International business can sometimes become dynamics given the changes in portfolio performance in the market. The International business environment may include multinational enterprise. Steel is a vital component that drives most of the economies throughout the world. Therefore, most global steel manufacturers play an important role in development of most countries and any challenges in the international business environment has a critical effect on the most economies. The dynamic global business environment is quite challenging that require key players to in the industry. To remain competitive or to have a competitive advantage over other competitors in the steel manufacturers, companies have developed various strategies and business models. One of the key players of steel manufacturers industry is Tata Steel industry that has more than 30 tons of steel products annually. The following paper critically asses and evaluate the strategies that are used by global steel manufacturers to response to dynamic and changing international business environment.
1.Portfolio, Integrated Organisation Perspectives, and Competitiveness
In the report released by the Tata steel, the company is able to respond to the challenging environment. The Tata steel company can adopt both portfolio organization and integrated organization perspective. Integrated organization perspective or model ensure different areas and departments are properly coordinated in accordance to corporate governance. Portfolios, on the other hand, involve diversification of company portfolios in order to evenly distribute resource (Goergen 2012, pp. 104–105).
Portfolio management enables the organization to organize and manage its products or group of products in a comprehensive manner. Adopting portfolio organization perspective is a couple with some merits and demerits as revealed in Tata steel. Portfolio organization model is accompanied by some merits and these include minimized risk, maximized resources, prove the value of stakeholders, improved decision making and enable recurring success. Firstly, portfolio model reduces the risk that comes as a result of changes in the international business environment. Some of the risks that are minimized by portfolio organization model include financial risk, resource utilization and misdirected efforts toward one direction (Wieland & Handfield 2013, pp 22–29). Secondly, portfolio organization allows the company to redistribute its resources in a planed manner thereby reducing resource use. Portfolio organization model also helps attract the interest of stakeholders and other groups that may be interested in investing in the company. Thirdly, adopting portfolio also is important developing infrastructure that leads to recurring success. Fourthly, decision making solely depends on data on the organization, the data need to be visible from a top-down perspective or tactical bottom-up perspective. Portfolio organization model, therefore, enable the visibility of the data that enable decision making (Dalling 2007).
Demerits of portfolio organization perspective may also include the following increase exposure and missed windfall. Firstly, as challenges increase in the steel industry the company risk suffers from since the portfolio increases exposure to risks. When the market is declining the portfolio holding also declines to lead to the risk of collapse. Secondly, diversified portfolio normally suffers due to loss from different sectors. A single portfolio may make a huge profit that is contrary to the profit that may be made by the whole organization (Penfield 2008).
Integrated model describes the linkage between different aspects of the organization in a coherent manner for high efficiency. Integrated business model that is used in the company integrates Operational Excellence, Corporate Citizenship, Social Responsibility and Environmental Performance. Integrated organization perspective is coupled with some merits that include control over business, allow positive differentiation, more cost control, and more competitive advantage. Firstly, business integrated model allows the company to have control over various aspects o the value chain. Secondly, business integrated model enable the company to differentiate its product both at the production and at the distribution which increases its competitiveness since it adopts to the changing business environment. Moreover, the business can design its products according to consumer’s preference. Steel manufacturer is able to control the cost since it can adopt its main outlet through direct control of a business. This is possible through vertical integration for instance. Finally, an integrated business model also increases company competitiveness since the company can gain control of either distribution or main outlet hence the company has a competitive advantage over its main competitors (Wieland & Handfield 2014, pp 22–29).
Demerits of an integrated business model, on the other hand, include decreased flexibility, require high cost, may cause confusion and normally cause barriers in the market. Firstly, the integrated business model used by the company reduces flexibility due to many challenges that may occur in upstream and downstream investment. Secondly, to maintain the vertical integrated for instance require a high amount of money. Thirdly, as business use integrated model reduced flexibility due to communication challenges within the company thereby causing much confusion. Finally, as the company venture in different aspects of business such as distribution, it creates barriers to entry of the market by new firms that would invest in distribution for example (Stehr & Jakob 2014, pp 135–150).
Integration of both portfolio and integrated organization model
Based on the merits and demerits of both business perspective it is possible to adopt both portfolio and integrated perspective. Firstly, portfolio organization perspective has an advantage such as reduced risk due to diversification as compared to integrated organization perspective that allows control over the company. Secondly, adoption of both perspective allows the company to efficiently control its operation since the company is able to minimize any confusion arising from the use of one perspective. A perspective such as a portfolio reduces flexibility and this can be compensated by adopting an integrated perspective that allows flexibility from all perspective either top-bottom or bottom up perspective (Shahwan & Mohammad 2016).
2.Business Model Innovation and Technological Innovation through Strategic alliances, M&As
In response to challenges in the international business environment, Tata Steel came up with one of the business models that focus on the innovative that focuses on strategic alliance and mergers. The company has join partnership with other companies that are closely associated with steel manufacturing especially in facilitating technological upgrade of its industrial activities. In order to make the business sustainable the organization highlighted information system as one of the strategies prompting the company to partner with information service providing companies. The company has come up with some innovative strategies that incorporate various partners in the value chain. Tata company has been investing in innovation business model that incorporate both technological and business innovation models. Through company’s innovation portal the company has highly implemented various technologies as this is to reduce risk associated with changing and a dynamic global business environment. It is estimated that the company has implemented over 3300 innovative business ideas through its various subsidiaries (Thomas et al 2017, pp 30–47). In addition, the company currently has most of its manufacturing activities automated with computerized system.
In my opinion, Tata company has resource and capability to apply digital and mobile technologies to realize its goals. Firstly, the company has made some development in digital and mobile technologies since it has innovation portal. Though mobile technologies the company has not fully develop yet there is resources and capability to develop it. The remaining aspect of digital innovation that the company needs to develop is the mobile application that uses different mobile platforms. This is important since currently the digital marketing and communication form a critical aspect of company activities (McWilliams & Siegel 2001, pp 117–127). To reach as many customers as possible and also to reach out to the community through its sustainability program the company need to develop its mobile communication platform. In addition, digital and mobile technologies are also important also facilitate strategic alliances that play important role in partnership with suppliers and distributers within the global steel industry. Tata has been forming alliances and M&As as a strategic approach to dynamic global business environment and currently the digital innovation play an important role in connecting various firms to the main company thereby improving communication efficiency (Mahmudur & Sanjaya 2016).
The addition of ‘Prevesh’ to product portfolio attracts different views as this may have merits and demerits of the company. According to blue ocean strategy, the business has invested in technological heights where other competitors have not ventured. The company decided to come up with innovative ideas such as ‘Prevesh’ with no other competitors. As the business implement the ideas it reaches to Blue Ocean without other competitors and this allows other innovative ideas to come up and are implanted (Lantos 2001, pp 595–632). To compete in current dynamic global business environment blue ocean strategy is regarded as an innovative strategy. The business model, on the other hand, interconnects to the blue ocean strategy since both can allow entering the untamed market. One of the listed strategies that are used by Tata to respond to challenges in the global steel manufacturers industry. Another strategy is also innovation in product differentiation that allows the company to develop new products and services as the solution to challenges (Khalid 2011, pp 484–492).
3.Corporate governance, CSR, Sustainability and Leadership
‘The company's vision to be a global benchmark in value creation and corporate citizenship and the company's long-term corporate social responsibility (CSR) objective, is to improve the quality of life of the communities through long-term value creation for all stakeholders. This objective is in alignment with the Tata Group core purpose. Towards achieving this, the company has been a pioneer in various CSR initiatives. We continue to remain focused on improving the quality of life and engaging communities through health, education, sports, and infrastructure development. ( 2016)’
The above extract reveals Tata company’s value that explains aspects of corporate governance, Corporate social responsibility (CSR), Sustainability and other leadership aspects of steel manufacturers. To critique the above extract there is need to analyze and evaluate several of these aspects. It is important to note that corporate social responsibility is closely connected to the leadership and all works to ensure the business achieve sustainable practice. For instance, the sustainability aspect ensure that the company is socially responsible to the society and the environment.
Tata Steel has well structured corporate governance guidelines in line with both laws and ethical standards. The leadership and governance of the company are based on the board that has proved experience in leadership. The board is appointed by shareholders who are the owners of the company. The company management can be compared to the agency theory that provides different between shareholders and management that are hired (Rasche, Morsing & Moon 2017, pp. 6f). This is based on transparency and ethics that drives company activities. Moreover, the corporate governance guidelines also resemble another theory of stakeholder’s corporate governance. In this theory, stallholders control the company and shareholders are not the main stakeholders for the company. Similarly, in Tata steel, there are many stakeholders that play role in corporate governance that is more important as shareholders (Denis & McConnell 2003, pp 1–36).
Corporate Social Responsibility (CSR)
The company has well structured corporate social responsibility guidelines that ensure that the company is managed towards the fulfillment of its corporate social responsibility vision. The company also came up with social responsibility community that is the task to monitor the corporate social responsibility for the company. According to Jones (2007), a corporate social responsibility normally functions in compliance with laws, ethical and norms. Based on the annual repot the company management work in harmony to fulfill the corporate governance responsibility placed upon it by shareholders (Lantos 2001, pp 595–632). The senior management has the capability to realize the corporate responsibility of the company. Under normal circumstance, shareholders are the owners of the company though the company is managed under the board of directors (Stehr & Jakob 2014, pp 135–150). This leaves no choice for the board to be corporate responsible to shareholders. Though some other theories suggest that shareholders should not be the main or important stakeholders in the corporate social responsibility, within steel industry shareholders remains important stakeholders in the organization since they are the owners of the company (Bhattacharya, Sen & Korschun 2011).
Sustainability can be defined as managing social, financial and environmental risk to fit both human and environment. Sustainability goal of the company revolves around involving community towards sustainable developments. As part of sustainability, the company is involving different people within the Tata steel family. Though According to the annual report on Tata steel cooperate social responsibility, the Company endeavor to positively impact the lives of the communities around its areas of operation, minimize the impact on the environment and responds various issues of communities in a mutually beneficial way (Penfield 2008, Vol. 18, no. 6). The company governance is largely involved in community participation. The company support communities in various ways that include agriculture, education, mid-day meal, renewable energy and newborn baby. Firstly, the company has literacy program that targets adult. The program has benefited over 15,000 people thereby increasing literacy level. Secondly, the company gives medical care to newborn and the mother so as to provide health care to the community. In addition, the company supports farmers through an agricultural initiative. The company also gives meals to students in government schools in a program known as mid-day meal scheme. Finally, the company has developed solar streetlight project that utilizes the solar renewable energy. These projects or programs serve to impact the community so as to fulfill the sustainability goal of the company (Anderson 2006, Vol. 53, no. 4.).
Another aspect of the company is leadership that plays an important role in driving sustainability policies (Mehrabani & Dadgar 2013, pp: 09- 13). The leadership structure of steel manufacturers is structured to allow innovative ideas and communication facilitation between different players or partners. The leadership of Tata steel, for instance, is top-bottom perspective and is headed by the board of directors appointed by shareholders. The leadership of the steel manufacturers has various responses to the changing and this is evident in the leadership partnerships and reports that are part of the annual report 2014-2015. In addition, the management also plays an important role in the decision making that derives the company to maintain its production and distribution of products. As part of management Tata steel has several committees that are the task to manage or oversea various activities or corporate governance (Jobber & Fiona 2012, p. 143).
4.Personal reflections on learning
This assessment has an impact on my understanding of the Global Steel Manufacturing Industry competition as many key players such as Tata has strategies to respond to dynamic changing a dynamic business environment. Firstly, companies concentrate on innovative ideas and implement them to enter new markets. Companies also use its diversified products portfolio and good corporate governance to ensure full control of business and operations. Steel manufacturers have innovative business model in come up with technological marketing and communication. For instance, the company has an innovative portal that allows sharing of business innovation (Clarke 2004).
Secondly, steel manufacturers also have sustainability strategies to involve the local community and small business. This assessment also shows the merits and demits various aspects of policies especially sustainability policies. Tata, for instance, involve the local community in various activities such as agriculture, healthcare, and renewable energy. The community has benefited from various projects and programs that target sustainability programs. The sustainability program also works in hand with the committee in charge of cooperate social responsibility (CSR) (Fields 2002).
Thirdly, strategic alliances are important strategies that help the company to enter a new market, diversified and increase its portfolio. As the company form alliance with other stakeholders in the steel industry and this is important as it increases efficiencies in the distribution of products. The company is partnering with different other companies within its value chain. The company has also partner with other companies through M&As to facilitate its operation. Some of the partners are NGOs partners, manufacturing & processing EPAs, warehouse partners, and channel Partners (Giesler & Veresiu 2014, pp 849–867).
Fourthly, corporate leadership also plays an important in ensuring the company takes full control of portfolios in the market and ensures that communication is properly coordinated throughout the organization. The company also has the committee that ensures that the leadership fulfills the corporate social responsibility as part of corporate governance. Another aspect of corporate governance that the assessment has revealed is compliance with laws and ethical standards (Goergen 2012, pp. 104–105).
Finally, the assessment has also revealed the effect of policies and practice of the steel manufacturers. Various companies within the industry have policies that aim to achieve the objectives and aims of the organization. Tata, for instance, has policies that facilitate good governance and incorporate all the key stakeholders in the company. The company work in harmony with other partners in the value chain to establish long-term value chain (Sneirson 2009, pp 987).
In conclusion, steel manufacturing industry is a dynamic industry that keeps on changing and sometimes declines to lead to good strategic polices. The industry has some key players such as Tata have well-structured policies, strategies, and models that enable the company to response through a sustainable solution. In addition, the company has a good corporate governance structure, corporate social responsibility, and leadership that work in harmony to ensure that the company response positively to the dynamic environment. The company as good sustainability strategy that in cooperate the local community through environmental strategies such as renewable energy. Finally, innovation and technologies are two most important aspect of growth that is critical for competition in the current society and business environment. The company, therefore, has both resource and capabilities to adopt and implement digital and mobile technology as an aspect of the technological innovation.
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