Tata Steel is reaching out to global markets, managing expansion, and acquiring and initiating more strategic alliances to remaincompetitive.
Tata Steel is a leader in the steel industry with a turnover of Rs.12,000 cr. Under the leadership of Managing Director, B Muthuraman, Tata Steel declared a net profit of Rs.1012 cr for the year 2002-03, which was five times higher than the previous year. Before him, under JJ Irani, there was modernization drive worth Rs. 9,500 cr leaving little scope for growth or acquisition. In the year 2001-02, steel prices fell down, but the cycle turned around in 2002-03, due to China's increased demand for steel.
In the pre-globalization era investment in foreign countries was not easy due to closed national boundaries. High tariff barriers made it very expensive to move goods between countries. Hence, large steel production companies had very little international presence. There has been an increase in inland freight cost by 344% since 2002 and, therefore, the transportation of bulky materials became difficult, which forced companies to acquire iron ore mines globally.
However, the advent of globalization and pressure from WTO saw the lowering of tariffs. Having seen the above developments, Tata Steel resorted to adopt a proper strategy to reap the benefits. Thus, it became more sensible now to manufacture primary steel closer to the source of raw materials and ship semi-finished steel, which is less bulky, closer to the market for final finishing. According to Muthuraman, "Globalization is a method by which you put the right part of the value chain in its right place in the world and link it up properly." |
