Pestle Analysis of TATA Steel

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Pestle Analysis of TATA Steel

By | December 2013
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Analysis of Tata Steel

Tata Steel, established in 1907, is one of the world’s most geographically diversified steel producers, with operations in 26 countries and commercial offices in over 35 countries. Tata Steel, part of the Tata group, based in Mumbai, has exploits in various categories including tea, automobiles, communications, power and salt. It is estimated that the Tata Steel group produces 31million tonnes of Steel per year. Tata steel is the second largest steel producer in Europe, with the level of global steel production currently over 1bn tonnes, which is expected to increase to 1.5bn tonnes by 2015-2020. To expand from India into the global marketplace Tata Steel has made numerous acquisitions including Millennium Steel in 2005, Nat steel in 2004, and Corus Steel in 2007. Tata Steel’s success is down to their understanding of the key drivers of the steel industry, which can be analysed by either ‘PESTEL’ or ‘SWOT’ analysis method.

‘PESTEL’ (Political, Economic, Social and Technological analysis) is a framework used to analyse and review the macro-environmental factors that have an impact on a business or organisation. Using this analysis the key drivers powering TATA Steel’s success can be identified and it becomes apparent that being an Indian based company has proved advantageous, due to its rapidly growing economy, with a GDP of 8.5% in the year beginning 2009 (1 http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG), and its large, low-wage workforce.

India is one of the fastest growing economies in the world, with a growth rate of 6% pa over the past 10 years. Following three decades of stale growth, often blamed on the following of socialist-inspired policies India has progressed towards a free market economy through economic liberaisation. During this boom, India’s crude steel production rose nearly 6% to nearly 38 million tonnes [1]. Being formed in India has proved advantageous to Tata steel due to the close proximity of...
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