Internal Environment

External Environment

SWOT
VRIO

PESTEL
5-FORCE

All team members listed out S,W,O & T which were then rated against the following matrix

High

Low

4
Low High

Severity of Impact (Lower the more)

Only such recommendations, which had the recommendation of 3 or more members, were accepted

Severity of Impact 1 Quality consciousness 1 Green Environment 1 Proximity to iron ore 1 Debt free & sound cash reserve 1 Railway siding for inbound & outbound materials 220 KV evacuation system 1 1 Competent & agile workforce 1 TATA Brand 1 Systems & Processes 1 Philosophies, values & culture Process expertise 2 Industrial relationship 3

Strengths

Weaknesses
Remote Location
Intermediate & single product Lack of captive RM sources Price market dependent Procurement of iron ore Non availability of land for waste disposal and future growth Slow decision making on investments

Severity of Impact

1
1 1 1 1 1 3

Opportunities
Acquisitions of DRI plants having iron ore mines Mechanized conveying of RM/FP Briquetting of DRI fines & coal fines Adding wealth to waste( brick, cement, briquetting, road construction) Setting up pelletisation plant (buying fines from other than TISCO also) Coal gasification Selling power to Tata Steel Setting up AFBC

Severity of Impact 1 1 1 1

1
2 2 3

Threats
New Government legislations & policies Increase in RM Prices

Severity of Impact 1 1

Uncertainty in Iron ore availability

Disposal of waste Financial constraints for growth Technological changes
Construction of NH-215

1
1 2 2 2

Fluctuating market

As a change to earlier year, the VRIO tool was adopted on seven resources / capabilities, as against 4 earlier Tangible Technological Financial Physical Organizational Intangible

Human Innovation and Creativity Reputation

Outcomes are given in the following slides

Resource : Technology
Valuable? Rare? Costly to Exploited imitate? by Orgn? No Yes Competitive Implications Competitive parity Economic performance Normal Strength/ weakness Strength

Yes

No

TANGIBLE

Resource : Finance
Yes Yes Yes No Temporary competitive advantage Normal Strength

Resource : Physical (Land)

Yes No Yes Yes (V low) Temporary competitive advantage Normal Strength

Resource : Physical (Railway Siding)

Valuable? Rare? Costly to Exploited imitate? by Orgn? Competitive Implications Sustained competitive advantage Economic performance Strength/ weakness

Yes

No

No

Yes

TANGIBLE

Strength & sustainable Above normal distinctive competence

Resource : Physical (Raw Material)

Yes No No Yes (Moderate)
Temporary competitive advantage

Normal

Strength

Resource : Physical (Coal)

Yes No Yes Yes (Moderate) Competitive parity Normal Strength

Resource : Human Resource

Valuable? Rare? Costly to Exploited imitate? by Orgn? Yes Yes Competitive Implications Sustained competitive advantage Economic performance Strength/ weakness

Yes

Yes

INTANGIBLE

Strength & Above normal distinctive competence

Resource : Innovation & Creativity

Yes Yes Yes Yes (Low) Competitive parity Below Normal Weakness

Resource : Reputation
Yes Yes Yes Yes Sustained competitive advantage Strength & sustained Above normal distinctive competence

As a change from previous year, it was decided to add two more dimensions to the erstwhile PEST, i.e. Environment and Legal and use the PESTEL tool for external scan

Dimension : Political Issue : Interference by Local politics/politicians in the companys affairs. Issue Disturbance in Logistics/strike Public hearing(intervention by local politician) Employment issues ie insisting for employment(direct/indirect) Probability High Situation Unfavourable

High
Low

Unfavourable
Unfavourable

Land acquisition

High

Unfavourable

Dimension : Economic Interference by Local politicians in the companys affairs. Issue

Steel demand( Govt. expenditure on infrastructure/auto sector)

Probability
Low

Situation
Depends on the growth(favorable/ unfavorable) Unfavourable Unfavourable Favourable Moderately favourable

Overseas economy(stagnant) Monsoon (fluctuation in steel demand) Customer drivers(Engagement) Interest & exchange rate( $ Vs Rs, high interest rate)

Low
Low High

Low

Dimension : Social
Societal influences impacting DRI business Issue Media views Brand Image(Tata Brand) Ethical issues Community Services Ethnic/Religious factor Customers(attitude, Opinion, buying pattern) Probability
High High High Moderate Low

Situation Moderate Favorable Favorable(except delay in clearances from Govt. offices) Favorable Restrained

Moderate

Favorable

Dimension : Technological

Threat of new or alternative technologies

Issue
Substitute technology (Gas based) Replacement / technological solutions(Smelting process) Maturity of technology

Probability
Low Low Low

Situation
Unfavorable Unfavorable Favorable

Information & communication

Innovation Potential

Low
Low

Favorable
Moderate

Dimension : Environment

Environmental standards impacting the DRI business

Issue Environment Legislation : (stringent Emission norms) Waste Disposal Emission of Green House Gases (CO2 emission/mT of DRI) Probability
High High High

Situation Unfavorable Unfavorable Unfavorable (coal based operation)

Dimension : Legal
Environmental standards impacting the DRI business Issue Future Legislation( coal mining operation, plant expansion, PAT target) Attain CGP status of power plant All statutory laws(applicable) pertaining to factory, labour, mining, electricity, legal metrology, Boiler, Taxes etc. Probability
High
High

Situation

Unfavorable
Unfavorable Varying mostly unfavourable

High

Improvement from previous year All the critical aspects were examined in greater details, with details about the forces that critically impact the 5 dimensions In view of the changes in economy, several new aspects were included in the study

Dimensions

May Need to Perceptible emerge in Monitor Threat the Future Behavior

Strategies to Focus on Threats

Threat of New Entrants

Intensity of Competition Bargaining Power of Buyers Threat of Substitutes

No
No No No

Yes
No Yes Yes

Yes
No Yes Yes

B/W & F/W integration, cost efficiency

Improve quality, forward integration Briquetting of fines, long term customers

Forward integration, diversification Procurement planning (RM) thru backward integration

Bargaining Power of Suppliers

Yes

Yes

Yes

May Need to Perceptible Strategies to Focus emerge in Monitor Threat on Threats the Future Behavior Threat of New Entrants Intensity of Competition Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers No No Yes No No No No Yes No No No No Yes No No Try for open access

#
1 2 3 4 5 6

Team Assessment Yes Are there a large number of potential iron ore & coal suppliers? Are the products that you need to purchase for your business ordinary? Do your purchases from suppliers represent a large portion of their business? Would it be difficult for your suppliers to enter your business, sell directly to your customers, and become your direct competitor? Can you easily switch to substitute products from other suppliers? Are you well informed about your suppliers product and market?

No

# 1 2 3 4

Team Assessment Yes Do you have enough customers such that losing one isnt critical to your success? Does your product represent a small expense for your customers? Are customers uninformed about your product and market? Is your product unique?

No

Would it be difficult for buyers to integrate backward in 5 the supply chain, purchase a competitor providing the products you provide, and compete directly with you? Is it difficult for customers to switch from your product 6 to your competitors products?

Team Assessment # 1 Do you have a unique process that has been protected? 2 Are customers loyal to your brand? 3 Are there high start-up costs for your business? 4 Are the assets needed to run your business unique? 5 Is there a process or procedure critical to your business? Will a new competitor have difficulty acquiring/obtaining 6 needed inputs? Will a new competitor have any difficulty 7 acquiring/obtaining customers? Would it be difficult for a new entrant to have enough 8 resources to compete efficiently?

Yes

No

Team Assessment

Yes

No

Does your product compare favorably to 1 possible substitutes? Is it costly for your customers to switch to 2 another product?
3 Are customers loyal to existing products?

Team Assessment 1 Is there a small number of competitors? 2 Is there a clear leader in your market? # 3 Is your market growing? 4 Do you have low fixed costs?
5 Can you store your product to sell at the best times? 6 Are your competitors pursuing a low growth strategy? 7 Is your product unique? 8 Is it easy for competitors to abandon their product? Is it difficult for customers to switch between your 9 product and your competitors?

Yes

No

1. Captive generating plants reduce the cost of manufacturing and also offer revenue from sale of surplus power 2. The goodwill of TATA brand 3. Captive Railway Siding : Facilitates receipt of inbound raw materials and despatch of finished product in bulk quantities, despatch product to distant regions due to low freight cost

Strategic Challenges Enhance income from current operations Attain CGP Status of Power Plant Arrange coal & iron ore at ABP prices Consolidate product perception in Market + Selling DRI fines Improve Productivity Build Social Capital Contain cost Waste management Energy Management Institutionalise innovation Enhance employee engagement & continuous improvement

Impact on

Business growth
Customer

Internal business

Learning & Growth

Core Competency Tata Sponge Manufacturing System (TSMS) that comprises Relationship to Mission Serve customers Consistent product quality Increase profits
Faster delivery (railway siding) Eco friendliness Learning & knowledge Competent people based organisation

Strategic Challenges
Enhance income from current operations Attain CGP Status of Power Plant Arrange coal & iron ore at ABP prices Consolidate product perception in Market + Selling DRI fines Improve Productivity Build Social Capital

Impact on

Strategic Objectives
Improve profitability

Business growth
Ensure sufficiency of inputs to facilitate uninterrupted production

Contain cost
Waste management Energy Management Institutionalise innovation

Enhance employee engagement & continuous improvement

Improve product and service values to the customer Enhance production of DRI & generation of power to rated capacity Improve people perception Internal Nourish social harmony business Optimise RM consumption and all other costs Convert all wastes to wealth Focus on climate change Consistently drive Innovation & continuous Learning & improvement - useful many and vital few Empower through Knowledge & skill Growth enhancements
Customer