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Unit 7 Business Strategy Assignment TATA Steel
Diploma in Business
Unit Number and Title
Unit 7 Business Strategy TATA Steel
Organisation is comprised of set of activities and all the work is performed in order to accomplish set objectives and goal. Strategy is considered a programme through which a clear root map is prepared in order to accomplish set goals. So many big business tycoons and entrepreneurs have given a complete definition of business strategy. It is a set of course of action which is already determined so that business goals objectives mission can be achieved in a very simplified manner strategy is widely being used by so many person in different sectors but business strategy is a term which is used only when there is say of profit and loss in the given circumstance. Business is considered to be highly risky and complex set of activities and strategy is the formula to perform those activities in well determined manner. It could be said business strategy plays a pivotal role in the success and failure of an organisation in competitive market. Development of core competencies or competitive advantages all are the outcome of a successful business strategy. In today’s fast growing marketing strategy an organization needs to hire specialist who could frame a good business strategies for handling structured and non-structured problems.
1.1 Analyse the factors that have to be considered when formulating strategic plans.
Strategic plan is long term strategy which is formulated to achieve goals and objective in an easy manner. It is comprised of various plans and idea made in the long run. Goals objective vision mission are key intent of strategic planning
Tata steel consider following factors while formulating its strategic plans.
- Timeframe with other planning:- Tata steel has adopted plans and procedure with due regards of time many of the strategic plan in Tata steel is encouraged to be not more than 3 years. This time is considered because it could be align with the interest of other internal and external planning procedure.
- Selection process as per the need: - Tata Steel make decision very wisely after considering so many important factors such a result, profit and loss, interest of stake holders coupled with decision (Aras, et. al., 2012).
- Environmental factors: - There has to involvement of big number of people as strategic plans are considered to be very valuable and economical decisions. Political, social environment and culture are the main pillars in formulating strategic plan.
- Focused: - Tata steel has made its strategic plan of disinvestment in order to prevent $1 million loss each day. Organisation has focused all the key potential factors to make such decision.
- Proper implementation process: - Strategic plan of Tata is concerned with very big responsibilities and authority. It needs proper due diligence in each of its implementation stage. Tata steel has to check also that there is proper resources and man power is available or not for implementing the plans (Aras, et. al., 2012).
1.2 Evaluate the effectiveness of techniques used when developing strategic business plans.
There are many techniques used by Tata steel at various point of time in order to develop an effective strategic plan.
BCG Growth share matrix:-Under this technique Tata steel in U.K. analysis the market in terms of competitor’s markets share and their growth level with due regard of each business unit.
GE McKenzie directional Policy matrix: - It is more of portfolio analysis. It helps to consider the position of business unit in the attractive market and its commutative strength which could be used in the same market. It provide a clear idea regarding with the fact that where new capital should be invested. It plays a very important part in strategic plans.
SPACE Matrix:-it is the best suitable technique which helps organization to make a good strategic plan. It tells the competitive strength and its prospective .with the potential market. It depicts which strategy should be followed in particular market such as aggressive strategy, conservative strategy, or reduced downstream measures.
SWOT analysis: - it is the technique which helps in making a robust strategic planning. It describes all the strength weakness opportunities and threats reside in the market. It shows all the negative and positive factors coupled with strategic decisions.
2.1 analyse the strategic positioning of TATA steel Europe by carrying out an organizational audit?
Strategic positioning of TATA steel Europe is comparatively conservative. It provides the analysis of the organization strength with that of changes in consistent environment.TATA steel and its decision makers have developed such a rote map so that opportunities available in market could be taken over and possible threats could be overcome by the time. Strategic position in market is consisting of various factors such as market penetration, growth, diversification, stability etc.
SWOT analysis, BCG growth matrix are the key components in order to measure the strategic positioning in the market. Strength, weakness opportunity and threats are the four elements which depicts the actual strategic positioning in market in terms of internal and external factors (Sposito, 2013).
Organizational audit: - It is the generic term in order to find out the key elements which posture the strength and weakness of an organization with that of competitive market comprised of various external environment factors. Tata steel organization audit could be performed with the help of value chain analysis. Value chain analysis is the process through which Tata steel produce steel with the help of iron ore and other raw material. Organization audit helps in determining the actual effective cost and determine whether the best product or services are produced or not with available resources or not.
Tata steel value chain comprised of two parts:-
- Primary or internal activities: - It is the activities which helps in producing Steel and ore and deliver the same in international marketing (Haley & Haley, 2013).
- Support activities:- These are considered to be back bone of primary activities. It coupled with how Tata steel procures the steel and other goods, activities in research and development department and other sales department. Tata steel has generated its core competencies in market handling, stock control and other transport activities (Haley & Haley, 2013).
2.2 Produce an informative poster that presents an environmental audit for TATA Steel Group
2.3 Assess the significance of stakeholder analysis when formulating a new strategy for TATA steel Europe?
Stake holder analysis is very significant process in order to formulate a new strategy in business. Strategy is set course of action to perform a certain task. In TATA steel Europe top management consider following point while making strategy planning.
- Environmental analysis: - In this top management of TATA steel consider the impact of strategy on its external environment. Both positive and negative points are considered while formulating strategy implementation. Interest of public at large and their perspective toward the new plan are taken into mind by the top managers (Rogers &Makonnen, 2014).
- Legal analysis: - TATA steel is known to be a corporate with its legal compliance. While formulating strategy it is seen that whether all the legal compliance and other legal matters are dealt with proper care or not.
- Political sustainability:- Formulating strategy might be a creative task but implementation of the same is far more critical task. TATA steel makes proper surveillance with the political sustainability with the factors planned in strategy.
- Social culture: - it is required to check the strategy plan and its implementation whether its viable to the culture in which it is implemented. Some factors like demographic changes, likeness of the plans, educational factors, social adaptability with new plans etc. (Rogers &Makonnen, 2014)
These are the above points establish the nexus between the stake holder relation with the formulation of new strategy. TATA steel has to pinpoint these various factors while framing new strategy in business plan.
2.4 Produce a creative poster which presents new strategy for TATA Steel Europe branch in UK. Your strategy may relate to any of the following strategies: market entry, substantive growth, limited growth or retrenchment.
3.1 after formulating a new strategy for TATA steel Europe analyse the appropriateness of the alternative strategies relating to market entry, substantive growth, limited growth or retrenchment for TATA steel Europe.
TATA steel Europe could use the following strategies in various cases if it shows a viable connection with the new formulated strategy
Strategies for Market Entry: - These are the strategy which is used when TATA steel wants to make diversified investment in other plants or potential niche markets. This strategy could involve the penetration of goods and services in market either at lower cost or with the better quality. TATA steel could follow the following strategies in order to enter into the market: - merger or acquisition with other entities, joint venture, strategic alliance, .licensing, franchising etc.
Substantive growth strategy: - It is strategy through which TATA steel could achieve its vision. It helps organization to grow faster and provide add on value toward the organization brand image. Such as generating its own extra value chain, acquiring or takeover of entities.
Limited growth strategy: - In this marketing strategy TATA steel could penetrate the existing market with its old products. In this approach company has to use different variety of channel. Product development strategy or diversification strategy could be a very good example of this strategy.
Disinvestment:-Tata steel is focusing on this strategy in order to reduce its market share in U.K. market. This strategy is involved with the withdrawal from the certain market. Tata steel with the consistent loss of 1 million per day has opted a plan of selling its U.K. branch to other competitor. Turnaround, liquidation are the key examples of this strategy.
3.2 Justify the selection of the strategy you proposed in AC 2.4 in terms of suitability, feasibility and acceptability
Divestment strategy is proposed by TATA steel in its business plan in order to avoid the loss of $1 million per day. This is a viable decision which is seen with the expected and other following effective factors.
Suitability, feasibility or appropriateness of strategy depends upon whether the strategy adopted in business covered the complete strategic position of the business (Stroh, et. al., 2014).
In order to justify the suitability of Divestment strategy in business TATA steel needs to check following points:-
- TATA steel has checked with Future demands of the Steel and has suggested the time of saturated point which is to be coming in the near future.
- In order to save the company and its stake holder interest it has to reduce its market share through divestment strategy in U.K. sector (Stroh, et. al., 2014).
- Stakeholders of TATA steel have passed the resolution for adopting this strategy in business line.
- Organization has faced a very big amount of loss. Furthermore this market share of U.K. business line gives a big impact on the entire business unit.
- Selling TATA U.K. business is very appropriate strategy as it saves thousands of jobs and also provides a very big amount of capital source to promoters (Ghezzi, 2013).
- In the competitive market where TATA steel is facing a downstream in its business life cycle could have revived if it could avoid two following factors:-
- Cost to produce steel from iron ore is too high due to high wages paid to employees and there could only be taken 25% output from the 75% of input given in process cycle.
- Divestment strategy is the only chance available for the promoters which will keep their other business in the line with the competitors. Consistent loss has shown the bad impact on the consolidated financial statement of TATA business which has resulted into low earning per share to its shareholders (Ghezzi, 2013).
Feasibility: - Tata steel has to consider whether it is possible to implement the strategy successfully. Shareholder’s permission, technical knowhow, and legal permission back up plan are the key pillars to decide whether the strategy adopted is viable or not. Suitability acceptability and feasibility are parts of strategic evaluation process (Bharadwaj, et. al., 2013).
4.1 assess the roles and responsibilities of personnel in TATA steel Europe who are charged with the strategy implementation?
This is easy to say that formulation of strategy is a very creative task but implementation of strategy demands various set of activities. In the implementation of strategy each and every department of an organization has to shoulder their responsibilities with the assign task Role and responsibilities of personnel in TATA steel Europe in implementation process could be described as below:-
- Proper involvement: - Personnel from each and every department have to perform their task so that smooth functioning system could be established. Proper involvement of each and every group assists in transforming information throughout the process. TATA steel has also absorbed it so many employees in various other business line in order to save its man power assets (Thomé& Medeiros, 2016).
- Align the interest of employees with the strategic decision: - Leaders in various department of TATA steel in Europe has played their part very well. Leaders need to assist the employees in understanding the importance of strategic decision and its implementation in process. Proper guidance and clear rote map has proved to be a successful business plan implementation in TATA steel.
- Complete monitoring system: - Implementation of its divestment strategy in TATA steel is done in many phases which take a very long time. The personnel in TATA steel identify when and how this strategy should be implemented in order to keep its effectiveness. It is responsibilities of all personnel to analysis the data and tells the Board of directors when and how this strategy should be implemented (Thomé& Medeiros, 2016).
These are the points which should be kept in mind by the personnel in department for the proper discharge of their functions (Boston, 2014).
4.2 analyse the estimated resource requirements for implementing the strategy proposed in AC 2.4.
TATA steel is opting of divestment strategy and in such a business strategy there is no need to make any investment in enhancement of resources. Furthermore TATA steel Europe could diversified some personnel in strategy formulation and its implementation process. Divestment strategy plans demands consistent support from each and every department for its successful implementation (Wu, et. al., 2015).
- Leader and other staff: - TATA steel needs to hire leaders and other motivational personnel who could give convey the reason of adopting the same strategy in business line. Organization need to make internal or external hiring for the same.
- Increment of research and development department: - Although TATA steel is winding up its U.K. business but it has to maintain it Research and development department. It is understood that for understanding the market and its growth could be beneficial for the future prospective for the organization. TATA steel is a very big organization and could come up with different business plan in near future. Therefor company has to make consistent investment in its research and development program (Marx, 2015).
- Legal experts: - TATA steel is making divestment strategy in it U.K. business. Therefor in order to rehabilitate the money to India Company need to hire professional persons who could give best advice in legal matters. It is true that there is sectorial cap put by U.K. government in foreign exchange transactions. Moreover it is also seen that divestment process is coupled with different process such as preparation of drafts, deeds, handling legal matters (Hunter, 2016).
- Capital requirement: - Divestment strategy is the process which involves selling of its own unit in market with a view to reduce its share. TATA steel has to pay very big amount of tax after applying of this strategy in business.
4.3 evaluate the contribution of SMART targets to the achievement of the strategy implementation you proposed in AC 2.4.
TATA steel is facing a very hard time in its U.K. business. The Tata Empire and its promoter has to take their decision as per the SMART target irrespective of its growth, size, assets in market SMART target is the part of strategic implementation process. In order to make strategy viable it is required to check its proper implementation process in divestment strategy (Grössler&Strohhecker, 2012).
SMART target is the useful manner through which strategy is properly implemented in business SMART is the abbreviation of following words: - Specific, measurable, attainable, Relevant and time bound (Grössler&Strohhecker, 2012).
Specific: - It depicts the subject matter of strategy adopted in business life cycle. Object and goal behind implementation of strategy should be specific and clear. TATA steel has come to this strategy because it was unable to see the future growth and has also estimated that in a near future there will be saturate point in the steel market.
Measurable: - It tells that whatever strategy we adopt its impact should be measurable and it is only possible when its impact is quantifiable. TATA steel has measured its strategy impact which will result into saving of $1 million dollar each day. This strategy will increase TATA overall value in near future and there would be seen increase in Earing per share of the company in consolidated financial statement.
Attainable: - strategy in much organization is based on such benchmark which is impossible to achieve. Therefor in order to see the effectiveness in business decision there has to be clear achievable goals. TATA steel has never followed a benchmark although it has known for its own quality in market. A smart strategist must understand the significance of attainable goals in the implementation of strategy in business.
Relevant: - Relevancy of goals and strategic plans in organization are effective in establishing a successful business plan.
Relevant of goals and objectives with the formulation of strategic plan is very important. There should be proper interrelation between ultimate goals and strategies in organization.
Time bound: - In a fast moving environment where organization has to run its business. Strategies should be time bond. There is seen an instant change in market factors with respect to time otherwise there could be chances of product or services becoming absolute in markets.
Business strategy is required by each and every organization and in order to formulate effective business strategy top level management has to use various methods and tools. I have studied the entire project with proper due diligence and have come to the conclusion that business strategy plays an important part in developing core competency. Business strategy provides a set course of action which is followed by all the personnel with a view to achieve organization goals. Objects, goals vision and mission are the key pillars in formulating of business strategy. In this project report I have seen that TATA steel Europe has come up with divestment plan in order to survive in long run. U.K. government and Stakeholders are largely effected.
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