TEST #2 AGRAWAL, DEEPANSHU
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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 8, 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 in the long run is sustainable competitive advantage. According to Michael Porter’s, 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. This entity became 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, 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, one of the strategy 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 competitor’s include
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25
20
10
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8
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4
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7
6
5
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Importance
Ra
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6
3
Brand Scores
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