Delivery in day(s): 5
Diploma in Business
Unit Number and Title
Unit 7 Business Strategy TATA Steel
Business strategy is a long-term plan for action that has been designed to achieve the goals and objectives of organization considering the various factors. This is a management game plan for encouraging the performance, overcome the impact of issues and implement the new plan for growing the business (Acemoglu.et.al. 2010). Unit 7 business strategy TATA Steel report will assess how the mission, vision and objectives and core competencies are informed about the strategic planning as well explain the effectiveness of BCG matrix and GE McKinsey that would be used for developing the strategy.
In the next part, the report will analyse the strategic positioning of TATA steel Europe and assess the significance of the stakeholder analysis for formulating the strategy. TATA steel is a subsidiary of TATA groups that operating the business in the UK. Organization has headquartered in London and main operations have been performed at Netherland and another part of UK. Moreover, the report will present the new strategy for the organization to expand the business as well justify the selection of strategy. At the end, the report will assess the role and responsibilities of personnel who are charged with the implementation of the strategy and evaluate the contribution of SMART objectives.
The strategy is the direction and scope of an organization over the long term, which achieves advantages in the changing business environment and competencies with the aim of fulfilling the expectations of its stakeholders. Thus, it is essential for Tesco and Tata steel Europe to be rational while taking the strategic decisions for an organization. The strategic decisions must always be taken for important and crucial goals and matters for sustainable growth of business visions.
Mission statement: The mission statement of a company provides the basic information about the organizational core values, core purposes and the visionary purpose that a company will pursue to fulfil its mission. The mission statement of Tesco and Tata steel Europe defines the clear picture about the purpose of its business and its goals to be achieved. For example, the mission of Tata steel Europe has been divided into following purposes that a company aims to achieve:
Vision statement: The business vision statement includes certain core ideals of a business that relatively remains steady and also provides the guidance in the process of strategic decisions making. This statement provides a picture to a stakeholder to predict and analyze the way that how the company will meet its objectives. In the similar manner, Tesco and Tata steel Europe’s vision statement is specific about their potential growth in the organization. It has been noticed that the companies having a leading position in the international market.
Goals and objectives: An objective of an organization is a short-term and long-term goals that an organization seeks to accomplish. These objectives play an important role in developing organizational policies and determining the allocation of organizational resources (Álvarez-SanJaime.et.al. 2013). From the annual report of 2014 of both Tesco and Tata steel Europe, it is has been observed that their business objectives are not only limited to offer suitable products but also to provide better services to their regular potential customers. The goals of a business are used to describe their approaches in such a way that they are capable of accomplishing their desired task in a fundamental way.
Core competencies of the organization: The core competencies are a harmonised combination of multiple resources and skills that distinguish a firm in the marketplace. The core competency of Tata steel Europe is helpful in achieving its competitive advantages in the market. Better human resource planning, strength-weakening analysis, helping with outsourcing options, use of advanced analysis tools, etc are some major core competencies identified in Tesco.
Figure 1: strategic planning steps
Strategic planning is an activity which is carried on by the management which used to set the priorities, focus energy and resources, strengthen operations, ensures that employees and all other stakeholders of an organization are working towards the common goal, etc. Following are some critical factors that will ensure that our strategic plans are successfully implemented:
Figure 2: Environmental factors
BCG matrix: The BCG model is also known as growth-share matrix. This model is based on the product life cycle theory which is used to determine what priorities should be given in the product portfolio of a business unit. The BCG matrix plays a crucial role in strategic planning and it has got a single grouping of lower and higher shares in the market by combining lower and higher development rate. The BCG matrix uses four cells.
The limitation or concern in regards to the BCG matrix is what should be plotted on the matrix? The BCG matrix was initially developed for large corporation organizations that had multiple, and often unrelated, business units in their overall portfolio. Another limitation of BCG matrix is the definition of the market (Boguslauskas and Kvedaraviciene, 2015). How the organization will decide to define the actual market that will change the outcomes.
Figure 3: BCG matrix
GE McKinsey matrix: The GE McKinsey matrix generalises the axes as “Industry Attractiveness” and “Business Unit Strength”. It uses nine cells instead of four cells of BCG. It considers many variables and does not lead to simplistic conclusions. The industry attractiveness and business unit strength are calculated by first identifying the criteria for each; determine the value of each parameter in the criteria and multiplying that value by a weighting factor. The result will be the quantitative measure industry attractiveness and business unit’s relative performance in that industry (Bouckaert.et.al. 2010). The drawbacks of GE McKinsey matrix is that it can get quite complicated and burdensome with the increase in businesses and it cannot effectively depict the position of new business units in developing industry.
Figure 4: The nine cells of GE McKinsey matrix
In order to analyze the current position of TATA steel Europe, SWOT analysis is being used that will help to identify the key strength, weakness, opportunities and future threats. By considering the information, management of company would be able to frame the sustainable business strategy to achieve the goals and objectives.
Table 1: SWOT analysis
To understand the current situations of external environmental factors that have the significant impact on the business strategy of TATA steel Europe, PESTLE analysis is being used which is as follows:
The poster is presented in appendix 1
Stakeholder analysis is the process of identifying the effectiveness of key people that have a significant impact on the business planning of organizations as well take active participation in the decision making. For Tata steel Europe it is essential to know the strengths of stakeholders to develop or make changes in the strategy for increasing the business (Cummings and Worley, 2014). For starting the new project and implementing the changes in the existing business strategy, Tata steel management has to consider the analysis of stakeholder that will help to assess the attitude, potential, issues and interest of stakeholder.
Figure 5: Stakeholder analysis tool
By using the stakeholder analysis, Tata steel management will be able to identify the key player within the organization whom the management could assign the new role and responsibility in the changing business environment. For that purpose, the organization requires monitoring the approach of individual to analyze the effectiveness as well frame the new business strategy to sustain in the market of UK. In addition to this, by keeping the stakeholder informed about the required changes the management would gain the advantage in the planning of new business strategy for encouraging business in the UK.
For developing the business and meeting the goals and objectives, Tata steel Europe could use the market entry strategy. In order to gain the competitive advantage and overcome the financial burden, organization could use the following market entry strategy:
Joint venture: This is an effective strategy for developing the business, by considering the factors that could affect the outcome of Tata steel. According to this strategy, Tata steel management would analyze the conditions and identify the steel organizations that performing well in their market to establish the joint-venture (Day and Tosey, 2011). This kind of business strategy will require the low funds for infrastructure development, hiring of skilled staff members as the organization should continue with the existing staff that has good knowledge of local market and production activities. In addition to this, the risk would also be low as both organization share the resources and contribute according to contract.
Following are the SMART target objectives for new business strategy:
The poster is presented in appendix 2
Following are the alternative strategies that could be used by Tata steel management for meeting the objective and goals.
By considering the facts that have been analyzed from internal and external market audit of Tata steel, market growth (Joint-venture) strategy is being proposed to management. In order to implement this strategy, organization do not have to make major changes in the functions as well in the policy for staff members as the organization has done this kind of partnership business in the past and had desired outcomes. So, it can be considered that organization will accept it. In addition to this, this strategy would suitable for the organization as Tata steel will have to invest less funds for developing the infrastructure as well the organization will retain the skilled staff members who can support to expand the business and maintain the low cost of production. Apart from that, market entry strategy of the joint venture will increase the capacity of production by sharing the risk and cost with the partner organization which make the implementation of strategy more feasible (Elmelund-Præstekær and Klitgaard, 2012). Additionally, by implementing this strategy organization will gain the greater access of resources, expert staff to perform the tasks and use of better technology.
The role of following personnel would be important for implementation of market entry strategy proposed earlier:
Following resources would be required for implementing the strategy:
This is important for Tata steel to work according to SMART objectives that have been slated for new business strategy. These targets will help the organization to maintain the focus on the tasks and operational activities as well follow the standard. The major strength of define targets is the improvement in the level of business encouraging the production and sales in the different areas. This kind of approach is required for Tata steel to sustain the position in European steel market that will face the major changes in the present time as a division of UK is going to affect the process of business as well the growth (Goetsch and Davis, 2014). Apart from that, the by considering the SMART target, Tata steel will able to maintain the flow of operations and functions to accordingly which will increase the effectiveness of activities.
Apart from that, the major weaknesses of SMART target are a lack of consideration of the technology and investment for implementing the strategy. In addition to this, management has framed the targets according to the capability of one unit of production which will not be beneficial for achieving the goals and objectives (Hamel and Prahalad, 2013). However, Tata steel management has good knowledge and resources for implementing the strategy but the lack of using technology for achieving the SMART target would affect the operations.
From the above study, it is been considered that business strategy of the organization plays a critical role in growth and sustainability in the market. The report has provided the information about the uses of the mission, vision and core competencies. The report has conducted the internal and external audit of Tata steel Europe and assessed the need for stakeholder analysis. Moreover, a report has proposed market entry strategy for Tata steel to sustain the business by having a joint venture with potential organizations. At the end, the report has discussed the role and responsibility of leading people and requirements of human, technological and financial resources for implementing the strategy.
Books and journals
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