Tata Steel

CASE TATA STEEL

MEMBERS:

* Carolina Castillo

* Gabriel García

* Nury Juca

* Leandro Navarrete

INTRODUCE:

Tata Steel is a top ten global steel maker and the world’s second most geographically diversified steel producer.

 Tata Steel was founded in India in 1907.  Since 2004 the Company has expanded globally, acquiring Asian steel producers NatSteel and Millennium Steel (now called Tata Steel Thailand) as well as Europe’s second largest steel producer Corus (now called Tata Steel Europe Limited). 

 Tata Steel is part of the Tata Group, India’s largest industrial conglomerate.  Both Tata and Tata Steel have a long history of charitable donations and social responsibility, with Tata spending approximately 4% of the Company’s profit after tax on corporate social responsibility initiatives.

 Tata Steel endeavours to improve the quality of life in the communities in which the Company operates.  Tata Steel’s charitable projects have touched the lives of over 800,000 people in India.

 PORTER FORCES

Backed by robust volumes as well as realizations, steel Industry has registered a phenomenal growth across the world over the past few years. The situation in the domestic industry was no exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy. However, the current liquidity crisis seems to have created medium term hiccups. In this article, we have analyzed the domestic steel sector through Michael Porter's five force model so as to understand the competitiveness of the sector.

Barriers to entry: We believe that the barriers to entry are medium. Following are the factors that vindicate our view.

1. Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set up 1 mtpa capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn depending upon the location of the plant and technology used. 

2. Economies of scale: As far as the sector forces go, scale of...