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Case Title:

Will the Expansion Strategies of Tata Steel Pay-off?

Publication Year : 2006

Authors: Sandhya Hotchandani, Prof. Bala Bhaskaran, Joel Sarosh Thadamalla

Industry: Minerals, Metals and Mining

Region:India

Case Code: GRS0164A

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Tata Steel had been a flagship company of Indian conglomerate Tata Group. By 2006, Tata Steel was the world's 55th largest steel company with production capacity of 9 million tonnes (MT). Though it had been exporting to various countries for the past 25 years, it had yet to prove itself on the global scale. Tata Steel had an objective to increase its production capacity to more than 30 MT and become a global company by 2015. Starting its journey on the global growth path, Tata Steel made two major acquisitions namely, Singapore based NatSteel in 2004 and Thailand based Millennium Steel in 2005. In October 2006, Tata Steel made a bid to acquire the world's 9th largest steel company, UK-based Corus Group. If approved by Corus shareholders, the deal would create the world's fifth-largest steel firm and the largest Indian takeover of a foreign company. Besides, Tata Steel had plans of capacity expansion in various countries through various projects. However, the deal to acquire Corus was not finalised yet, as it took a new turn when Brazil's CSN (Companhia Siderugica Nacional) approached Corus' board with a higher offer than Tata Steel. Critics of Tata Group's globalisation spree argued that the group had intended to overpay for overseas acquisitions. Moreover, Ratan Tata, who had been leading Tata Steel for more than 12 years, would retire in 2007 at the age of 70. The case highlights the globalisation aspirations of Tata Steel and the challenges ahead. It traces the journey of Tata Steel from domestic company to global entity. The case presents a dilemma, would Tata Steel be able to realise its ambitions of putting its brand name on the world map in the volatile steel industry? How successful would its expansion strategies be?

Pedagogical Objectives:

  • To understand growth strategies of Tata Steel
  • To discuss whether Tata Steel would succeed in its expansion strategies.

Keywords : Tata Steel; Tata Group (TATA); Expansion Strategies; Globalisation; Mergers and Acquisitions(M&A); Steel Industry; Consolidation; Growth Strategies Case Study; Challenges for Globalisation; Strategies for Globalisation; Domestic Market; Corus Group; CSN; NatSteel; Millennium Steel; Ratan Tata; Leadership

Contents : 
The Global Steel Industry
Growth of the Industry
Major Global Steel Companies
Future Prospect of the Steel Industry
The Trend of Consolidation
The Tata Steel Company
On the Growth Path
Acquisition of Millennium Steel, Thailand
The next target: Corus Group, UK
Other International Expansion Plans

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