the
company doing the business for achieving the objective. It is also marketing tool which help to
make strategies of business to get success (Keupp, Palmié and Gassmann, 2012). Through this
process company will be able to identify the strength and opportunities and also weakness and
threads so that it can formulate such strategies which can be beneficial for the organization. Tata
steel production plant of blast furnace plant, electric arc of furnace in England analysing various
opportunity, threats, weaknesses, strengths to achieve the competitive advantage in market.
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Illustration 2: SWOT ANALYSIS
(Source: Bettis and et.al., 2014)
Strengths: It determines the positive points of the business which can give benefit to the
organization. It is very necessary to identify the plus points of company it helps to formulate such
plans where these strengths can positively give good results to business (Fisher III and Oberholzer-
Gee, 2013). Tata steel in UK has its own mine which supply raw material mainly iron ore and
makes available sufficient amount of raw material for production purpose. This company also
establish R and D department which carried out experiments in the area of development of product,
steel making procedures, blast and furnace area.
Weaknesses: It refers with the negative points of company. It is very important to analysis the
weakness so that company can improve such points and can make its operations effective and
worthwhile (Coombs, 2015). Steel company is confronting that they are inherent in the necessary
quality of raw materials. The content of ash is relatively high which affect the production of Iron
and leads the import of Steel in UK. The quality of non coking coal and coking coal is inferior so
that rise the production cost of Steel plant.
Opportunities: Steel company tap opportunities to enhance steel application in the area of Wales
and Netherlands, Canada, Scotland. The opportunities also promote the consumption of raw
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material in this area. Tata steel also make strategy to dominate in the European market by the
production of furnace and core iron in the UK plant. E- marketing in UK plant also enhance the
selling of steel product which gain the market share of the Company. Boom in the sales of steel
product promote the growth of the plant and increase the worldwide image to stakeholder (Mahoney
and Qian, 2013). To enter into new market it is necessary that company should do a proper analysis
of available options to establish itself in new market. Company can use acquisition and merge
strategy to expand its market in Europe. Tata steel has different options for providing wide range of
options in steel construction materials like TMT bars, MS angles and channels etc. which makes
low product differentiation in the UK market. Tata steel has a strong market in Wales and
Netherlands for blast furnace. Tata steel audit department continuously supervise the internal
control system which makes company update about the future Risks. This is highly efficient method
which a company used to identify opportunities in order to improve the growth prospects (Priem, Li
and Carr, 2012). The iron ore manufacturing and steel distribution strategy of the company is
adopted by using advanced technology which differentiate the company from its competitors and
provides option for the company to offer wide range of superior quality products to its consumers.
Company can appoint a consultant to take advice on formulating its marketing strategies to expand
its business in Europe.
Threats: It focuses on such factors which can harm to the business environment. Theses threads
creates trouble in the business environment. Nowadays global warming is major issues in world
which increase the restriction of the business practices (Keupp, Palmié and Gassmann, 2012). The
company is facing high cost due to the ash content is high in coal which affect the production of the
Steel group UK. The quality also reduce the growth and efficiency of the Company. In steel, the
company is also facing the threats in Aluminium but at the same moment the cost of aluminium
extraction cost is high. Steel pipes have been replaced by the company with new product of PVC
and RCC pipes in many application increase the loss of revenue in UK steel. There are major threats
for Tata steel as steel industry is facing challenge of retaining employees. The UK company has to
make provision for production of steel as the resources for raw material are in a state of depletion
and non renewable. The low cost of labour productivity and cheap labour tends is being expensive
in the process which affect the overall efficiency of the Steel plant of UK (Cragg, Mills and
Suraweera, 2013). It is getting difficult for steel industry to retain its competent and talented
employees as employee turnover rate is high in steel industry. Company should develop a effective
policy for working towards betterment of employees. It will help the firm to retain its existing
employees and hiring new employees for its future operations. Company is also facing challenges in
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manufacturing and mining technology in relation to safeguarding the environment and conserving
natural resources. Natural resources are depleting at a faster rate and as the steel industry is totally
dependent on natural resources for its operational activities it is a big threat for Tata steel to work
for conserving resources available to them. One of the major challenge for Tata steel is to reduce its
carbon emission as government is making provisions for industries to reduce their carbon emission.
To achieve this objective company must use new innovations and technology for its steel
manufacturing plant. Existence of competitors make it difficult and challenging for Tata steels to
expand its market in new area.
Competency analysis of Tata steel:- competency analysis is defined as a process of analysing
competencies of a given company. It is done for finding out capabilities of the company. It is a
powerful tool which helps the company in analysing its capabilities and resources which will help
the company in offering superior quality products and services to its consumers. Company is a
growing steel manufacturing company in the world. It has the largest steel producing companies in
the world with an annual capacity of 26 million tonnes. It comprises of 100 operating companies
which works for providing quality services to its consumers. It has strength of 40000 employees
who work with an objective to provide their best potential for growth of the company. In Europe the
company has steel production capacity of 18 million tonnes per annum and has its manufacturing
operations in UK, Germany and Netherlands. It shows that company has potential to expand its
business on a large scale in European market.
As per the analysis of the threats and opportunities in the UK market, the company can
compete to its competitor. This will define new trends available in the market and then implement
the strategy to overcome the factors (Yorio, Willmer and Moore, 2015). By using SWOT, it is easy
to implement the standardised machinery to enhance production capacity of Tata steel. It also adds
value in steel construction materials like TMT bars, MS angles and channels etc. which makes low
product differentiation in the UK market. Company can establish and integrate operations along
with strong marketing that results intense competition in the UK industry.
3. Evaluation of the outcomes that shows Tate steel addresses innovation strategy
By using Pestle and SWOT analysis both techniques, the company presents the issues and
challenges which are confronted the Tata steel. Tata steel maintain the position on worldwide by
addressing the various innovative strategy (Vogel and Güttel, 2013). Through Collaboration, Tata
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steel gives open approach to world-class research and development department so they launch new
product in the market. Along with this, testing capability benefits Tata leading product and allows to
tap the stakeholders in UK trading market. Tata steel has created Road map which identify the
projects aimed and increasing high quality raw material which reduce energy use and emission of
carbon into the environment. Coal leaching technology had demonstrated successful for producing
8% ash clean coal from washing tailings. Tata steel Europe is also working with other steel makers
in Europe on the research Work of Ultra low Carbon dioxide steel makings which aims to reduce
the Carbon pollution per tone of steal produced by company (Bettis and et.al, 2014).. Through this,
the company were launched new products in the UK financial 2012-2013. Tata steel R and D
department work with CSRIL-NML to develop a low cost, online and fast method for electronically
sensing of aluminium in iron Core. This innovation enables to plan effectively and reduce the
impurity which decrease the cost of the electric furnace and blast furnace plant. Tata steel align
footprint as per the market conditions so company improve performance and cost competitiveness
in the value market. The company also develop the capabilities of the workforce through training
and development program.
Natsteel implement various IT and automated projects in order to enhance productivity
across its operation plant in Australia (Hill, Jones, and Schilling, 2014). The company also make
strategy for raw material which secure the raw material and increase flexibility in price of raw
material. The innovation strategy also access raw material investment data which increase the
stability in investment of the Iron core or aluminium product. In Pestle analysis, the company will
aware incentives Zero duty on imports, provision of the land, cut in duty and other infrastructure
facilities which is provided by UK government. In Canada, Iron and core plant is developing Direct
shipping project which increase the share in the Europe market (Ward and Peppard, 2016).
RECOMMENDATIONS
Tata steel carries out operations on wider basis in the market of UK where large numbers of
complexities are present and due to this basic reason it is necessary for business to employ
advanced tools for enhancing overall performance. Further, internal analysis has shown that
company is highly efficient in carrying out overall operations and this has assisted to deal with the
range of challenges present in the business environment. The main recommendation to business
involves investment in research and development activities. Tata steel operates in the market where
competition level is quite high and there is a need for business to focus on innovative activities.
Therefore, by focusing on research and development activities it is quite possible to deliver unique
products to the target market. Company has strong financial base and due to this basic reason
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investment in research is possible up to the extent. Apart from this, it can provide base to the
organization in product development where new forms of products can be offered easily keeping in
view the requirement of the target market.
Moreover, business can develop its own research and development department whose main
focus will be on introducing new products which are unique in the market. On the other hand,
adoption of advanced technology is also one of the ways through which product development
within Tata steel is possible. No doubt level of advancement is quite high and by adopting the same
organization can improve its performance worldwide and it can lead to favorable results. Adoption
of modern tools can lead to decline in level of cost which business has to indulge in manufacturing
of products. This can support in building better design of the products and in turn product
development can take place at faster pace as compared with key competitors.
Another recommendation to business is to develop flexible practices where organization can
take initiatives in order to develop internal operations which are flexible. Further, one of the main
benefits of this type of practice is that it can assist business in carrying out overall operations in
effective manner. Apart from this, it can encourage company to make modifications in the product
range whenever necessary. In short, customers’ requirement can be easily met if the internal
operations of company are flexible. Apart from this, employees can be easily encouraged to take
part in major affairs of the business and their valuable suggestions can lead to fruitful results.
For development of new strategy support of staff members is necessarily required. Further,
some motivational tools can be employed by Tata steel for enhancing motivation of its workforce.
This can lead to favorable results for business where all the employees can participate in
development of the new strategy. Without proper support of staff members it is not possible for
business to focus on development of new plans. Apart from this, analyzing internal along with
external environment is must as on the basis of same strategy development can take place in lesser
period of time and it can assist in gaining competitive advantage. Tata steel must try to focus on
development of its internal strength where its key strengths can be used for the development of
strategies and this in turn can support to deal with the major barriers such as competition along with
other type of laws etc.
Further, stakeholder analysis can be carried out by Tata steel in the process of strategy
development. Business has to consider all the parties associated with the business and by meeting
with their expectations better strategies can be developed which can enhance profitability level of
the organization. Apart from this some other suggestions involve analyzing the future goals along
with the objectives of the business through which plans can be built. It is well known fact that
strategies are developed by company for accomplishing the desired objectives and due to this reason
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