India steel industry response to the liberalization : the case of tata steel

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SUMMARY

INTRODUCTION………………………………………………………………………………………1

I. IMPACT OF THE LIBERALIZATION ON THE STEEL INDUSTRY

1. Presentation of the steel industry……………………………………………....2

2. The New Industrial Policy……………………………………………………..2
3. The steel industry under the New Industrial Policy…………………………...3

4. The evidenceof growth of the steel industry after the liberalization…………..5

II. THE CASE OF TATA STEEL: A STRATEGIC APPROACH

1. Presentation of the company…………………………………………………….6
2. Strategic change of Tata Steel under the liberalization…………………………7
2.1 Modernization of the production…………………………………………………..7
2.2 Quality improvement………………………………………………………………8
2.3 Overstaffingmanagement………………………………………………………….9
2.4 Results……………………………………………………………………………...9

CONCLUSION……………………………………………………………………………….10
SOURCES……………………………………………………………………………………………..11
APPENDICES…………………………………………………………………………………………12
INTRODUCTION

The development of modern economies necessarily involves the steel. All major industrial economies worldwide hold a large and technologically complex steel industry whichshaped their growth at the beginning of their expansion. Even nowadays, the level per capita consumption of steel is considered as a major indicator of development and living standard among a country.
In India, the steel industry is more than a century. In 1956, a new industrial policy took place in the recently independent country. The role of the new policy was to enhance sustainable economicgrowth and accelerate the industrialization to achieve the socialistic pattern of society. The resolution gave to the State the responsibility for the industrial development, given the scarce capital and inadequate entrepreneurial basis. The Industrial Policy Resolution classified industries and defined a degree of State control for each category. The first one comprised 17 industries exclusivelyunder the domain of the Government. These included iron and steel industry. Therefore, the steel industry was developed under a state controlled system. Large plant capacities were reserved for public sector only and the entire industry were under capacity control measures, price regulation, foreign investment and import-export restrictions and licensing system.
But in the 1991 and then in 1992 awave of liberalization modified significantly the economy and the steel industry. The new economic policies generated new opportunities for the expansion of the steel industry. The liberalization was a factor of significant growth for the steel and iron sector. Thought, the new economic model also brought a lot of crucial change among the Indian market which constituted a real challenge for the steelindustry. The company already on the market successfully faced up the modification of their environment by applying innovative strategies. Tata Steel was one of the oldest and most important players on the steel market in India. Founded in 1907 by the visionary Jamsetji Nusserwanji Tata, the company …
We will take the example of this company to understand how the steel sector made the transitionof the liberalization.
How a company like Tata Steel enhance its growth in a context of liberalization? Which kind of strategic advantages it develop to keep its competitive advantage in a growing market?
To answer this question we will first study the evolution of the steel industry under the liberalization, trough a presentation of the industry and the different aspects of the New IndustrialPolicy. Then we will observe the evidence of its growth in the nineties.
In a second part, we will take the case of Tata steel and observe the strategic change led by the company to challenge the new competitive forces involved by the liberalization.

I. IMPACT OF THE LIBERALIZATION ON THE STEEL INDUSTRY

1. Presentation of the steel industry
The modern Indian steel industry...
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