PESTEL Analysis of TATA Steel

Political

1. As part of their business expansion, Tata Steel made some high risk investments in countries such as Bangladesh, Iran. For example: the plan set up in the Bangladesh is getting delayed by the question of gas supply, whereas the issue of lease of the mining of the iron ore in the Iran country is responsible for the increase in the cost of the production. 2. By improving the infrastructure of the country, Tata Steel and other steel companies can save some amount, as they spend huge amounts on the freight and transportation. 3. There are no quantitative restrictions on import of iron and steel items. The only mechanism regulating the imports is the tariff mechanism .Advance Licensing Scheme allows duty free import of raw materials for exports. Iron and Steel industry has been included in the list of `high priority' industries for automatic approval for foreign equity investment up to 100%. Price and distribution of steel were deregulated from January 1992. 4. The government acts as a resource allocator (the mining policies of the Government), as Competitor (the public sector steel companies) and as Regulator to TATA Steel.

Economic

1. Due to the subprime crisis in US, European markets faced the problems of the recession this creates the bad impact on the Tata steel as the Netherlands, United Kingdom and Germany are the main markets for the CORUS. 2. Steel industry may got affected because of the cyclical economic condition because many industries like automobiles, appliances and construction depends on the steel industry and if industries faces any kind of downturn in the economy Tata steel also may also face the losses . 3. Steel production process are completely dependent on the energy market which can affect the Tata steel in the economic manner. With the acquisition of CORUS company gained the growth prospective in nature but, the cost of acquisition goes beyond the financial expectations. 4. The Government introduced ‘Special Economic Zones’ (SEZ) in June 2005, with the aim of creating competitive economic regions. TATA Steel plants in the SEZs are not subject to restrictive normal laws for the purpose of export operations and also receive additional advantages including tax holidays. Freedom to source inputs domestically or externally without any specific approval or duty payable and sales tax reimbursement on domestic purchases.

Socio-Cultural

1. Tata Steel got awarded for the commitments in the business ethical behaviour and improving the lives of the employees and their families. For this purpose Tata steel got awarded by the GOLDEN PEACOCK GLOBAL AWARD. 2. Tata Steel also focused to create the social environment. They constantly made the improvements in the health issues, economic wellbeing and education facilities provided to the nation. This policy works out in near 800 villages in Jharkhand .Orissa and Chhattisgarh. 3. Hospital on wheels is the basic innovation of the Tata’s whereas Tata is also responsible for the habitation in slum areas in urban developing cities. 4. ‘Operation Muskaan’, a project initiated by Tata Steel, under which hundreds of people born with cleft lips or cleft palates were operated for free of cost.

Technological

1. ‘METAL JUNCTION’, an e-portal system started by Tata Steelwhich is helpful for not only to Tata steel but also to entire industry. With the help of this technology e-market is the biggest market for the purchasing and selling of the steel in the world. 2. To reduce the emission of the co2 in the environment Tata steel has invested hugely with the research of the ultra-low carbon steel. 3. Tata is also engaged with the objective of the energy conservation schemes where Tata is doing research to reduce the energy consumption in the production process. 4. Captive iron ore is one of the biggest competitive advantages of Tata Steel. But this raw material has phosphorus content at .080 per cent, which is not acceptable by many buyers. By changing the converter blowing regime, bottom injection practice, and the lance geometry, Tata Steel took the level down in stages, thus using technological innovation to build on the competitive advantage.

Environmental

1. The Dhamra port is the joint venture of the Larsen & Toubro and Tata Steel, which came into existence for the protection of the Olive Ridley sea Turtles. Dhamra port is also supporting for the saving in the saltwater crocodiles as well as it is contributing the help to save the wildlife in India. It is also providing the breeding grounds for the horse shoe crabs and other rare species of the reptiles and amphibians. 2. TATA steel aims to reduce CO2 emission from 1.8 to 1.5 tonnes per tonne of liquid steel (9%) by 2012, under its global initiative called eco-citizen. 3. The Company raises 400,000 saplings every year across various locations and it involves the local community in this process of sapling plantation in the area. Tata Steel Rural Development Society (TSRDS) has created and supported many ‘Save Forest Groups' in Noamundi and Joda, to safeguard existing forestland. TSRDS has encouraged local people to protect the forest as a valuable sustainable resource.

Legal

1. Tata Steel, with its captive mines in Orissa and Jharkhand meet its entire requirement of iron ore and 65 per cent of its coal needs. 2. Mines and Minerals (Regulation and Development and Regulation) Bill, 2010, requires mining companies to share 26% of its profit with local inhabitants. Royalties accounted for 3.4 per cent of Tata Steel's stand-alone expenses last year. The new charges could account for nine per cent of their total expenditure and cost them 5-6 per cent of their operating profits. 3. Tata steel ensures the EHS (Environmental health and safety) under which each and every employee’s activity is managed by the EHS framework. 4. Unstable government in Jharkhand and various tribal protestors are creating some legal issues for the Tata steel to set up 12 MTPA green field plant.

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