Analyzing Tata Steel's Global Strategy: Business Model and Governance

This report provides an in-depth analysis of Tata Steel's global corporate strategy within the steel manufacturing industry. It examines the company's portfolio and competitive position, its business model for innovation through strategic alliances and M&As, and its corporate governance, leadership, CSR, and sustainability initiatives. The report evaluates the advantages and disadvantages of portfolio and integrated organization perspectives, assesses the impact of strategic alliances and M&As on Tata Steel's growth, and analyzes the integration of digital and mobile technologies. It also includes an assessment of the 'Pravesh' product line and personal reflections on the learnings from the assignment. The analysis considers Tata Steel's vision and mission, focusing on value creation and corporate citizenship in a competitive global market, with emphasis on strategic initiatives to improve quality, meet customer demands, and maintain a competitive edge.

Global Corporate Strategy 1
Global steel manufacturing industry: Tata Steel
Student
Institution
Word Count: 3,150 Words Excluding Executive Summary and Reference List

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Executive Summary
This report will focus on Tata, a Steel manufacturer and the sector of steel manufacturing at
large. The report will be divided into four parts. The first part will analyze Tata Steel’s portfolio
and its competitive position in this sector. Part two will analyze the business model that Tata
uses for innovation through M&A’s and strategic alliances. The third part will analyze corporate
governance, leadership, CSR, and sustainability activities of Tata Steel. The last part will give a
personal reflection on the learnings of this assignment in the context of steel production sector.
Table of Contents

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Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Portfolio, Integrated Organization Perspectives and Competitiveness.......................................................5
Portfolio Organization Perspective..........................................................................................................5
Integrated Organization Perspective.......................................................................................................6
Adopting both Perspectives.....................................................................................................................7
Business Model Innovation and Technologies Innovation through Strategic Alliances, M&As...................7
Strategic Alliances and Merges and Acquisitions.....................................................................................8
Strategic Alliance.................................................................................................................................8
Mergers and Acquisitions....................................................................................................................8
Mix of Resources and Capabilities to bring the ‘digital and Mobile” Technologies Together..................9
Assessment of “Pravesh” to the Product Portfolio................................................................................10
Corporate Governance, CSR, Sustainability and Leadership......................................................................11
Corporate Governance..........................................................................................................................11
Corporate Social Responsibility (CSR)....................................................................................................12
Sustainability and Leadership................................................................................................................13
Personal Reflections on Learning..............................................................................................................14
Global Steel Manufacturing Industry Competition................................................................................14
Role of Strategic Alliances and M&A’s...................................................................................................14
Role of Corporate Leadership................................................................................................................15
Conclusion.................................................................................................................................................16
Reference List............................................................................................................................................17

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Introduction
The true character of a company is tested on its ability to endure the market environment
challenges by turning them into opportunities. One of the most competitive sectors in the world
market is steel manufacturing (Lynch, 2006). The leading players in this industry include Tata
Steel, HBIS Group, ArcelorMittal SA, POSCO, and Nucor Corp just to mention a few. However,
our report will center more on Tata Steel in attempts to achieve the objectives of the study as
clearly stipulated in the executive summary.

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Portfolio, Integrated Organization Perspectives and Competitiveness
As per the annual report, Tata has had a turbulent annual period where in its history; this has
been the first time to encounter closure of critical mines (Singh, 2018, p. 118). In the same
period still, steel imports surged as global steel demand stagnated; and thus exposing the
company’s margins under extreme pressure. In the management of these failures, Tata Steel is
focused to adopt a global corporate strategy that will effectively help in combating them (TATA
STEEL, 2017, p. 5). In this perspective, a good analysis, testing, and review of the portfolio and
the means of integrating its operational perspectives to its competitive strategies will be done at
larger scales. The report will provide an evaluation of the advantages and disadvantages of using
either of these two approaches, and out of this evaluation; the report will come up with a list of
recommendations whether Tata should adopt one or use the two simultaneously.
According to (De Wit & Meyer, 2010, p. 210), the portfolio organization approach is set to
ensure that a company together with its departments utilizes the available scarce resources on
projects that give it optimal value.
Portfolio Organization Perspective
In respect to the 2017-18 Tata Group annual report literature and examples, the portfolio
organization approach features both advantages and drawbacks to Tata Company. As per the
report’s literature, the merits associated with the adoption of a portfolio organization perspective
include high sales, cash flow, and high liquidity portfolio (TATA STEEL, 2017, p. 10). In the
report, turnover is associated with Tata’s more activity and investment in specific geographical
zones and also larger stall prices. Also, total cash flow from company operations have increased
due to the new value added tax by Tata on imports. Last, the liquidity portfolio of Tata is

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satisfactory due to the use of funds in projects that give the company higher returns (TATA Steel
Board's Annual Report, 2017, p. 4). The drawbacks of the portfolio organization approach in the
risks of over-diversification, no downside protection, reduced portfolio growth in the market,
credit risks, and other currency instability out of investing more on a single project; in case it
fails then the future development of the company is at a great risk.
Integrated Organization Perspective
On the other hand, (De Wit & Meyer, 2014, p. 58) explains that “integrated organization
perspective” occurs when the internal and external factors of a company are successfully blend
and mesh together. In Tata Steel, the approach of integrated organization is effectively blend and
has offers the company with a range of benefits. The internal work environment of Tata Steel is
good and built on the ISRS management systems and more efforts to improve and implement it
on a regular basis are there. Also in this report, there have been no occupational accidents
witnessed during the 2017 financial year, and this is due to the adoption of an integrated
organization perspective in its management (Johnson, et al., 2005, p. 44). Other benefits of this
approach to Tata Steel include improved performance, elimination of redundancies, increased
accountability of financial reports and other reporting procedures, increased consistency and
reduced bureaucracy. However, there are certain disadvantages associated with Tata’s adoption
of this method, and these include absenteeism and sicknesses of employees which amount to
2361 hours (TATA STEEL, 2017, p. 15). These illnesses are not related to work, are majorly due
to long-term sick-leave. It is also costly for Tata to integrate the management of its projects as
this requires more funds and time to complete.

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Adopting both Perspectives
YES, it is possible for Tata Group to simultaneously use these two perspectives. This is because
each perspective has its own merits which the company cannot forego. Portfolio organization
approach assists the firm to increase sales, cash flows, credibility, and liquidity portfolio (TATA
Steel Board's Annual Report, 2017, p. 18). On the other hand, an integrated organization
approach helps Tata Steel eliminate redundancies, improve performance, raise accountability and
consistency, and reduce bureaucracy in its operations. Therefore, each of these perspectives suits
to the company goals since the company is focused on increased sales on a wide range of
products as it upholds accountability, performance, consistency, and innovation in its day to day
steel manufacturing.
Business Model Innovation and Technologies Innovation through
Strategic Alliances, M&As
Creativity is the mother of innovation. Tata Company has been so focused on innovation in
attempts to improve the quality and value of its steel products, services and solutions and to meet
customer needs, demands, tastes, and preferences (Osterwalder & Pigeur, 2010, p. 18). The main
products manufactured by Tata Group include Galvanized sheet, alloy steels, construction
systems, and hot rolled and cold rolled steel under different brand names. This comprehensive
portfolio of Tata Steel is improved by the creative pool of talented and skilled workforce, whose
innovations lead to unique brand products. For example, “Innovent” program has helped Tata
Steel to explore new market segments such as the steel doors segment, under the brand name
“Pravesh” (TATA STEEL, 2017, p. 22).

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Strategic Alliances and Merges and Acquisitions
Strategic Alliance
According to (Lynch, 2006, p. 80), a strategic alliance allows two or more companies be able to
share resources in attempts to accomplish a specific and mutually beneficial project. In the
recent past, Tata Steel has deployed intelligent innovations and technologies via the creation of
SA’s. In 2013, the company entered into a strategic alliance with Canada’s Labrador Mines
worth 30 million dollars. Such strategic alliances have enabled Tata Steel to engage in a multi-
part-co-operation agreement in the fields of procurement and other potential off-take
arrangements such as the development of a rail line that passes through Labrador Mines and
connects to Tata Steel’s processing plant (De Wit & Meyer, 2010, p. 66). Also through these
SA’s, Tata has been able to explore efficient means of extracting mineral deposits.
Another strategic alliance of Tata Steel was signed with Volkswagen. Through this combination
of resources, Tata Steel has been able to explore new markets in other countries and exploit them
with the demanded products (Starr, 2011, p. 141). Also, increase in budgets to fund technological
equipment and train employees on how to use technologies has made Tata Steel offer customer-
oriented mobility solutions in this evolving and fast-growing market (Lynch, 2006, p. 100). As a
result, both companies expect to achieve sustainable and viable growth in all world markets, and
this is why Tata is systematically pursuing its regional growth strategy.
Mergers and Acquisitions
According to (Johnson, et al., 2005, p. 102), M&As’ entails the consolidation of companies or
assets of companies through financial transactions. In the recent past, Tata has formed mergers
and acquisitions with various companies. These M&A’s have been established to ensure that
Tata Steel sustains its competitive advantage in the market through innovation of new products
and services that the target market demand (Rothaermel, 2013, p. 99). These M&A’s have been

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helping the company to track the growth strategies and business structures of the other
competing firms (Hudson and Sadler, 2017, p. 250). In 2017, India’s Tata Steel and Germany’s
ThyssenKrupp merged their European steel operations and formed the continent’s 2nd largest
steel manufacturer after ArcelorMittal. Named ThyssenKrupp Tata Steel, has been innovating
new brands at a low cost through the “Innovent” program which has been very effective in its
M&A (Lebedev et al., 2015, p. 660).
Also, Tata acquired Corus in 2017, a company which is four times bigger that its size and UK’s
biggest manufacturer of steel. In the acquisition, Tata Steel has been able to market its innovative
commodities in the United Kingdom market. This has also made it possible for Tata Steel to
enhance its capacity, market strength, and growth in the international market (Johnson, et al.,
2005, p. 99). Through this acquisition, Tata Steel has innovated new products in the wire
business by establishing its wire manufacturing facilities in Thailand and Sri Lanka.
Mix of Resources and Capabilities to bring the ‘digital and Mobile”
Technologies Together
The vision and mission of Tata Steel include:
Vision: “To be the global steel industry benchmark for value creation and corporate citizenship”.
Mission: “To scale the heights of excellence in all it does in an atmosphere free from fear, and
thereby reaffirming its faith in democratic values”.
The management of Tata Steel has been focused to provide the right resources and capabilities
required in bringing digital and mobile techs together. To accomplish the above vision and
mission, Tata has to be financially stable and capable of recruiting the right employees that will
take the company to the next level (TATA STEEL, 2017, p. 3). Given its success in strategic

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alliances and M&A’s with different companies in different global zones, Tata Steel has the right
financial muscles to provide all these resources. The recruitment of right human resources means
that the company is investing more to raise creativity and innovativeness of new technologies of
manufacturing the demanded steel brands to the market (Lebedev et al., 2015, p. 66). Blending
mobile and digital technologies of the manufacture and supply of steel products by Tata Steel is
very possible. And this is justified by the diverse nature of qualified, skilled, competent, and
experienced employees that the company has deployed both domestically and across borders
(TATA Steel Board's Annual Report, 2017, p. 12).
Assessment of “Pravesh” to the Product Portfolio
As per the 2014-15 report, steel doors have been introduced by Tata Steel through the program
of “Innovent” in the brand name “Pravesh”, and have gained a positive appreciation from the
target market. As a manager, there is need to assess “Pravesh” and its suitability to Tata Steel’s
product portfolio (TATA STEEL, 2017, p. 9). To ensure that the new brand is purchased by the
target market appropriately, Tata Steel needs to use the Blue ocean strategy due to its ability to
simultaneously attract large numbers of customers while at the same time increasing the
competition cost. For Tata Steel to go beyond competing, the management needs to seize growth
opportunities and new profits through new product offers such as “Pravesh”. In addition, a
business model innovation such as the BCG matrix will help Tata Steel gain a competitive
advantage over rivals and in value creation by making mutually supportive and simultaneous
innovations on both its company value proposition and that of steel market to its existing
operations model (De Wit & Meyer, 2014, p. 168).

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Corporate Governance, CSR, Sustainability and Leadership
As per Tata’s 2014-15 annual report, the company has been pioneering various CSR activities in
attempts to improve the wellbeing of the community through sporting, health, education, and
infrastructure development activities (Hudson and Sadler, 2017, p. 9).
Corporate Governance
According to (Lynch, 2006, p. 96), corporate governance refers to the creation and enhancement
of sustainable and long-term value to the company’s key stakeholders via ethically steered
processes and practices. At Tata Steel, the CSR affairs of the company are imperatively managed
in a transparent and fair manner. The set corporate governance guidelines of the company are
strictly followed, with an evolvement of the best global CSR practices. The management of Tata
Steel has the inherent responsibility to ensure adequate, complete, accurate, and timely
disclosure of information regarding the budgets set to finance CSR activities, as well as the right
governance and leadership approaches such as the participative leadership and followership
leadership styles (Johnson, et al., 2005, p. 130). In respect to the company’s vision, the manager
have to power to take the right actions that aid in the achievement of the main goals of safety,
environmental protection, well-being of people, and value creation.
In order to make sure that the company’s CSR activities are effectively achieved, the Board can
use the Tata Group Guidelines for Board effectiveness and for the optimal benefit of its
stakeholders. By using these guidelines, the Board has enough authority and power to review
and, assess, and evaluate the operations of the company towards upholding the welfare of its
stakeholders (Johnson, et al., 2005, p. 111). Also, these guidelines help the top leadership of Tata
Steel in making decisions that are independent of the management and whose general interest is
promoting CSR goals for the benefit of stakeholders. Through highest standards of corporate

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governance, Tata Steel’s CSR activities will be easily managed and result to the increase of its
value in a more sustainable and strategic manner (Kuratko, Hornsby, and Hayton, 2015, p. 252).
Corporate Social Responsibility (CSR)
The top management of Tata Steel designed a CSR policy which is used to date. As per the
2014-15 annual report, the CSR activities of the company are aligned with its focus initiatives for
promoting education, livelihood, rural and urban infrastructure development, and health.
Besides, the CSR policy of Tata Steel requires the company to undertake control mechanisms in
the field of disaster relief, environment protection, and sporting activities all with the objective to
raise the quality of society’s life and living standards of the community members (TATA
STEEL, 2017, p. 80). At Tata Steel, the management emphasizes on the sponsorship of quality
education, sustainable livelihoods, and healthcare opportunities in all global areas where it
operates.
Also, Tata Steel empowers the community and society at large through agricultural development,
youth skills development, market linkages, preservation of culture and ethnicity of indigenous
communities, and also the promotion of entrepreneurship and preservation. This clearly shows
that Tata Steel operates under the rules of balancing environmental responsibility, economic
prosperity, and social benefits to the members of the society (Lynch, 2006, p. 56). For example
in India, Tata Steel has partnered with Odisha in attempts to take its stakeholders ahead in its
growth journey. Also, Tata Steel Thailand has been fully involved in “The Children
Sustainability Forum” with a goal to protect the rights of children.
Last, Tata Steel has been in the forefront when it comes to the promotion of tribal culture and
heritage through tribal literature curation, running of tribal language centers, creation of
documentaries for tribal heroes, and in the teaching of tribal music (Lynch, 2006, p. 122).

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Although this is a CSR activity, it negates the overall purpose of Tata Steel and its vision to
creating value of all stakeholders and thus should be revisited.
Sustainability and Leadership
Tata Steel has set in place sustainability policies that aim at the protection of environment,
community, employees, and all its key stakeholders. According to (Johnson, et al., 2005, p. 77),
Tata Steel has a dedicated corporate sustainability leadership team responsible for the
implementation and mainstreaming of CSR activities across its premises and it value creation
chain throughout the world. This team tracks worldwide best practices that are related to
sustainability and also facilitates the incorporation of all stakeholders in the key processes and
decisions made by the company (Du, Bhattacharya, and Sen, 2010, p. 16). The CSR activities of
Tata Steel are clearly aligned with the global Sustainable Development Goals. Currently, Tata
Steel is handling the challenge of further lowering carbon dioxide emission, consumption of
excess water, and the enhancement of the impacts of its CSR activities across all its zones of
operations.
Also through sustainability and leadership, Tata Steel has been engaging in manufacturing
activities that reduce global warming, besides lowering environmental impacts. Employee
recognition and satisfaction have made the company more productive and also in gaining a
positive social reputation from the target market (De Wit & Meyer, 2014, p. 138). Other CSR
endeavors by Tata Steel via its sustainability and leadership approaches include safety of
employees, employees training and development, upholding of business ethical practices,
customers service level increment, and supplier satisfaction initiatives.

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Personal Reflections on Learning
Global Steel Manufacturing Industry Competition
Steel manufacturing is a booming and competitive industry in the globe. The increasing demand
for steel in the world market has attracted many entrepreneurs to major and invest in this
industry. All over the world, the Asian nations enjoy dominance in the manufacture of steel, with
India being among the fastest growing economies out of global steel hub and its production
(Schmidt, 2015, p. 440). In the recent past, the steel industry is growing at a fast rate. The main
steel players in the world include ArcelorMittal, Tata Steel Group, NSSMC, and JFE Steel Corp
just to mention a few.
Role of Strategic Alliances and M&A’s
As per this report and analysis, strategic alliances and M&A’s play a major role in the
strengthening of a firm’s impact and sustainability in the market (Stahl and Tung, 2015, p. 396).
Also, strategic alliances and mergers and acquisitions are established to enhance cooperation,
coordination, collaboration, and functioning of business operations while in the market place
(Hersey et al., 2014, p. 200). Strategic alliances in particular play the role of expanding
organization’s resources and functioning, and that is why most organizations prefer it as the main
strategy for market growth. Mergers and acquisitions on the other hand ensure an equal control
over the combined companies and ensure that no one company dominates over the other (Deng
and Yang, 2015, p. 160). The other role of strategic alliances and M&A’s is to eliminate market
competition by absorbing or merging with the competitor firm or through the expansion of
corporate portfolio by retaining the acquired company for instance as an independent
organization under the overall corporate management.

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Role of Corporate Leadership
Corporate leadership is a mandatory when it comes to global business operations. Corporate
leadership ensures that the CSR activities of a company are properly planned, organized, and
controlled for the benefit of stakeholders (Herrera, 2015, p. 1470). Corporate leadership ensures
the implementation of business models, change trends and technologies, customer preference
products, and concerns that enhance the productivity of a company in the market place (Harjoto
and Jo, 2011, p. 60).

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Conclusion
To summarize, the steel manufacturing sector is highly competitive across the world. Tata Steel
has been much focused to counter the stiff competition in the market through the use of strategic
alliances and mergers and acquisition strategies. Also, the management of Tata Group has been
actively involved in CSR activities such as sports, education, environmental protection, health,
and infrastructure development activities in attempts to improve public reputation, sustainability
in the market, and a competitive edge against the top world market rivals. The management of
the company should remain tireless in its endeavor and commitments to ensure that it grows in
the market, enhances sustainability, and its competitive position in the steel industry and world
market.

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