The industrialized value chain’s backbone is the global steel industry. The steel industry is also a basic tool for important global economic sectors like aerospace and automotive since steel forms the core part of economic growth and global innovativeness. On the contrary, even if the steel is that important in today’s industry, uncertainty has created the sense of certainty. The entire sector is on the verge of struggling from the recession that happened decades ago. Such is the time when a couple of new projects worldwide (under the field of construction) fell while investments in machinery and infrastructure plummeted (Kroeber, Kluckhohn, and Untereiner, 2015). A number of challenges have been faced in this industry including weak customer demand, increased stringent operation regulations, steel prices and raw materials volatility, and increased competition from producers in economies that are developing like China have led to the reduction of steel production. However, such reduction in demand is attributed to the existence of slowdown in growing global economies such as that of China. Such a less-than-rosy industrial performance gives the reason why forecasters think that the demand for steel globally is likely to rise by just 2.9% come 2025 (Carrol, 2018).
According to the outlined growth trajectory of Tata, growth and integration are but buzzwords since the company views the global market as not only the place to sell its steel but also a source of acquiring assets for manufactural expansion. Currently, the organization’s Corus project has propelled the organization to be the sixth largest producers of steel in the globe. However, it should be noted that in as much as Tata has faced several production challenges over time, this activity identifies some of the outcomes of improved manufacturing and operations strategies. For instance, as a joint venture, Tata has developed mines in countries such as Thailand, it has also created a seaport in Orissa’s coastal parts, and lastly, the company explores opportunities in Tamil Nadu (regarding the business of titanium dioxide) (Lynch, 2016).
The global and local perspective of Tata is on a path of overall improvement general growth. As per the mission and objectives of the company, Tata is subjected to growth and expansion even if new challenges crop. Some of the reasons why the company is confident about global growth are the fact that Tata has engaged in many joint ventures as well as incorporated operational strategies in its core activities (Bernard, 2017). For instance, the company has integrated projects such as Corus within its steel manufacturing activities thus helping in the achievement of its vision as recognized by the Steel Group. According to the financial reports of 2015/2016, the company achieved a lot that another achievement before that was literally dwarfed. For instance, the company’s production of still skyrocketed to more than 7million tonnes compared to 2007/2008’s 5million tonnes (Kroeber, Kluckhohn and Untereiner, 2015). Some of the areas that have led to Tata Group’s successful growth and that this paper intends to discuss are:
For an organization aspiring to grow, there are a number of strategies that must be put in place. Tata not only intends to grow its global operations but also use the global market to acquire assets for manufactural expansion. Such a mindset is the reason why Tata Group and Steel come up with projects such as Corus (Hofstede, 2017). Not to mention, Corus alone has propelled the organization to be the sixth largest producers of steel in the globe. It does not matter the number of challenges that the venture has faced. Good management policies and growth strategies have made the joint venture one of the organizations to watch in the global steel manufacturing industry (Calasanti and Slevin, 2017). In general, this report will identify the activities done and the strategies adopted by Tata improve its manufacturing activities (Hofstede, 2013).
For this activity, we shall:
The objectives of this paper thus, include:
Integrated Organization Perspectives, Portfolio, and Competitiveness
The integration of processes that are seamless from mine-to-manufacture-to-customer is the backbone for efficiencies and resultant competitiveness according to the 2015-16 Tata report. The organization introduced better services and products with the aim of coping with market demands and fighting evenly with its competitors. In the realization of such outcomes, the company replaced wooden saddles with trucks and rail wagons to ensure easier transportation of coils (Cox∗, Daoud and Rudd, 2017). Although road surfaces that are uneven causes defects of products, provision of a special cushion for the reduction of fretting corrosion ensured that Tata reduced waste by a large margin. In addition, the implementation of Jamshedpur Works as a blast furnace source includes a modern cooling technique thus, improving production. Not to mention, the organization added a new product to its portfolio called Celsius 420. This product allowed the creation of structures that are more efficient while reducing the use of materials and at the same time, reducing cost (Knapp, 2016).
Second, as a result of competition from other steel manufacturing companies (most of which come from China), the company decided to focus its operation on the development of value-added products, product diversification, the introduction of new brands, as well as having its customer base deepened while employing initiatives of cost reduction. In Europe for instance, Tata Group and Steel fastened its operational and commercial improvement initiatives followed by further rationalization after which the company decided to improve its product mix. The improvement of product mix led to sales and marketing growth, which translated to its growth in exports (Hopkins, Raymond and Carlson, 2016).
When an organization uses portfolio perspectives, a couple of merits and demerits result. Such merits include:
On the contrary, the associated demerits include but not limited to the loss of control over the management’s capability to influence the business in a manner that is positive. With regards to the integrated perspective of the organization some of the benefits of the company include:
According to the company’s general report, the company was able to save up to Rs 33 crore in a few months because it implemented integrated operational perspectives. The organization’s cost of labor also happened to be minimalized from about $200 to $140 for every ton in the year 2000. Apart from that, the cost inventory reduced from the initial Rs90 to Rs155. According to Tata’s operational analysis, an organization is able to implement two perspectives then achieve maximum system utilization (Essays, 2015).
Technological and Business Model Innovation via Strategic alliances, M&A’s
Immediately after Tata venture acquired Corus, strategists noted that the organization required a platform through which its workers from different locations would collaborate and work together more effectively and efficiently. As a result, the organization decided to go for Ms. SharePoint as a medium through which employees would manage the company assets globally. Employees then adopted this platform and a team created that would ensure that the needs of over 80,000 workers registered in the company would be attended to. The platform helped in storing files and sharing schedules through the help of MYSQL database. On the contrary, in as much as the platform opened new ways for Tata, it came with extreme challenges such as the need for data backup. Later on, this problem was tackled when the company adopted the DocAve backup and restore system (Dawson, 2017).
Over time, Tata has faced a couple of cyclical swings of difficulties from excess capacity expansion to fluctuating security prices. The difficulties were not only associated with Tata but other companies as well thereby, leading to 2009’s global economic crisis. As a result, the global demand for steel reduced. During such a time, Tata turned its focus on ensuring that it operated under cost efficiency with the overall objective of keeping the market on the recovery mode. Years later, the company has increased its security threshold for raw material, which is currently at about 65% from the previous 25% (GWA, 2017). The report provided shows that operational performances were affected by changes in mining regulations. The passed coal bill back in 2015 led to the closure of several mines leading to numerous operational disruptions and stress to several companies. However, as mentioned before, Tata responded positively by liaising with numerous state governments regarding the extension of its mining lease thus ensuring that the company’s raw materials were available leading to increase in production by about 3% (Hofstede, 2016).
Regarding the company’s strategy for growth, Tata has deferent programs for capital expenditure alongside acquisitions in different parts of the world. During hard economic situations, Tata has been able to collude other projects and put them on hold. By the use of such an approach, the company has been able to accumulate the resources that provide cash alongside other projects based on the priorities given to the available resources and the project itself. There are a number of initiatives that the company has taken including the expansion if the greenfield project which ensured that the organization was able to invest above Rs.25, 000 crores in the same project. However, even if there are related financial implications in operations done in Europe, the company banks its hopes on India since the country has the funds required to continue operations (Hager, 2014).
Leadership, Sustainability, CSR, and Corporate Governance
The 2014/15 report deduced that Tata’s board adopted guidelines on effectiveness to ensure that the responsibilities of corporate governance are fulfilled concerning being responsible towards employees. With such guidelines, the board as the ultimate power to review and evaluate the operations of Tata. However, the same guidelines help Tata to make decisions that are independent. The company’s board and any other in the industry is fairly selected then approved by The Nomination and Remuneration Committee (Hofstede, 2016). This committee checks on a number of factors including skills, characteristics, and experience of an individual. This committee then selects individuals who would make up the Corporate Social Responsibility Committee. According to requirements, this committee performs a number of operations including the provision of recommendations regarding policies of Corporate Social Responsibility (Alder, 2016). This Corporate Social Responsibility Policy is used to:
The models of CSR are numerous. However, one of the most prominent models is Carroll’s model known as Archie B. According to Carroll, CSR refers to a number of duties that a business organization has to the society. Carroll then proposed a 3-D corporate performance model, which are further divided into:
Another model is the Halal model. This model argues that an organization can only be able to form a coalition that is workable if the groups that form such a coalition have interests that vary. This model then defines CSR in three identifiable phases. The phases include:
In relation to the discussed models, Tata recognizes CSR in many ways. However, its strategic implementation measurements have enabled the company to be recognized as one of the best-governed organizations in the world. Such is because the company, apart from the CSR, has the Risk Management Committee (Wood, 2016). This committee has a couple of duties associated with its existence. Such duties include but are not limited to oversight of potential risks. Such oversight helps the board in developing, implementing and monitoring plans related to risk management. The committee also reviews and guides the policy as well as create a framework for the organization. Tata also has a number of adopted policies that help it in the management of its employees (Goyder, 2017).
Personal Reflections
After such an extensive oversight of the global steel manufacturing industry, we can define a global manufacturing company as an organization or a firm or a corporation that manufactures steel worldwide. The key components of such a company include configuration, compatibility, control, and coordination. However, such a company has several business agents and subsidiaries that help in its operations (Johnson, Scholes and Whittington, 2015). These organizations, as seen in the case of Tata, faces several challenges, which are supposed to be tackled expertly to ensure that the reputation of the company is not ruined. During the processes of forming alliances, companies create joint objectives that benefit both them and the society depending on their characteristics. There are a number of strategic alliances; however, the most common alliances are acquisitions and mergers. The board of such mergers of alliances should be responsible for coming up with strategic and risk management plans as well as monitoring corporate performance. They are also responsible for the maintenance of proper governance. When the management of an organization is okay, the organization stands a chance of achieving its goals (Tata Steel Group, 2016).
As mentioned before, the backbone of an industrialized value chain’s backbone is the global steel industry. However, the steel industry is also a basic tool for important global economic sectors like aerospace and automotive since steel forms the core part of economic growth and global innovativeness. On the contrary, even if the steel is that important in today’s industry, uncertainty has created the sense of certainty. The entire sector is on the verge of struggling from the recession that happened decades ago. Such is the time when a couple of new projects worldwide (under the field of construction) fell while investments in machinery and infrastructure plummeted (De Wit and Meyer, 2014).
Conclusion
Conclusively, this report paper, in relation to the issues discussed, has achieved its purpose by:
In addition, the report has identified challenges faced by Tata and discussed the strategies adopted by Tata towards improving its manufacturing activities. In line with the same, the activity has:
Through such discussions, the paper has:
References
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