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This Unit 32 Business Strategy Assignment Tata Steel provides effective insight on the process of strategic planning and evaluation. The company taken in consideration here is ‘Tata Steel UK’. The first segment comprises of the definition of the terms like vision, mission, value, core competencies, goals and objectives. This is also discussed with regards to Tata Steel as an organisation. The key problems associated with the process of strategic planning has been analysed and the different types of planning techniques has been discussed. The second segment deals with the internal and external analysis of the environment of Tata Steel UK. The concept of stakeholder analysis is defined and analysed in brief and the importance of the same with relation to the chosen company has been discussed. It also includes the compilation of a new strategy for Tata Steel UK.
The concept of vision aims to paint a picture of the organisations and behaviour’ direction and the future. A well formulated vision statement helps in the succinct communication of an uplifting philosophy that helps in energizing the stakeholders of the organisation to face challenges by embracing it in order to accomplish the various goals and objectives. (Virtue Ventures, 2016). Tata Steel believes that diversity helps in enriching any large organisations and does enhance its overall collective capabilities. The primary vision of Tata Steel is to become the top global steel industry benchmark for the purpose of creating value and corporate citizenship and they aim to achieve it through their people, their offers, their innovation and their conduct. (Tata Steel, 2016)
The mission statement can be referred to as the heart of the enterprise. It helps in determining the central purpose and the basic principles of the organisation that helps in guiding the actions of the employees and the management. A mission statement also aims at the embodiment of the organisational values of the enterprise. Tata Steel’s primary mission is to attain sustainable development through all its operations by laying equal emphasis on economic, environment and social considerations. A core competency can be defined as a concept within the management theory that aims at the combination of multiple resources in the most harmonious way possible and also comprises of the skills and attributes that distinguishes a firm from others.
The core competencies of Tata Steel include that of persistent teamwork, enhanced leadership, development of leading edge solutions in Technology and various processes. One of the biggest competencies of Tata Steel is its employees that work consistently in achieving the pre determined vision and mission by acting with pride, passion and pace. Objectives and goals can be interchangeable. They can be defined as the particular end towards which actions and efforts can either be coordinated or directed. Objectives and goals aim in determining the ‘what’ and not the ‘how’ and in nature are smaller than the mission. The goals and objectives of Tata Steel is to become the obvious supplier of choice by ensuring that premium and commendable products and services are delivered and value is effectively created for all the customers. One of their main objectives is to provide an efficient workplace for the various employees to work in and also by caring for communities by maintaining high ethical standards.
Strategic Planning takes into consideration all internally and externally focused information during the implementation or enforcement of a decision aiming to maximise certainty, minimise risk and look to optimise results and outcomes. Strategic Planning allows one to determine what is significant in the organisation and facilitates the understanding of every organisational element starting from business systems to human resources and achieves the contribution towards every individual’s, teams’ and organisation’s success. (Simerson, 2011). Three factors associated with Strategic Planning include:
The Internal Analysis of Tata Steel can be affected by conducting a SWOT Analysis on the Organisation. The resultant strengths and weaknesses give an indication of the internal environment. The weaknesses of Tata Steel basically deal with the operational efficiency and slightly backward on the technological front. This means that Tata Steel during the compilation of the strategic plans is not implementing or determining techniques and tactics with the consideration of modern day technology. A well crafted competitor analysis will help in understanding the updated technology that needs to be incorporated in the operational activities in order to transform the weaknesses into strengths. (Mbaskool, 2016)
The External Analysis of Tata Steel can be determined by the conduction of Porter’s 5 Forces. This reveals that Tata Steel has to take into account the strategies and trends of other competitors in the market. Competition is stiff and hence accumulating all the data of the operations of all the competitors can be tough. The main competitors include BHP Billiton, CVRD and Rio Tinto.
Two Strategic Planning Techniques used in Strategic Planning include:
BCG Matrix: is basically a (2*2 matrix) that has been developed by the Boston Consulting Growth, USA. It is basically a two dimensional analysis on the effective management of Strategic Business Units. The Matrix denotes that businesses can be categorised as high or low based on their growth rate and market share. BCG Matrix comprises of four cells. The Horizontal Axis denotes market share (relative) and the vertical axis denotes market growth rate. Resources allocated to the business units are in accordance with their position and situation on the grid. The four cells are called stars, cash cows, question marks and dogs. (MSG, 2016)
Stakeholder Mapping: Stakeholder Management is a planning technique that all successful organisations implement in order to derive favours and support from others. Various steps are involved in the process of stakeholder mapping. (Freeman, 2010)
The best way of answering these questions is by talking to the stakeholders as they are likely to be quite open about their views and opinions. The understanding should be incorporated on the stakeholder map so that one can understand which stakeholders are going to be blockers and which ones are going to be supporters. Colour Coding enhances this phenomenon by showing the supporters in green, blockers in red, etc.
Internal Audit: SWOT ANALYSIS
External Audit: (PEST ANALYSIS)
A stakeholder can be defined as a person, group or organisation that has an interest or concern in an organisation. They can affect or be affected by the objectives and policies of the organisation. Examples of stakeholders can be customers, suppliers, creditors, directors, etc. (Businessdictionary, 2016). Stakeholder Analysis is a planning technique that all successful organisations implement in order to derive favours and support from others. Various steps are involved in the process of stakeholder mapping. (Freeman, 2010)
Step 3: The third step deals with understanding the key stakeholders and how they are likely to engage or react to the project. There are several questions that help in understanding who the key stakeholders are. A few questions include “What motivates them most of all? What is their current opinion of your work? , What information do they want from you?” etc.
The best way of answering these questions is by talking to the stakeholders as they are likely to be quite open about their views and opinions. The understanding should be incorporated on the stakeholder map so that one can understand which stakeholders are going to be blockers and which ones are going to be supporters. Colour Coding enhances this phenomenon by showing the supporters in green, blockers in red, etc. The importance of stakeholder analysis with regards to Tata Steel includes:
Employer of Choice: Tata Steel’s employment philosophy is based on the realisation or recognition of the fact that people are the primary source of their competitiveness and they forever strive to provide a workplace fostering equal opportunities and team work. (Tata Steel, 2010)
The new strategy will be based on the outlook of fostering the business management opportunities of Tata Steel in the UK. Tata Steel is currently looking to sell of its establishment in the UK owing to the import of cheap steel from China. The current situation of Tata Steel can be defined by analysing the internal and external analysis of the company. The main aim is to convert the weaknesses of the SWOT into strengths and the threats into opportunities. The new strategy will involve the focus on production. This is because Corus out-produces Tata Steel by quite a big margin when it comes to production. Even if producing more than Corus is not possible, emphasis should be laid on narrowing the margin of difference. The en strategy will also focus on the adoption of new technologies like the Corus Process and the Hismelt Process. The new strategy will focus on various aspects in the following ways.
The Positioning Strategy should be based on pricing. The main competitors for Tata Steel in the UK market right now are the suppliers of steel into the UK from China. It is not easily probable for Tata Steel to provide steel to UK at the low price as China is offering, hence one of the positioning strategies can be price. People and businesses might perceive the comparatively higher price of Tata Steel and relate it to better quality as the steel from China is coming in at massively diminished price per tonne.
Tata Steel is looking to sell its plant off in the UK. The new strategy will counter such a thought or decision. It has to be understood that the steel industry of UK is struggling at this point of time. Cheap Steel is being infused from China. Tata Steel should look to capitalise on this situation and look to achieve competitive advantage. One of the primary strategies is to infuse faith among the UK people that the Steel Industry is there to last. Tata Steel should look to merge up with or completely acquire comparatively smaller steel organisations which tend to be struggling in the UK market now. This will mean that they now have access to a wider amount of customer base also backed up with pertinent number of workers as a result of the acquisition.
The first strategy that should be adopted by Tata Steel is through strategic acquisition of smaller steel companies in UK. The UK Steel Industry is struggling and has been for quite some time now. Tata had earlier acquired Corus in 2007. There are chances of Tata Steel facing loss in UK if it continues to exist independently as steel imports into Europe from third world countries and cheap import of steel per tonne from China might result in Tata Steel’s demise. That is why it should look to acquire or merge with companies like Celsa Steel UK, Bourne Steel, etc. This will help them concentrate on different sectors and will also give them access to a larger customer base and higher market demand opportunities.
Another alternative strategy can be the decision to initiate strategic alliances with the different Chinese exporters who are contributing to present scenario of the steel industry of UK by providing steel at a very cheap rate. Steel imports into the UK from the rest of EU on an estimated average cost 897 Euros a tonne while China exported steel into the UK at 583 Euros a tonne. Moreover, in 2013, UK imported around 303,000 tonnes of steel which went up to 687,000 tonnes in 2014. Thus the UK Steel sector is massively under the control of these Chinese Suppliers. (Bowler, 2016). Thus Tata Steel, based on its reputation should look to make strategic alliance with some of these suppliers. They should seek allegiance to companies like Hebei Iron & Steel, Baosteel Group, Jiangsu Shagang, Shandong Iron and Steel Group, etc. This is the analysis of two alternative strategies that Tata Steel should adopt.
The Positioning Strategy selected is based on pricing. As mentioned earlier, UK is highly dependent on China for its steel consumption as China suppliers are offering steel to the UK at the rate of 583 Euros per tonne in comparison to the rest of EU supplying UK at the rate of 897 Euros per tonne. (Bowler, 2016) It might not be possible for Tata Steel to stoop down to such low prices. Hence, they positioning should be based on the pricing aspect because the difference in rate of the steel from China is massive, therefore organisations and people may question the quality that is being provided. For such organisations and people, they might perceive the comparatively higher cost of Tata Steel as more reliable and high in quality firstly because of its realistic and expected cost and secondly because of its existing reputation.
The rest of the strategy is based on the core values that Tata Steel always aims to incorporate. They are customer satisfaction focus, innovation, sustainability and people. (Tata Steel, 2016). Customer satisfaction is what Tata Steel focuses on to yield profits. They recognise the value of serving customers efficiently in order to enjoy competitive advantage. Hence in this strategy as well, a lot of emphasis will be laid on focusing on customers. They also aim to be the global leaders in Steel sector through leading innovation. This is why the second segment of this strategy is based on the adoption of the latest and modern day technologies. One of the aspects that this strategy is focused on is sustainable development. This is in order to keep a clean environment. Tata Steel has engaged in a lot of CSR activities making their contributions to the society and environment. So this strategy will also look to provide to achieve development but in a sustainable way. Emphasis will be laid on adhering to the anti dumping policy of UK and reduction in carbon emission levels.
Finally Tata Steel realises the significance of their workforce. It is the workers and employees that have taken this company to unparallel heights. Thus the formulation of the strategy does include the development and satisfaction of their employees. This includes providing an efficient workplace for the employees, frequent training and development programmes, employee engagement schemes, etc
This Unit 32 Business Strategy Assignment Tata Steel depicts the strategic objectives and intentions of the globally renowned Steel Company Tata Steel. The vision of the company is to become the global leader in Steel. The various problems that arise in the planning procedure include that of flexibility of the plan, wrongful leadership and the ill execution of a well formulated plan. The two strategic planning techniques taken into consideration here is the BCG Matrix and Stakeholder Mapping. The second segment depicts the internal and external analysis of environment of Tata Steel UK. The internal analysis has been carried out by considering the strengths and weaknesses of a SWOT Analysis and the external analysis has been carried out by the conduction of a PEST Analysis.
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