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Environment Business Company
One of the most important aspects for any organisation to function effectively in the present situation requires them to be constantly aware of the environment in which they are in. This report aims to study the business environment of a leading Indian industrial manufacturing company called Jindal, which is presently know as JSW who have experienced a large and widespread growth not only in India but also throughout the globe.
Today, JSW steel Ltd is fully combined with various units in India across Karnataka and Maharashtra at Tarapur mini steel mill and in USA in Bay Town and Texas. Orginally the name of JSW was Jindal Iron and Steel Co Ltd [JISCO] and then it was incorporated as Piramal Steel Ltd on June 2, 1972. In 1982, the company renamed it as Jindal, today Jindal Vijayanagar steel Ltd (JVSL) is presently known as JSW. The company is spread over 3,700 acres of land and its plant is located at Toranagallu in the Bellary-Hospet area of Kanataka. (www.jsw.com).
The main task and motto of the company is to produce large iron and steel products. Mr.Sajjan Jindal, the Managing Director, suggests that “Everything revolves around our core steel business;” adding to this “steel gave birth to the power business.” (Adhikari, 2008). Apart from this company is also diversified in many aspects like carbon, power, aluminium and cement steel plant. The vice chairman and MD of the company is Mr.Sajjan Jindal under whose dynamic leadership the company has grown in leaps and bounds.
The External Environmental Factors
To better understand the organisation’s environment, the PESTLEC analysis is employed which breaks the environment down to its Political, Economic, Social, Technological, Legal, Ecological and Competitiveness and identifies the factors that imply on them.
According to “Michael Howard, Secretary of state for the Environment, in This Common Inheritance: The Second Year Report, as, a new presumption in favour of economic instruments rather than regulation as we develop our environmental policies” (Beaumount, Pedersen & Whitaker, 1993: 49).
The company is located in the Bellary region of Karnataka, India which is a politically sensitive area. This is due to the huge returns the politicians see in the mining belt. The two important main parties are the Congress and the BJP take the maximum opportunity to possess the hold of the mines so that they have the final say. Due to these factors the company has to ensure that they keep the politicians and the parties in their good books.
Pressure groups: Mukherjee (2008) suggests that today in the current scenario there are lots of confusion and conflicts is going on and the one would be disappointed if the one were steel investor and these days the pressure on raw materials is to high and even the government are also trying to solve the problem and they are also coming up with number of solutions. Here the pressure groups are between the Tata motors, Sail and JSW.
The strong international demand for steel especially propelled by China coupled with a high domestic requirement resulting from India’s economic boom has immensely benefited the Indian steel industry.
Ironically however, the company has also benefited from the economic depravity of the region. The high illiteracy rate, the fertility of the iron ore belt has indeed helped the company to contract employees at a very low cost. The industrial belt of Bellary is not is not as developed like other major cities as there are hardly any major industries which contributes to the financial stability of the locals.
Thereby, JSW has naturally become the dream company for many and to stick on in spite of frustration and disappointments. The company’s progress has also affected the local people who are in no where connected to the company’s advancement. The land price around the JSW has soared up to unaffordable prices for the locals. The daily basic items like fruits, vegetables and groceries has shot up so high that it matches the prices seen at some of the cities.
Social / Cultural
Social changes in the lives of those who are connected to JSW steel and reside around their premises experience a visible change. The standard of living has changed with the higher income and buying capacity of the employees. A contract labourer working in the company brings more money than tilling the barren land. This higher financial capability has helped people to live in better conditions having the basic needs of their lives met.
More children are seen going to schools, migrations to the cities is arrested to a larger extent. People are able to live decently and are having stronger purchase power. All these have helped the people involved with the JSW group positively. But as we analyse the negative aspects of this economic growth JSW are bothered by the changing lifestyle of the youths. The village youth are no longer interested in simple living but are attracted to high lifestyle of the cities which in fact suck most of the financial resource they earn.
Due to the lack of the financial resource to meet the growing desire and attraction they tend to robbery and cheating. For instance robbery and thefts are plenty. Surrounding villages has also reported the increase of AIDS cases. In order to catch up with the booming industrial growth prostitution has increased. The clients are the truck drivers who bring materials from all over India and the growing associates employees.
The dangerous trend seems to be that some of these women are married and are forced to this flesh trade by their spouse in order to earn more money for their family. Thus the financial change has also changed the traditions, values and the culture of these people immensely.
JSW is situated in the location of Toranagallu has various factors which is affected by the environmental factors around the company. The massive expansion of the company has given rise to various employment opportunities especially for the local flock. The land which was their own was barren with scant rainfall and they were not able to cultivate it. When expansion of the company physically lots of these land were bought by the company.
The local who sold the land according to the agreement received they assured money as well as job for the family members. This sudden economic growth not only enhanced their economic power but only made them strangers to their own native place. Identity to land and thereby to the village no more exists.
Due to the lack of skill of these people they were given jobs which were high risks and thereby leaving the comfort zone of their land to the risky jobs. Thus the local land losers not only gained a new lease of economic growth but also entered the dangerous risk of industrialisation.
JSW is the second largest company which has implemented the technology of Corex other than POSCO Korea. Due to this technology production of steel has doubled and has become the boon for the company. Thus technology is one of major focus of JSW group. The plant is its self modern plant with latest mechanisms. Communication is very important medium to cover the large area and a vast work force.
Thus computer, inter and intranets, mobiles are widely used mediums so that communications does not suffer. The company also produces in house magazines so that the employees also are kept updated of information happening in other areas and subsidiary plant of JSW plants. With this rampant use of technology communication is not taken for granted.
Legal and Ecologicalfactors
With the massive expansion of the company’s legal problems have increased. However, the company has devised policies and measures so that the land giver is not affected and jobs are ensured to these land givers so that they can work in the company. The company has also developed its environmental background immensely.
The land which was like a barren desert like a place filed with trees which has bought in rain and decrease in the temperatures. The dream of the Top management is to plant 10 lakh saplings in the next two years so that it gives to earth what it has reaped from it.
The company has benefited immensely from the fact that raw materials available at its vicinity are of the best. In comparison with competitors the cost of raw materials is cheaper. Due to the regional environmental condition of sparse vegetation and illiteracy the growth and progress of the company has attracted cheap labour from surrounding villages. The financial benefit they get in comparison of working in the plant is minimal.
This has helped the company immensely as the cost of labour is cheap as compared to its competitors. All this has helped the company to address to the market diversity in a massive way. Thus the demand of power, cement, steel & aluminium are the market diversities which the company is earnestly addressing so that the company betters the benchmark at different aspects of everyday life to a common man as well as the company (Seshadri and Tripathy, 2005).
Monitoring the environment
Factors like customers, competitors, employee, currency fluctuations, regulatory bodies, suppliers, services and utility, trade unions and management committee, finance and economic factors are some of the transactional / contractual model of the company.
Monitoring is one of the vital elements for the progress of the company. The company monitors its products, employees through various forums. The company has well trained quality team in each and every departments where the products are manufactured. These monitoring is done at various stages to ensure that the quality of the products are up to standards.
According to Har Ravindra Lal, AVP – HR , JSW adds, “we have a pro-active approach and issues are addressed without much ado. If there’s no trade union it’s because the management acts as proxy union for them”. Monitoring the employees is a very sensitive and a very delicate issue. It is done in the office and at the township where the employees reside. Appraisals are conducted yearly ones so that the boss / managers evaluate the sub-ordinates and the grades are given accordingly.
The day today is monitoring at different level in order to get best from the worker. Monitoring of the work is more with the contract employees. Since the employees are large in numbers and under various contracts these associates employees are monitored so that their livelihood is not endangered in any way. Since the company does not encourage the unions the company are always on the look out for employees who are involved in the anti company drives.
This is done so that the company and the employees do not suffer due to some vested interests. In order to address the grievances of the employees and the company has various motivational schemes like suggestion schemes, grievances addressal schemes so the employees are look after. (Lal, 2007)
Key customers – India & International
Fast growing ISP in India:
Among the many social economic, political and technological factors affecting the organisation, the key factor which can change the future course of organization is the following.
Increasing prices of iron ore. Though JSW group has low cost of production as compared to other steel plants in India, this is fast changing. The company at the time of inspection didn’t feel it apt to own the mines, thus it relied on the iron ore supplied by the governmental organisation which was very cheap.
But as time passed and steel being a major consumption through the world government too realised the potential wealth it can create to its coffers through the sale of iron ore. This naturally raised the value 100 times to the present market. Now the company is finding that the iron ore which is bought from the government is eating to its profits (The Hindu Business Line, 2008).
The second major external factor which might affect the organization is the tough competition from the major steel industries. With boom of steel prices the steel manufactures are expanding in an immense phase. With the globalization rampant in every country multinationals are entering markets and competing with the local markets which cannot stand the heat of these multinational companies.
Such a situation is also seen in the steel industries of India. The government run SAIL and private owned Tata Steel were like giants manufacturers taking a nap. But the emergence of foreign markets has toppled the Indian steel market. These giants have awakened and are in a massive expansion mood. In such a situation JSW steel which is young company is venturing into a market of not only foreign but also Indian companies whose sole aim is to take the mines and have a dominant role in the steel production of the country.
The third external factor is the depleting iron ore from the rich Bellary belt. Critics may argue that this is of distant future but the impact will devastate the whole region if it is not controlled now. With the company expanding keeping in view of the global markets and profits we might be squeezing the mother Earth by the throat which might die in pain and struggle taking the toll on all those who are involved.
Terms of employment and rates, HR matrix, exit interviews
Since the company is growing into 10 millions tones the rate of recruitment is massive. The company plans to induct around 5400 employees for its 10 MT projects. For these the efforts are in a full swing. At the same time the company is also losing its valuable human resources in attrition and the opportunities is wide open.
Thus the attrition rate is reaching to the mark of 12%. The reasons for attrition are discussed in various forms and the management is trying various possibilities to address the various grievances of the employees. Managers are trained to deal with the employees problems so that better results are expected. Exit interview are the last forum in which the employees is convinced of benefits in staying in the company.
Responding to environment factors:
Under the leadership of Sajjan Jindal, the JSW Group has other companies like JSW steel Ltd, JSW Energy Ltd, Southern Iron & steel, South West Port ltd & Jindal Praxair oxygen Ltd. In India, in different parts in different locations overall 13 plants has been set-up which has proven high improvement in those fields. (www.jisco.com).
JSW mainly focus on producing metals and manufactures the products and the company is sub-divided into steel producers, the number of employees in the industry is 4000 people. The major business description of JSW is to production and distribution of iron and steel products like hot rolled steel strips, sheets, plates, cold rolled coils, sheets, galvanized plain, corrugated, colour coated coils and sheets.
Indian steel producer suggest that the three U.S companies of Jindal United steel, Saw pipes USA and Jindal Enterprises for combining values of $900 Million .So by this JSW steel company are going to merge the three companies into one. In keeping with the trend of Indian companies going global JSW steel has also gone global with recent acquiring of the three plants in US Houston. Today’s the market is growing especially in the steel sector thus the new plant era coming up in areas like Jharkand and Bengal and also expanding in the existing of Vijayanagar plant in our location from 4 MTPA to 10 MTPA (Stundza, 2007).
Conclusion and Recommendations
In the sections above, some of the key factors that influence the environment of JSW have been identified and also an attempt was made to try and understand how the organisation monitored its Environment. Finally some of the company’s responses to this environment were looked upon. Putting it all together gives a lot of information of how they are situated in the industry and what they may need to focus on to stay in the game. Below are some recommendations for the organisation.
- The company in keeping with phase of development can also develop the people in and around by giving more facilities to t live a life of satisfaction and contentment.
- The company can develop grievance mechanisms so that the employee can get to opening up and expressing issues that can be solved before it becomes a job threat.
- The company in the name of expanding should also take steps to protect environment so that life is not threatened.
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Seshadri, DVR. and Tripathy, A. (2005), ‘A Value-Based Approach for Sustainable Supplier-Customer relationship : The case of the Indian Steel Industry’.
Stundza, T (2007), ‘JSW steel buys U.S. steel plate’, pipe mills; Vol 136, Issuse 12, 13th September, [Online], Available: http://www.allbusiness.com/manufacturing/primary-metal-mfg-iron-steel/6338255-1.html [22nd Jan 2008]
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[17th Feb 2008]
Trivedi, Anup (2008), Employee of JSW interviewed on 15th January 2008 (name changed for confidentiality)
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