Subject category:
Strategy and General Management
Published by:
IBS Research Center
Length: 34 pages
Data source: Published sources
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Abstract
This case analyses the globalisation strategy of Tata Steel, the flagship company of the Rs480 billion Tata Group and the second largest steelmaker in India. In 2004, Tata Steel, with an annual capacity of 4.3 mtpa (million tonnes per annum), was ranked 56th by the World Steel Institute. The company had a plan to increase its production capacity to 15 mtpa by 2010, thereby becoming one of the top 10 steel companies in the world. To fulfil its mission, the company chose to increase the capacity of its existing facilities, set up greenfield projects and acquired new companies. Due to the emergence of South-East Asian countries as major steel consumers, in 2004 it acquired Nat Steel to have access to these markets. The next year it acquired Millennium Steel to mark a footprint in the global market. However, the most audacious move of the company was its bid for Corus, the larger Anglo-Dutch steel maker. However, after a prolonged bidding process with Brazilian steel maker CSN (Companhia Siderurgica Nacional) the company acquired Corus. This acquisition put Tata Steel in the league of global top ten steel companies, into The Fortune 500 group and catapulted it from its previous rank of 56 to 5. The new Tata Steel would have an exciting value chain also. Tata Steel had plans to manufacture primary steel at its plants in Jamshedpur and Orissa, (slated to start production from 2006), places having large deposits of iron ore. This would help the company in transporting the semi-finished products to the Asian markets and also producing and selling the finished goods. Apart from traditional steel manufacturing, the company also forayed into value added steel products (automobile steel and ferro chrome) to strengthen its presence in the global market and became a global company instead of a local one. The case study offers scope for discussing the trends and present strategies in the global steel industry and how Tata Steel planned to grow according to the recent trends.
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Abstract
This case analyses the globalisation strategy of Tata Steel, the flagship company of the Rs480 billion Tata Group and the second largest steelmaker in India. In 2004, Tata Steel, with an annual capacity of 4.3 mtpa (million tonnes per annum), was ranked 56th by the World Steel Institute. The company had a plan to increase its production capacity to 15 mtpa by 2010, thereby becoming one of the top 10 steel companies in the world. To fulfil its mission, the company chose to increase the capacity of its existing facilities, set up greenfield projects and acquired new companies. Due to the emergence of South-East Asian countries as major steel consumers, in 2004 it acquired Nat Steel to have access to these markets. The next year it acquired Millennium Steel to mark a footprint in the global market. However, the most audacious move of the company was its bid for Corus, the larger Anglo-Dutch steel maker. However, after a prolonged bidding process with Brazilian steel maker CSN (Companhia Siderurgica Nacional) the company acquired Corus. This acquisition put Tata Steel in the league of global top ten steel companies, into The Fortune 500 group and catapulted it from its previous rank of 56 to 5. The new Tata Steel would have an exciting value chain also. Tata Steel had plans to manufacture primary steel at its plants in Jamshedpur and Orissa, (slated to start production from 2006), places having large deposits of iron ore. This would help the company in transporting the semi-finished products to the Asian markets and also producing and selling the finished goods. Apart from traditional steel manufacturing, the company also forayed into value added steel products (automobile steel and ferro chrome) to strengthen its presence in the global market and became a global company instead of a local one. The case study offers scope for discussing the trends and present strategies in the global steel industry and how Tata Steel planned to grow according to the recent trends.