TEST #2 AGRAWAL, DEEPANSHU 12092023 (3)

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Test #2 Test #2 Deepanshu Agrawal Department of Management, California State University San Bernardino MGMT 6850-60: Strategic Management Dr. Breena Coates December 9, 2023

Test #2 Title: An Analysis of Tata Steel’s Generic Strategy Abstract This report does investigate the most important and significant three areas of generic strategy construction. According to Michael Porter, these are Cost Leadership, Differentiation and Focus. I am covering, how TATA STEEL applied this generic strategy in their business and its impact on their competitors, resources, and capabilities. These three areas of generic strategy helped Tata Steel Ltd in mapping the various competitive forces that are prevalent in basic materials industry in both local markets and international markets. Introduction Tata Steel as a firm's relative position within their industry determines whether its profitability is above or below the industry average. The fundamental basis to remain above average profitability overall is sustainable competitive advantage. According to Michael Porter, there are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which Tata Steel seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. Cost Leadership In cost leadership, a firm sets out to become the low-cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. Here, Tata Steel

Test #2 Ltd set out to become the low-cost producer in the iron & Steel industry. Further, this entity turned as be a cost leader varies based on the Basic Materials industry forces and structure. In pursuing cost leadership strategy, Tata Steel Ltd did assess – pursuit of economies of scale, proprietary technology, supply chain management options, diversification of suppliers, preferential access to raw materials and other factors. According to “Tata Steel – Integrated Report & Annual Accounts 2020-21”, it states the main focused area was as below:  Increase capacity of India operations through organic and inorganic growth  Attain and retain leadership in chosen segments (current and new) According to “Tata Steel – Integrated Report & Annual Accounts 2020-21”, the key performance indicators were below:  Crude steel capacity  Market share Goals : The key goals of Tata Steel were as below according to same report-  40 MnT capacity by 2030  Enter new segments and sustain #1 position in existing chosen segments.  Maintain cost leadership at market price of raw materials. According to Bartleby research published in May 2016, one of the strategies of Tata Steel is to improve its strategic management is “business level strategy”. This strategy was intended to create differences between the firm’s positions relative to those of its rivals. Here, Tata Steel’s

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Test #2 competitor is including companies like Nucor, Commercial Metals, Hindalco industries and Magnitogorsk Iron & Steel Works. Cost Leadership Strategy: Tata Steel and Corus According to Bartleby research published in May 2016, this deal between Tata Steel and Corus was one involving two major steel producers in the world. A few of the ways in which this deal allowed a cost leadership strategy - control of production and overhead costs and minimizing of marketing and R&D cost. The deal also allowed a substantial amounts of production facilities under one entity which allowed Tata-Corus to achieve economies of scale. According to Tata Steel’s acquisition of Corus, published in 2008, it states that during 2006–2007 year, the Indian steel industry witnessed one of the biggest acquisitions. Tata Steel offered Corus to buy a UK based giant steel industry. Further, after numerous attempts of bidding, Tata Steel bought Corus for $12.9 billion. The Corus acquisition moved Tata Steel’s position to the sixth place among the world’s largest steel producers. The main aim behind this acquisition was to be the largest steel supplier across the world and to have long-term benefits from this acquisition. At the time of this acquisition, Corus was world’s ninth largest producer of Steel, whereas Tata Steel was at 56 th position. This acquisition made Tata Steel the fifth largest producer of Steel in the world. Differentiation In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers

Test #2 in an industry perceive as important, and uniquely positions itself to meet those needs. It is also rewarded for its uniqueness with a premium price. Tata Steel Ltd did also pursue differentiation strategy based on the Iron & Steel industry forces. In this differentiation strategy, Tata Steel Ltd did seek to be unique in the Iron & Steel industry by providing a value proposition that is cherished by customers. Tata Steel Ltd selected one or more attributes in terms of products and services that customers in the Iron & Steel values most. The goal was to seek premium price because of differentiation and uniqueness of the offerings. Industry analysis of Iron & Steel using generic strategy of Michael Porter helped Tata Steel Ltd to avoid spaces that were already overpopulated by the competitors. Focus – Cost Focus & Differentiation Focus The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serve them to the exclusion of others. The generic strategy of Focus rests on the choice of competitive scope within the Iron & Steel industry. Tata Steel Ltd did select a group of segment and tailor its strategy to only serve it. Most organizations follow one variant of focus strategy in the real world, but Tata applied this practice differently to be unique in the market. The Focus Strategy has two variants for Tata Steel Ltd-  In cost focus a Tata Steel Ltd did seek a cost advantage in its choses segment in basic materials sector

Test #2  In differentiation strategy, Tata Steel Ltd did differentiate itself in a target segment in the basic materials sector. Both variants of the focus strategy rest on differences between a Tata Steel Ltd.’s target segment and other segments in the Iron and Steel industry. Resources and Capabilities of Tata Steel Tata Steel knew the importance of their skilled resources and available capabilities available within the organizations. Their internal resource departments worked upon upskilling their resources in various fields and focused on innovating with analytics ideas. By applying the right resources helped Tata to analyze the cost and become the low-cost steel producer. Tata’s capabilities helped them to differentiate their generic strategy to be unique in terms of producing steel for the customers. Their resource strength and capabilities also helped Tata to be in the competition in the market against their four major domestic rivals like SAIL, JSW, ISPAT & ESSAR STEEL. Institution According to Strategic Management of Tata Steel (Jan 26, 2015), it is almost one hundred years old and currently comprises ninety-six operating companies. The major business of Tata is in information system, communication, engineering, materials, consumer products, chemicals etc. Focusing on Innovation, Technology, Sustainability & People, Tata strives to be the global steel industry benchmark for value creation and corporate citizenship and become the most respected and valuable steel company globally. Overall, the Company’s India business

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Test #2 showed broad-based growth across chosen segments due to sustained focus on customer relationships, distribution network and portfolio of brands supported by an agile business mode l. Conclusion Concisely, this study presents the most important and significant areas of generic strategy construction that was explained by Michael Porter and applied by Tata Steel in terms of their leadership, differentiation and focus to remain at top in the market. Tata’s goal of differentiation strategy was to increase the perceived value of goods and services so that their customer will pay a higher price for additional features. While the goal of a cost leadership strategy was to reduce the firm’s costs below those of its competitors have in the market. This helped Tata Steel to survive and retain their position not only in the Indian market also in the rest of the world. Tata’s differentiation strategy helped them differentiate from other competitors based on superior quality and unique features, image of prestige. This also helped for Tata to be unique in the Iron and Steel industry by providing a value proposition that was cherished not only by the customers but also realized by the market competitors.

Test #2 References: Tata Steel Ltd (2018), Annual Statement of Tata Steel Ltd M. E. Porter , Competitive Strategy (New York: Free Press, 1980) O. E. Williamson , Markets and Hierarchies (New York: Free Press, 1975) Porter, Michael E., “Competitive Advantage.” 1985, Ch. 1, pp 11-15. The Free Press. New York.

TEST #2 AGRAWAL, DEEPANSHU 12092023 (3)

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