Anda di halaman 1dari 11

Case Analysis: TISCO

The world of Steel, Its a world without boundaries, a world that is growing, changing and challenging every day, world that requires many different skills, continuous innovation and financial investment, and the responsible use of natural resources. This is the world in which Tata Steel seeks to excel, by providing the best quality products and the best possible service to their customers. The stated purpose is to create solutions to the ever changing needs, using the material that plays a vital role in all everyones lives. Steel is exceptionally strong, durable and versatile, as well as being 100% recyclable. As a Fortune 500 company and one of the worlds most geographically diversified steel producers, they are not only meeting the current needs of their global customer base but are also developing exciting new solutions in steel that will deliver additional value to their customers in the future. Tata Iron and Steel Company is the Flagship Company of the Tata group. It is perhaps the oldest and the largest company. Tisco was founded by MR. JN Tata in a remote jungle in Bihar. That place is now known as Tata Nagar or Jamshedpur. It was founded in 1907 in pursuit of Jamsetji Tatas dream of a prosperous and independent India. More than 100 years later, the company continues on its successful journey, with its sights set on becoming the global steel industry benchmark for both value creation and corporate citizenship. Today, it is one of the largest steel producers in the world with over 80,000 employees across five continents. It is one of the first integrated steel plants in Asia and the worlds second most geographically diversified steel producer. In Jamshedpur, India, where the company was first established, Tata Steel has a 6.8 mtpa crude steel production plant with further capacity currently under construction. In Europe, it has total manufacturing capacity of 20 mtpa located in the UK and the Netherlands. Tata Steels South East Asian operations make it a key steel producer in the Asia-Pacific region with a presence across six countries. In 2007, Tata Steel acquired Corus with the idea of collaborative growth an approach particularly relevant in the global market today. With their very different but equally proud and long histories, Tata Steel and Corus have much in common in terms of business culture and global vision. The lineage of Corus can be traced back to the earliest days of steel production in the UK and the Netherlands, although the name Corus came into being relatively recently. In 1988, the British Steel Corporation as it was then known was privatized, and 12 years later it merged with Koninklijke Hoogovens of the Netherlands to form Corus, which is now Tata Steel. In 2005, Tata Steel acquired NatSteel Asia, now known as NatSteel Holdings. A strong partnership was forged, enabling the Group to tap on growth opportunities in Asia and create a formidable pan-Asian steel business.

Started in 1964, NatSteel was actively involved in Singapores nation-building efforts, providing much needed steel for public housing and infrastructural works as the nation industrialized. NatSteel has since expanded beyond Singapore to establish a strategic footprint in the Asia Pacific, and built a premium brand name for its quality steel solutions and expertise. Tata companies have always adhered to the principle of returning wealth to the society they serve. Two-thirds of the equity of Tata Sons, the Tata holding company, is held by philanthropic trusts. The combined development-related expenditure of the trusts and the companies on social initiatives around the world amounts to approximately four per cent of the total net profits of all the Tata companies. Throughout its century-long history, Tata Steel in India has been a pioneer in industrial and employment practices. Today it has a 6.8 mtpa crude steel production plant as well as a significant presence in all the key product segments. Capacity expansion is a key strategy for Tata Steel in India, where it derives much of its competitive advantage as a low-cost producer from the quality and yield of its raw material sources. The mines have provided raw material security and also partially insulated Tata Steel from the volatility within the global markets for these raw materials. Work is currently under way to increase steelmaking capacity at Jamshedpur to 9.7 mtpa of crude steel by 2012. This additional capacity will enable the company to increase its market share in flat products and to use its existing resources more efficiently, including manpower, utilities and its captive mines. Looking further into the future, the company plans to continue to increase its capacity significantly through both brown field and Green field developments. (As per current data)

Brand Value: Tisco itself having a large brand value which act as a one of the strength for the company. And it also owing to its highly ethical and a socialization approach to their business have made their name a synonymous to trust. Management Value: Tisco has a highly credible team which have contributed in the growth of the company. And also in expanding their business outside India. They also believe that what comes from the people must be returned to the people. The trade union also believed in cooperation, keeping interest of the labour, country as well as industry. Innovativeness of Tisco One of the strength of Tisco could be that they have the lowest operating cost for manufacturing steel in the world. And they also adopted an eco friendly and sustainable approach toward the manufacture of steel while they also take measure for the protection of their employees health and productivity. Spawning upon Opportunities: Since Tisco was the earliest company to spot the escalation in the demand for steel in the coming years. They were the one who firstly started in Jamshedpur and they are now also setting up other green field projects at Orissa, Jharkhand etc.

Employee participation Management: It is based on the beliefs that the employees are more productive only when they feel full commitment to their goals and jobs. So, Tisco started a lot of programmes which help in the development of their employees, and as for them their employees are their assets as well as their strength. Commitment: Their commitment to welfare grew beyond its employees to society at large. The extent to which these measures have been successful become evident when Tata steel instituted independent social audit to evaluate how far the company has been able to fulfil the social and moral responsibilities.

The weakness of Tisco is that as they hire the employees internally, so no new fresh talent is poured into the organization The hierarchy of Tisco is very wide and complex, so they lack in decision making, the flow is decision making process is very low. Another weakness was a geographic area, as the Tata steel was located in a very small town so, they faced a major transportation problem. As the employees of the employees were rigid or in the other words we can say that they were laggards, which are they were not interested in adopting new technologies. They want to stick into their old tradition which they were following through past decades.

External Environment
A business does not operate in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies. The external environment of TISCO can be classified in the form of PESTLE analysis which is as under: Political: The political environment is the state, government and its institutions and legislations and the public and private stakeholders who operate and interact with or influence that system. The stability of the political environment and government will impact on the prioritization of mental health policy in relation to other policies, the funding available to mental health and the time frames in which policies and programs can be realized. Taking TISCO they faced a lot of problem pre and post independence. The problems which they faced pre independence included the coming up of industrialization and they being the 1st one into the country to set up their industry. Post independence includes difficulties with trade unions and also the governmental pressure. Economical: The presence of the Company and its operations has created the economic hub of Jamshedpur, the largest industrial town in the region. The city has among the highest per capita in the country and is among the top ten cities in India for

per capita expenditure. Tata Steel has also endeavoured to take the benefits of its prosperity deep into the rural areas around its operations Tata Steel has a century long ethos of returning a share of the value it creates to the community, based on the belief that the role of an enterprise is to foster economic progress, growth and prosperity in the community. It reviewed its engagement in the community and it in the process of developing indicators and mechanisms to ensure greater value creation and impact. The living standard of the people in Jamshedpur has improved tremendously due to TISCO which has helped a lot in the boosting up of the economy. Social: The purpose of enterprise at Tata Steel is the community, its socioeconomic progress through socially responsible business practices. The first company to be incorporated in India, Tata Steel founded on the belief that it must deliver economic freedom and show the way forward for its people to obtain civil liberties, equity and human dignity. Over its century long history it adopted employee welfare measure and practices, which went on to become part of the statutes in India. Several of these practices were ahead of those followed globally, including an eight-hour working day, maternity benefits and the Joint Consultation process. The latter introduced the concept of freedom of association and collective bargaining to Indian industry. Tata Steel has, therefore, promoted Human Rights as part of its core business philosophy. It has adhered to the Universal Declaration of Human Rights; the International Covenant on Civil and Political Rights; and the International Covenant on Economic, Social and Cultural Rights. It has more recently recent times voluntarily adopted and implemented the principles of the United National Global Compact and has implemented SA 8000 since 2004. As the Company has globalised, in line with internationally accepted conventions and standards and the revised Tata Code of Conduct, it has ensured all policies, principles and clauses with respect to Human Rights are followed with uniformly across nations, without exception to any. Tata Steel has given itself an Affirmative Action Policy to promote equal employment opportunities for the socially disadvantaged. The Company has thus taken empowerment activities into the community to facilitate education, employability training, and entrepreneurship. It has made education and employability training of the socially disadvantaged a part of its social agenda. The Company's Corporate Social Responsibility &Accountability Policy and Affirmative Action Policies uphold human dignity as a fundamental value. They are available on the corporate website and were last reviewed in 2009. No employees in Tata Steel are less than 18 year age. Technological: When the company was set up in 1907, the entire plant was run by technicians hired from abroad. There was no institution in India imparting sound knowledge in metallurgy or steel making. This resulted in the formation of the Jamshedpur Technical Institute JIT. JIT had a modest beginning with the senior
apprenticeship scheme to train personnel for supervisory positions in the works. The rapid development of technology in the world and the necessity to keep abreast of current development led to the formation of a technical advisory committee in 1930. In Tata Steel,

technology development has a strong focus on saving raw materials and energy, resulting in improved sustainability through a reduction of CO2 and other emissions. Environmental: Tata Steel recognizes that Steel is a significant contributor to manmade greenhouse gas emissions as the manufacture of steel unavoidably produces Carbon Dioxide. Tata Steel is committed to minimizing the environmental impact of its operations by increasing its spend on technology and hardware to address

environmental concerns which will automatically lead to the healthy and green environment. They also make sure that the green patches in the city are not harmed due to the emission of green houses in the environment.

Let us begin the analysis on the HR policies of TISCO with the opening lines of their HR policy. Tata Steel is an equal opportunity employer. People are primary source of its competitiveness. TISCO believes that it is very important to be the best employer to retain the employees for a longer time. It has been the main focus of Tata steel since the beginning. It has been more than a century that this has been followed. For Tata steel nothing is more important than ensuring that their employees do their work without any harm and Injury. TISCO aspires to be the benchmark for the health and security in the global steel industry, and there has been a remarkable improvement towards that goal since the establishment. Now let us focus on the different sections of the Human Resource policies of TISCO. Performance appraisal Performance appraisal is the assessment of an individual's performance against previously agreed work objectives. Performance appraisals are normally carried out once a year. Since it is a joint responsibility of the individual and the supervisor; every individual inTISCO are coprime to each other. It also enables management to compare performance and potential between employees and subordinates of the same rank. Rating of employees is done by their performances. It is given as per ranks very good, average, and average to medium and below average. On the basis of these rankings highest reward of the year is given to best suitable worker. The better performing employee gets the majority of available merit pay increases, bonuses, and promotions. Training and Development The employees are guided with the development and training in line with strategic goals of the company and long term objectives. They have developed an in-house training centre which takes care of the major training and development programs. It is known as the Technical Institute and Management Development Center The employees are sent to other organizations and training centers like JTI and also abroad for specialized trainings. Officers have an opportunity to become Business managers with the help of courses like, CEDEP, France. All the employees are trained to know the changes in environment, market and in the steel prices.

Compensation Planning Compensation planning is basically done on the basis of the financial capabilities of the company. Yearly increments are given for the employees

Compensation for Inflation is given to all the employees at flat rate. Individual performance bonuses are also given.

Special Benefits provided to the Employees There are a lot of special benefits which were started by the TISCO which later got added in the Government act. Benefits like 1. Free Medical Aid 2. School facilities for children 3. Leave with pay 4. Workers provident fund scheme 5. Accident compensation scheme 6. Maternity Benefit 7. Retiring gratuity 8. Tata Steel officers beach club 9. Holiday Homes 10. Higher Education schemes

Developing People Valuing their people is the greatest asset of the Tata Steel. They are committed to their development not only in the perspective of employee but also the organization. In order to leverage the maximum potential of the Human resource to achieve the company objectives, the company believes that the enrichment of their people will result in retaining the motivated workforce in a competitive environment. The company has also developed skills development courses for officers and non-officers both which will help them in their daily work and also in the process of climbing up the corporate ladder. Equal Opportunities Practices TISCO is an equal opportunities Employer that does not discriminate people on the basis of race, caste, religion etc. The HR policies of the company are monitored by the Ethics counselor and are supported by an effective grievance redressal mechanism. Female employees are encouraged by TISCO to advance their careers with initiatives dedicated towards personal development and professional development both. There is a Woman Empowerment cell which is built which takes care of all the issues faced by the Female employees and the objective of this cell is to ensure that the female employees do not miss out on any growth opportunities. Grievance handling system

The need to redress grievances has been well understood and appreciated in Tata Steel. They think it is important because it is a means of two way communication and it enables the management to locate the troubled areas of relations within the undertaking. Mutual trust between people at every level of the organization is intrinsic to the Tata Steel culture, calling for open, honest two-way communication between management and employees at all times. Tata Steel believes as a matter of principle that diversity within the workforce greatly enhances its overall capabilities. It is an equal opportunity employer in all its operating locations, and does not discriminate on any basis.

Corporate Level Strategy

Tisco is the very oldest and largest company in INDIA. And now today it is very big company of private sector of INDIA. When the company started on that time company facing lost of problem like strike etc. But company changes their policies time to time and finally it is control strike in the company and other thing. After some years it is grown up largest groups of companies in India and then the company begun their journey globally. A company does not become global by simply participating in a certain number of geographic markets. In that sense, it is not a sum of parts. It is ability to become globally competitive, leverage global opportunities and have the required global capabilities that make it global. We are in the process of acquiring such a competitive position and global coordination capabilities, both at the individual company level, as well as at the group level. But it is take some time and needs some changes like. Technology: Financial engineering, too, has evolved with the help of advances in technology. The derivative products and their pricing are matters that have been easier to handle through the use of sophisticated decision tools on technology platforms. Activities such as the development of business plans and investment cases, and the ability to channel a huge volume of data into productive management-information systems have given the CFO the tools to carry out his responsibilities more effectively. At the group level, however, the responsibilities are greater and more macro. At the level of a business unit, financial functions revolve around management accounting, advising the head of the unit on financial matters, and any managerial decisions having financial implications. At the group level, the functions concern investor relations taxation, funding new businesses, and resource allocation. The knowledge of sufficient financial data is enough to enable one to take business decisions at the operational level. But at the corporate level the CFO needs to consolidate all the information, to evaluate businesses that are performing well and those that are not, and to allocate resources between them, to help in deciding to retain some businesses and to restructure others, and to track improvements in the performance of the portfolio.

Targeting specifics: While holistic thinking strong industry and market awareness is critical, the most insightful perspectives are meaningless without the ability to apply them through concrete decisions that address specific business objectives. Industry knowledge is one of the most powerful assets in developing a good business strategy. While it is important to know your own company, it is equally necessary to know your industry: your competitors, suppliers and channels. A good CFO must be a strategic thinker. He should be able to discover ways through which the company can be significantly different from the competition. On a personal level, finance professionals can energies their careers by pursuing leadership opportunities, especially where a particular business is at risk or has severe performance problems. The key skill in this Endeavour is being able to build relationships and knowledge outside the finance function.

Business strategy
Tata is now not a domestic organization it has became an international and now Tata has its other subsidiary called as Tata international. Tata has not grown in a single face its take time and the policy is change from time to time and make a necessary. The every company in the umbrella of Tata group has three different strategy and Tata steel is the one of the oldest organization of Tata group. Based on the resources Tata steel is the one of the modern steel manufacturing company in India which produces the steel using the modern technology till 1930. At this decade the consumption pattern of the steel has drastically change in the country because of the reduction in the consumption of steel in railway and increase in the demand of the steel in the domestic use for the modernization and industrialization. The major strategy of Tata at that time is to increase their sales network and is expected to narrow the aforementioned gap in the understanding of how a large-scale Indian industrial undertaking developed a business strategy to adapt to a macro-economic transition.They mainly focus to sell their steel in domestic because the understand to captured the domestic market and make themselves in for stand against the international competitiveness because TISCO failed to achieve high international competitiveness in steel production, largely due to the high cost of conversion from pig iron to steel ingots. Another serious hindrance to producing competitive steel was labor cost. The cost of labor continued to be a particularly difficult problem for TISCOs management, especially since the 1920s, Labor costs per ton of steel ingot consist of two factors, wages and productivity. In colonial India, the high cost was caused by productivity, rather than wages. The wages and productivity problem is due to the lower productivity. In 1929- 30 additions to sales to dealers, some of the steel products of TISCO also reached mass consumers through engineering firms producing, for example, agricultural implements. Engineering firms purchased about 20 per cent of the total sales of TISCO, indicating the significance of sales to such firm the increase in the sales of steel in the engineering industries and the company was opening the engineering stores with the financial support to increase the sales of steel and its product. After the 1930 Tisco was start up the various institute to grow up the sell of the steel and gather the information from the various institution and the different area of the country to

increase the demand of steel. Over this time the Tisco gain the power of the bargaining and this is not only for price but for quality standard this power was gradually gain over the period 1932-33 by gaining its own information from its dockyard and depots, by this Tata reached to the position of monopoly because of the high duty on steel import and Tata produce steel at low cost which give them t the high amount of profit. Till 1990 the Tisco was regularly expanding their business in India and expand its global network by expanding its supplies and purchasing the iron and steel mine allover the word and expanding its furnace capacity to increase the production, in this period the company has change their many policy in order to gain the market control and maximize the profit with providing the a low cost steel and superior quality however it face the strong competition from the other local and global manufacturer. TISCO set plans in motion in 1995 to construct India's largest blast-furnace mill with an eventual annual capacity of ten million metric tons. After 1990 the company was in their fourth stage of growth and its forged with the modernization and expansion of the company by introducing the new technology and increase annual production capacity to 3.2 million metric Tone per year by 1999. During 1990 the Tisco subsidiary Tata inc. was established and in Dubai and Singapore in the following year and in 1996 the demand has increased by the 10% annually by the last four year and Tata will joint hand with Inland International Inc. to create Tata-Ryerson, a joint venture that would provide industrial materials management services in India. During the late mid 1990 the economic growth of steel industry became weakens many project are stop in between in that year the Tata steel will get 50% decline in the sale revenue and 60 % in net income but however Tata was available to make profit but they start cutting down their sales force and at that period many factories were shut down and many was in huge loss but Tata was able to keep its bottom line in the black. Rather than the economic decline in steel industry but Tata was able to complete its $1.5 billion modernization program in April 2000 and start its 1.2 million metric Tone operation cold rolling mill which was one of the lowest-cost producers of hot-rolled coils. Tisco change their name to Tata steel in 2005, during the course of period of time Tata has expended its self globally and now Tata steel has presence in 50 countries with manufacturing operations in 26 countries. It has manufacturing operations in these locations: Asia: India, Malaysia, Vietnam, Thailand and Oman and all this is through acquisition route Africa: Ivory Coast, Mozambique and South Africa Australia: Central Queensland North America: Canada Europe: United Kingdom, the Netherlands and France. During the last decade the Tata steel expends their capacity by doing several acquisition and merger some of them are:With Corus 1. On 20 October 2006, Tata steel signed a deal with Anglo-Dutch company, Corus

2. On 19 November 2006, the Brazilian steel company Compendia Siderrgica National (CSN) launched a counter offer for Corus at 475 pence per share, valuing it at euro 4.5billion 3. On 11 December 2006, Tata pre-emptively upped the offer to 500 pence, which was within hours trumped by CSN's offer of 515 pence per share, valuing the deal at Euro 4.9 billion. The Corus board promptly recommended both the revised offers to its shareholders. 4. On 31 January 2007 Tata Steel won their bid for Corus after offering 608 pence per share, valuing Corus at Euro 6.7 billion. Some Other acquisition 1. In August 2004, Tata Steel entered into definitive agreements with Singapore based NatSteel Ltd to acquire its steel business for Singapore $486.4 million (approximately Rs 1,313 crore) in an all cash transaction. 2. In 2005, Tata Steel acquired 40% Stake in Millennium Steel in Thailand for $130 million (approx. Rs 600 crore). 3. In 2007 Tata Steel through its wholly owned Singapore subsidiary, NatSteel Asia Pte Ltd acquired controlling stake in two rolling mills: SSE Steel Ltd, Vinausteel Ltd located in Vietnam. Tata steel has setup their target to achieve the capacity of producing the 100million metric Ton steel by 2015 through 50-50 balance planning of Greenfield facilities and acquisition

Green field project of Tata Steel They have lined up the green field project inside and outside the India which include 1. 6 million Tone plant in Orissa, India: Tata steel is setting up 6 million Ton per annum capacity plant at Kalinganagar. 2. 10 million Tone in Jharkhand, India: The capacity of Jamshedpur steel plant has already been increased to 6.8 MTPA. It is expected that its capacity will increase by 10 MPTA in near future. 3. 5 million Tone in Chhattisgarh, India Tata steel signed MOU with Chhattisgarh government in 2005 for setting up 5 MTPA plant. But, it is facing strong protest from tribal people. 4. 3-million Tone plant in Iran 5. 2.4-million Tone plant in Bangladesh 6. 10.5 million Tone plant in Vietnam (the study of project feasibility undergone).


The worker must feel comfortable with the system where they can go and put their grievances. Sometimes when the worker grievances are not solved, they quit the organization due to the improper response from the management and the implemented policies so for that Tisco can introduce Drop boxes, Opinion survey, open door Policy and Exit interview for the betterment of the company. Creating respect for employees and giving them a sense of self respect and better understanding their role in the organization and statistic their urge for self expression through closer association with management can be done. The Company should allow external Recruitment on priority basis which can reduce regionalism and if there is any kind situation of conspiracy occurred then this will never happen in future. Also 360 degree analysis on customers, suppliers, peers, supervisors, workers, employees etc because they are already doing grievances analysis on supervisors, workers, employers so it will be easier for them to implement this process. They need to raise up their production standards by putting on more and more plant on different sectors and also provide more job opportunities. They need to focus on job evaluation which will provide strong support to the people. Creating a sense of belonging trough humanity and purposeful activity as integral part of human relation insuring their willing co-operation and loyalty. The structure of Tisco employees union is very complex and hard to understand for a normal people so there must be an orientation program for a newly recruit. Group 5