Pgbm16 Global Corporate Strategy: Case Assessment Answers

Case Study: Tata Group’s Growth Strategies

The assignment has been designed to allow you to develop and use your knowledge and skills in understanding key strategic issues relating to the Global Steel Manufacturing Industry.

Task:

The individual assignment has been developed to identify the key strategic issues within the global corporate business of the Tata Steel Company. Through the identification of the relevant issues, the strategic options suitable for global corporate policies of the firm have been illustrated in the study paper. Precisely, the Tata Steel Company is one of the leading firms in the global steel industry. In the recent years, the global headwinds have affected the mining operations of the business. In the study, by using the relevant literature, the application of portfolio organisation perspective and integrated organisation perspective have been stated in the management of diversified product portfolio of the Tata Group. Also, the study defines how the organisation has achieved business model innovation through strategic alliances and mergers. Moreover, by understanding the corporate governance, CSR policies, sustainability, and leadership concepts of the Tata Group, the role of the senior management ensuring the completion of the CSR activities has been briefed in the discussion. To finish the study paper, the current assessment of the global steel manufacturing industry has been illustrated defining the leading business competitors, best practices, roles of strategic alliances etc to attain sustainable growth.

Portfolio, Integrated Organisation Perspective and Competitiveness

By adopting the integrated organisation perspective, the Tata Group can comprehensively manage the difficulties associated with the business dynamics of a range of products offered by the firm towards the massive target market demographics. Responding to the challenges in the internationalisation of the business, integrated organisation model can be applied to influence several factors affecting the business proposition of the organisation. Precisely, the components of integrated organisation model (IOM) include a significant number of internal as well as external components influencing the performance of an organisation (Kumar et al., 2010). Alternatively, portfolio organisation perspective is another concept in maintaining range of products of the company. By using product portfolio, the company has increased sales by 28 percent in 2014-15 in the automobile sector. Also, the sales of branded steel segment have jumped 10 percent. In the case of the Tata Group, actors, suppliers, market competitors, target demographics, partners and associates, and investors of the company have been identified as the most affected individuals due to the business proceedings. By analysing relevant literature from the Annual Report of the Tata Group, merits and demerits of portfolio organisation perspective or integrated organisation perspective have been illustrated.

Merits 

Based on the strategic management of the Tata Group, portfolio organisation perspective can counter the rapid changing demand of the target audience. Through the application of portfolio organisation perspective commercial production and capacities of the firm can be increased (Trong Tuan, 2012). By differentiating management portfolio and product portfolio, the Tata Group has introduced new product line and management stance supportive of the business in the Indian market as well as the European market. On the other hand, integrated organisation perspective has influenced the role of senior management so that employee engagement, productivity in business, and talent resources can be enhanced and retained for sustainable growth perspective (Kupers and Weibler, 2016). Based on the target market, the Tata Group has invested sufficient capital to increase the performance of the key asset of the business i.e. human resources. Thus, the production and supply of the diversified product portfolio can be managed in an efficient order using substantial management perspective.

Demerits 

In order to develop both portfolio organisation management and integrated organisation model, the organisation has to invest sufficient capital. During the global crisis scenario, by including integrated organisation perspective, the organisation has increased its financial burden in the Indian market (Pfau, 2011). In order to maintain the performance of the top management, efficient procurement programmes are necessary for the management. Therefore, despite the lower business turnover cost of management can be surged. As a result of the consequences, the management of a range of products might be hampered in the target markets.

Creating Competitiveness

Under the current circumstances, it is possible for the Tata Group to adopt both perspectives simultaneously to manage the range of products offered by the organisation.  First of all, the portfolio organisation management will ensure that best products can be offered to the target demographics based on the market differentiation strategy (Chatterjee and Mukherjee, 2015). For instance, in the Indian market, such portfolio management perspective will ensure the sales, marketing, and distribution of products as per the suitability and demand of the target audience. Alternatively, as the organisation has been continuously focusing on growth and innovation, integrated organisation model can be included with the management to influence the role of the R&D team and HR management team (Shah, 2010). Thus, the firm can develop new products contributing towards brand value creation. Therefore, the financial strength and business turnover of the Tata Group can afford to implement both perspectives to control the diversified product portfolio of the firm.

Business Model Innovation and Technological Innovation through Strategic alliances and Merger & Acquisition

The Tata Group has collaborated with the leading Universities of the world to promote education and research in order to develop the talent base across the world. The strategic partnership with leading Universities such as Yale University, Harvard University and the IIT Madras has been initiated to conduct the Global University Collaboration Programme. The company has spent around $25 million in order to fund the programme across the globe (Jha and Arora, 2013). The primary objective of Tata Group is to develop young talents to acquire and deploy intelligent innovations and technologies in the business model of the company.

In term of financial position of the company, Tata Group has the ability to acquire and deploy intelligent innovations and technologies through Strategic Alliances and Merger & Acquisition. The Tata Steel Company has developed strategic partnership with several mining companies such as Labrador iron Mines Holdings to reduce the challenges of lower availability of resources in the Indian mines in the recent years (Huizhong and Xiuqing, 2012). Tata Steel Minerals Canada has entered into a joint venture with New Millennium Iron Corporation to develop its growth in the Canadian market. On the other hand, Tata Steel Ltd., Nippon Steel & Sumitomo Metal Corporation (NSSMC) and Cold Rolled Automotive Steel in India, have came together to form a joint venture to acquire and deploy intelligent innovations and technologies (www.tatasteel.com, 2015).

Finally, in terms of Merger and Acquisition, the company has acquired the Corus in the year 2007 for $12 billion to make India the fifth largest steel producer in the world. Corus has been involved in various Merger and Acquisition deals in the past (www.tatasteel.com, 2015). The acquisition of Corus has been a strategic move by the Tata Group to lead the company towards it success. On the other hand, the Merger and Acquisition of the Jaguar and Land Rover by Tata Motors have helped the company to fight the growing competition in the current business environment (Wit and Meyer, 2014). Hence, Tata Group has effectively used its ability to acquire and deploy intelligent innovations and technologies though Strategic Alliances and Merger & Acquisition.

Resources and capabilities 

According to the current market scenario and Tata’s ability to acquire and deploy innovations and technology, Tata Group has adequate resources and capabilities to bring the digital and mobile technologies in order to achieve its aims and intentions. According to the chief technology officer Gopichand Katragadda, Tata Group has taken an initiative to conduct seventy internal projects to achieve a breakthrough innovation across its main companies and subsidiaries (www.tatasteel.com, 2015). Out of the seventy projects, around forty projects are in the pilot stage. After successful completion of the tests, the innovative strategies will be integrated in the business models of the firm by facilitating the creation of the technology road maps.  

On the other hand, the company has the resources and capabilities such as good research team, strong management and good financial backup to bring digital and mobile technologies in order to achieve its aims and objectives. Furthermore, the infrastructure of the firm and its policies of CSR towards innovation can be leading factor to support the initiative of the firm to develop digital and mobile technologies (Wit and Meyer, 2010). Tata Group spends a huge amount of money on talent development and implements several programmes to meet the needs of the workforces. Furthermore, Tata Group focuses on developing products according to the demand of the consumers. Hence, the company has the mix of resources and capabilities to bring the digital and mobile technologies together in order to achieve its aims and intentions.

Blue Ocean Strategy and Business Model Innovation

There are two different strategies used by the corporate giants to seek success in the current global business environment. The first is the red ocean strategy and the second is the blue ocean strategy. The red ocean strategy is used to fight in the current global market against the increasing competition using the pricing and promotion tactics (Lynch, 2006). On the other hand, the blue ocean strategy is used by the corporate leaders to develop new products and create market space of the new innovations. Hence, the case of “Pravesh” can be termed as a blue ocean strategy implemented by Tata Steel to create demand for an innovative product. The new product is technologically advanced and long lasting that will be in high demand in the market (Johnson, Whittington and Scholes, 2005). Therefore, a business model innovation has been initiated by the Tata Group by developing its product portfolio in order to fight the growing challenges in the international steel market (Osterwalder and Pigneur, 2010). Moreover, the company will have no competition in the initial phase of the launch of the product that will provide potential opportunity to the firm to seek growth over the international platform.

Corporate Governance, CSR, Sustainability, and Leadership in Tata Group

The corporate governance of the Tata Group includes value and purpose, and code of conduct that are relentlessly pioneering significant quality of living of the social communities served by the organisation. In the corporate governance of the Tate Group, the business purpose of the organisation is to endeavour global competitiveness through efficient leadership in the operating business sector (Tilt, 2016). The practices within the corporate governance have aimed to increase trust among the target demographics, human resources, business investors, shareholders, and social community engaged to the business proposition. For instance, the Tata Group has evaluated crucial safety initiatives such as safety leadership initiatives to protect the safety and health of the employees (Jha and Arora, 2013). Evidently, significant policies and safety codes have been defined under the codes of conduct to achieve the commitments and values of the organisation. Moreover, the corporate governance of the business includes core values such as integrity, excellence, responsibility, unity, and innovation (Albiston and Cross, 2012). Notably, the Tata Code of Conduct has been refreshed on a regular basis according to the laws, regulation, and management directives although the core value remains intact.  

Since the inception of the Tata Group, the organisation has responsibly maintained sustainability and corporate social responsibility.  By committing towards the social issues and environmental issues, the Tata Group has dedicated to strengthening the community through building capacity, engaging the community people, and sharing value creating. In the target market of India, the Tata Group has developed Tata Steel Rural Development Society, Tribal Culture Society, and Tata Steel Skill Development Society, etc to improve the culture, standard of living, and employment opportunities for the social public (www.tatasteel.com, 2015). Invariably, the company has contributed towards three major sectors that are health, education, and environment. The organisation has taken initiatives in the education sector and health sectors as well. By offering scholarships to the poor but meritorious students, the Tata Steel Company has contributed towards the community (Srivastava, 2012). Besides, the organisation has provided significant support in agriculture, renewable energy sector, and skill development of the youths to increase the potentials of the community.

In terms of sustainability in business, the organisation has promoted societal sustainability in the target market of Europe developing partnership programmes and strategic initiatives. Precisely, in the education sector, the employees involved with the Tata Steel Company have attended classroom sessions to influence the STEM activities among the students (www.tatasteel.com, 2015). Also, the organisation provides efficient and high-quality vocational training programmes to the students encouraging their competencies and learning activities (Emi, 2014). Alternatively, by developing environmental programmes through community engagement, Tata Steel Company has fulfilled its commitment towards sustainability of environment and business operations (Chatterjee and Mukherjee, 2015).

Ability of Senior Management of Tata Group in managing CSR

The corporate governance and social responsibility of the Tata Group has been developed aiming to achieve long-term viability of business. In this regard the role and responsibility of the Tata’s senior management team can be identified as evident (Mintzberg, Ahlstrand and Lampel, 1998). Precisely, the senior management team of the Tata Group has effectively adopted some strategic objectives and interventions in the target market i.e. India, Europe, Thailand, and China. In case of the Indian market, the contribution of the senior management is massive. For instance, in the recent time under the brand name of Pravesh, Tata Steel has entered in the state of Odisha, India. The project has been termed as Greenfield expansion project (Tilt, 2016). The outcome of the project will be massive as far as company as well as community’s perspective. The entire project supply chain will save 1800 crores rupees and has been estimated to deliver 25 percent EBITDA in the upcoming three to four years (www.tatasteel.com, 2015).

On the other hand, the senior management of the group has ensuring sustainability with such massive projects focusing on rehabilitation and resettlement initiative programmes. Through such projects, the company will offer specially created colonies, health and education services, and massive number of employment to the social public (Eby, 2015). As a result of the same, the community engagement initiatives will develop improved standard of living. Meanwhile, the senior management of the firm has taken the initiatives so that the overall outcome of such project will secure long-term growth for the organisation as well as the community that has been served by the firm (Tidd and Thuriaux-Alemán, 2016). By promoting the core business values and CSR activities stated in the mission and vision statement, the strategic interventions of the senior management of Tata Group have created revolutionary leadership concepts improving the quality of living for the engaging community.

Personal reflections on learning

The Global Steel Manufacturing Industry has been facing downturn due to the reducing supply of raw materials from the mining sector and increasing competition in the market. Alternatively, a price war in the global market has made it difficult for the corporate leaders to carry on their operations using static strategies. Meanwhile, Strategic alliances, M&A, and corporate leadership play an essential role in the sustainable growth of business through responsible policies and practices (Tidd and Thuriaux-Alemán, 2016). In the case of Tata Group, the company has collaborated with strategic partners in order to take the advantage of intelligent innovations and technologies. For example, the company has collaborated with several universities to develop talent base in the global market. On the other hand, Tata Steel has collaborated with other steel manufacturing companies and mining firms to take the advantage of their capabilities and competencies.

Additionally, Tata Group has merged or acquired different rivals such as Jaguar, Land Rover and Corus one of the leading firms and brands in their industry to seek the advantage of innovation and technology. The acquisition of Corus, one of the leading steel manufacturing companies of Europe has helped Tata to make India the third largest producer of steel. Furthermore, the company focused on business model innovation and blue ocean strategy by introducing new products and creating space for the innovations to meet the challenges of the global steel market in place of just fighting the current rivalry through price war and modern promotion tactics (Tracey and Hinkin, 2017). Precisely, the Greenfield Extension Project and Innovative Technology initiatives taken by the corporate leaders of Tata Group have led to the sustainable growth of the firm over the international market (Osterwalder and Pigneur, 2010). Hence, the strategies of Tata Group have been quite effective and can be used by other leading firms as an example to meet the increasing challenges of Global Steel Manufacturing Industry.

Conclusion

By considering the above analysis, Tata Group has been quite effective in using the Strategic Alliance and Merger & Acquisitions policies to seek growth in the global steel market. On the other hand, the company focus on innovations and technology improvement to develop its product portfolio and market positioning. Additionally, the strategic alliances and merger & acquisition policy has been effectively used by the firm to enter new markets and introduce innovative products to meet the challenges of the global steel manufacturing industry. Conclusively, the corporate leadership style and internationalisation strategy of the Tata Group have been the key success factor for the sustainable growth of its business.

References

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