Anil Barik - Final-strategic Approachci_relevance of Competitive Intellegence in India Steel Sector

8/11/2019 Anil Barik - Final-strategic Approachci_relevance of Competitive Intellegence in India Steel Sector

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The Relevance of Competitive Intelligence in Indian Steel Sector

Anil Barik

Research Scholar

SOA University, Bhubaneswar,India-Email: [email protected]

Unknown to many, India had a role to play in Japans reconstruction in the years after WorldWar II. Indian iron ore fed Japanese steel mills, the backbone for growth in the countrysconstruction and auto industries. And, till Chinas steel industry took off at the turn of the century,more than three-fourth of iron ore exported from India landed in Japan.

Towards end of 2010 in India , supply glut in Japan ,increased Chinese exports to the country

and a sluggish domestic economy bring Japanese majors to India. All four major steel companies tieup with Indian Steel Companies: JFF invests in JSW steel, Kobe has JV with Essar and SAIL,Nippon with Tata steel and Sumitomom with Bhushan Steel. They are again complementing autopeers like Toyota who are also setting up plants in India

India was the worlds fifth largest producer of crude steel in 2009 and is expected to becomethe worlds second largest producer by 20152016.

In Indian steel sector scenario, The past can be a dangerous predictor of the future. This isespecially important if the present and/or the future have little in common with the past, as isincreasingly the case in the business marketplace today. Intelligence must be prospective-oriented,

looking both deeply and broadly at an indeterminate and uncertain future, and willing to take risksby being both predictive and inventive. Foresight is not gained by looking in the rear-view mirror orby using data pointing toward the past. Increasingly, a winning strategy will require informationabout events and conditions outside the institution: non customers, technologies other than thosecurrently used by the company and its present competitors, markets not currently served, and so on.

Here comes the role of CI which will be future, as opposed to historically, oriented. Theywill be predictive in addition to being descriptive and explanatory.

This paper gives an in depth analysis of trend ,Business strategy of Indian steel majors andrelevance of the CI to Mitigate Corporate Risks.

Key Words: Compititive Intelleigence, Indian Steel Sector, Business strategy,SWOT Analysis


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INTRODUCTION:

Nowadays, economic organizations are subject to external forces that they must live with andreact to: increasing sophistication of competitors, customers and suppliers, globalization ofbusiness, international competition. Perhaps the most critical component for success of the modernenterprise is its ability to take advantage of all available information - both internal and external. Its

a real challenge, due to the tremendous flow of information its facing every day. Also, the nature ofinformation itself has changed, in terms of volume, availability and importance. The data to beconsidered becomes more and more complex in both structure and semantics. With the Internet,Intranets, Groupware systems the volume of available data increases each day customercommunications, internal research reports or competitors web sites are just some sources ofelectronic data. Intellectual property and assets, knowledge are contained within the huge volumesof information and leveraging this value is increasingly important in the competitive market. Makingsense of all this information, gaining value and competitive advantage through represents realchallenges for the enterprise. Information management its a part of knowledge management, asinformation can be considered a type of knowledge (explicit knowledge). Integrating BusinessIntelligence and Knowledge Management in order to respond to the challenges the modern

enterprise has to deal with represents not only a new trend in IT, but a necessity. Over time,techniques from both technologies blended, Competitive Intelligence Systems are a direct result ofsuch integration.

No business is an island. For success, the business will need to deal with customers,suppliers, employees, and others. In almost all cases there will also be other organizations offeringsimilar products to similar customers. These other organizations are competitors. And their objectiveis the same - to grow, make money and succeed. Effectively, the businesses are at war - fighting togain the same resource and territory: the customer. The competitor will have secrets that can be thedifference between profit and loss, expansion or bankruptcy for the business. Identifying thesesecrets is thus crucial for business survival. Finally, the relevance and importance of each piece of

information needs to be interpreted and analyzed - on its own and in conjunction with otherinformation, the other pieces in the jigsaw. This is where information starts to become intelligence.Competitor intelligence needs to be evaluated and selectively communicatedto all who need to makedecisions based on what customers, suppliers, or other companies in the market are doing or arelikely to do. And in today's world, that usually means everybody [14 ]

When some people hear the term competitive intelligence (CI), they often think of industrialespionage or spying. Even though the term may imply some overtones of these activities, CI is reallyinvolved with developing a systematic program for capturing, analyzing, and managing external (andinternal) information and knowledge to improve the organizations decision- making capabilities.CIs focus is more on external views, but some people feel that it could include internal perspectives

as well. Knowledge management (KM) and business intelligence (BI) are closely linked with CI.KM deals with how best to leverage knowledge internally within the organization and externally tothe organizations customers and stakeholders. Certainly, some cultures are more permissive andreceptive to knowledge sharing. This influences how willing people are toward sharing theirinformation and knowledge. Similarly, BI deals with how best to capture and share internalinformation to make it widely available throughout the organization. KM and BI are close cousins toCI . CI is similar, in a way, to playing sports. Scouting out ones opponents helps self to prepare agame plan in advance CI is as simple as that collect, analyze, develop, and manage; collect theappropriate information and knowledge, analyze the information and knowledge, develop an


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approach based on the synthesis of the results, and manage companys expectations and strategy, andadjust accordingly [ 11]

Competitive intelligence has undergone a raising interest in recent years as a result of theinformation explosion and the sharpness of information technologies. Trying to define the scope ofcompetitive intelligence, a lot of definitions proposed by business intelligence professionals and

strategic analysts were summed up in the Competitive Intelligence Handbook .The general opinionof all these business information professionals is By its very nature, no business is isolated. In doingits activity, the business will need to deal with customers, suppliers, employees, and others. Inalmost all cases there will also be other organizations offering similar products to similar customersand seeking similar objectives: growth, profit and fame. These other organizations are known ascompetitors.

Competitiveness is a natural relationship between businesses. Business competitors are otherorganizations offering the same product or service in the present time but also in the thatCompetitive Intelligence deals with the collection, selection and interpretation of publicly-heldinformation that emphasize competitors position, performance, capabilities and intentions.Competitive intelligence is the analytical process that transforms scattered information about

competitors and customers into relevant, accurate and usable strategic knowledge on marketevolution, business opportunities and threats. It is focused on environment and uses public sources tolocate and develop information on competition and competitors, information later used as references,benchmarks or any other basis for strategic analysis. Competitive Intelligence is the natural exploitof the increasing availability of commercial databases world-wide, the on-line mass-media and thedevelopment of cutting edge information technologies: business intelligence and knowledgemanagement. future and also organizations that could remove the need for a product or service byoffering substitutes or changing habits. Monitoring competitors worth a lot because it providesnecessary knowledge to be able to predict their next moves, exploit their weaknesses and underminetheir strengths. There are four stages in monitoring competitors - the four "C"s:

1. Collecting the information

2. Converting information into intelligence(CIA)- Collate and catalogue - Interpret it - Analyze it

3. Communicating the intelligence4. Countering any adverse competitor actions (making use of gathered intelligence)

This approach is war-like, with terminology taken from the military field (intelligence,counterintelligence and techniques as well). [ 18]Business and Competitive Intelligence:

The focus of business intelligence is on understanding all aspects of a business enterprise:internal operations and the external environment, which includes customers and competitors (themarketplace), partners, and suppliers. The external environmental also includes independentvariables that can impact the business, depending on the business (e.g., technology, the weather,

government policy actions, financial markets). All of these are the objects of business intelligence inthe broadest definition. But the term business intelligenceis also used in a narrower sense to focuson only the internals of the business, while the term competitor intelligencerefers to those aspects ofintelligence that focus on the externals that influence competitiveness: competitors. A taxonomy ofthe business intelligence terminology distinguishes business intelligence proper from competitiveintelligence by the objects of their study. Neutral external factors are often included in the definitionsof both categories of intelligence. [12 ]


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Fig.1The 4C approach of competitive intelligence [ 18]

Fig. 2Business Environment Fig. 3Competitive Intellegence Program

CI, especially when used for forecasting and scenario analysis, alerts us to competitive playsthat are happening or about to emerge in markets. It helps organization to explore growth andmarket opportunities. It keeps employees smart, because it really pays to have smart employees. Inrapidly changing and consolidating industries, youre managing chaoslots of input happening allthe time. Organization need a well-articulated marketing strategy based on sound market research,sound competitive intelligence, sound business intelligence, benchmarking, and metrics (Figure 2).CI is a vital element for finding the right strategies, and for executing the strategies right. With theappropriate resources, theres no reason why companies cant continue to grow in markets that arechanging rapidly

Economy

E X T E R N A L F O R C E S

CustomersP

artners,

Suppliers,

Distributors

D I R E C T F O R C E S

Technology Demographics

Your Company

Current

Competitors

New Competitors

Regulatory Changes

Political


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Taxonomy of the Components of Business Intelligence

Business Intelligence: Acquisition, organization, analysis, and reporting of internaland external factors to enable decision makers to make faster, more accurate andeffective decisions to meet business objectives.

Business Intelligence Competitive Intelligence

Focus ofIntelligence Internal External: Neutral Factors

External: CompetitiveFactors

Objects

(Targets) of

Intelligence

Business operationsSupply chainCustomer relationsmanagementBuyers and suppliers

Customer structure,preferences, behaviorsFinancial environmentRegulatory climateMarketplace environment

Segmentation Market drivers

Buying patterns

CompetitorsStrategic partnercandidates

Objective Efficiency Agility in the marketplace SecurityUses by

Intelligence

Consumers

Business process performanceanalysis, refinement, andreengineering

Market dynamics modelingand forecastingMarket positioningLearning customer trendsIdentifying threats,technology, regulation

Identifying competitorthreatsTracking andforecasting competitoractionsIdentifying, qualifyingstrategic partnercandidates

Strategic Business Planning Process

Fig. 4 The CI cycle - [ 9]


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1.Identify Key

IntelligenceTopics

Needs2. Create the Knowledge Base

Intelligence Usersand Decision makers

3. Intelligence Collection andReporting

4.Making the IntelligenceActionable and Understandable

Fig. 5

The CI Cycle: 5 Basic Operations Each is necessary and adds value. ( Herring, Model) [ 7]

For companies to realize lasting benefit from competitive intelligence that pays dividends tostrategy development and execution, it is critical that the competitive intelligence be a systematic,

ongoing activity that resides within the organization. The process cycle depicted in Fig.5demonstrates the key components of that process. Too often, companies believe they can short-circuit the intelligence process and fail to develop one or more of the components. Typically, theanalysis and production function is given short shrift, resulting in a poorly conceived program thatprovides little more than data summaries to management under the guise of intelligence. No oneprocess can stand alone; all are necessary and add value to each other. [ 6]

COMMON GOAL OF COMPETITIVE INTELLEGENCE:The common goals of a CI encompasses to Become aware of competitive threats, Do away

with or shrinking surprises , getting competitive advantage by decreasing reaction time and toExplore new opportunities

For fulfilling these goals it is necessary to Identify the Competitor - Direct or Indirect,Who is threat in the market (Self or Any major competitor),if self entry or existence is threat tocompanys market, have in depth wing of research. Identify capabilities (strength) or weaknesses ofcompanys competitor and finally identify competitor's future prospects or opportunities.

"A competitive world offers two possibilities. You can lose. Or, if you want to win, you canchange."How? Answer is simple. Search. Research. Adopt. Market Research: Market studies enable

Planningand Direction

Information,Storage, andProcessin

ProperCollectionand Reporting

Analysis andProduction

Planningand Direction

Other Users


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strategist to envision market sitting from his desktop. Market research can beprimary(Questionnaires, Focus groups, Indirect research (spying, counting ) research and secondaryresearch(Government Reports and Publications, Reports from research firms , News and Articles,Yellow pages, Trade magazines, Associations and Industrial buyer guide.[12 ]

Analysis-Synthesis in the Intelligence Workflow

A typical intelligence production consists of all or part of three main elements:descriptions of the situation or event with an eye to identifying its essential characteristics;explanation of the causes of a development as well as its significance and implications; and theprediction of future developments. Each element contains one or both of these components: data,provided by knowledge and incoming information and assessment, or judgment, which attempts tofill the gaps in the data [13]

Analysis-synthesis is one process within the intelligence cycle, the highest level abstractbusiness model of intelligence, It represents a process that is practically implemented as a continuum

rather than a cycle, with all phases being implemented concurrently and addressing a multitude ofdifferent intelligence problems or targets. Further, the process integrates multiple Intelligences todeliver integrated products to consumers derived from all sources. Several abstract models have beendeveloped to describe the details of the process, each with a different perspective and focus Thefigure is organized with increasing levels of model granularity moving down the chart. The first twomodels focus on command and control decision making for military action, while the second twomodels are focused on the delivery of intelligence. The models are all cyclic, including the feedbackfrom results to actions that include sensor tasking to better observe a situation, or military responseto change a situation.(Fig. 6)

The stimulus-hypothesis-option-response (SHOR) model, emphasizes the consideration of

multiple perception hypotheses to explain sensed data and assess options for response. The modeldetailed the considerations for commander decision making by making choices among alternativecourse of action [17]

The observe-orient-decide-act (OODA) loop, is a high-level abstraction of the militarycommand and control loop that considers the human decision-making role and its dependence onobservation and orientationthe process of placing the observations in perceptual framework fordecision making [2]

The tasking, processing, exploitation, dissemination (TPED) model distinguishes between theprocessing elements of the and the all-source analytic exploitation The TPED process has beenapplied to independent stovepipe intelligence channels, and concepts have been developed toimplement wide-scale multi-INT processes. The model is a high-level organizational model that

does not include planning per se because it includes policy-level activities organizationally abovethe processing chain [16 ]


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Fig. 6: Comparison of models that describe the intelligence process

The data fusion modelis a more detailed technical model that considers the use of multiplesources to produce a common operating picture of individual objects, situations (the aggregate ofobjects and their behaviors), and the consequences or impact of those situations. The model includesa hierarchy of data correlation and combination processes at three levels (level 0: signal refinement;level 1: object refinement; level 2: situation refinement; level 3: impact refinement) and a

corresponding feedback control process (level 4: process refinement [15 ]

Knowledge is core to driving the strategic decisions that manage a firms competitive assets.Whether it's discovering whats outside the firms network (competitive intelligence), or capturingand leveraging whats inside its network (knowledge management),executives need to makeinformed choices about how to best use finite resources. Competitive Intelligence KnowledgeManagement (CIKM), the active integration and employment of knowledge from both outside andinside the firm, is an essential ingredient in the decision making system.

Competitive intelligence pursues the filling of knowledge gaps. In practice, intellectual

capital is not captured systematically unless it is deliberately sought. Knowledge management isresident primarily within the walls of the firm and its closest collaborators. While knowledgemanagement may also be mined outside the firm through communities of practice or other suchtechniques, the knowledge sought may be limited. In addition to seeking people-based intelligence,competitive intelligence also discovers information outside of the firm from Both disciplines useknowledge. The knowledge management system may proactively distribute new information topeople who have requested such a service. In a competitive intelligence system, analysis andresulting action options are disseminated to executives engaged in strategic decisions. Existingknowledge management can provide competitive intelligence practitioners with a wellspring of


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knowledge to begin their work. Competitive intelligence fills in knowledge gaps and thus helps tobuild the firms knowledge cache [ 10]

PROBLEMS/ ISSUES BETWEEN CI PRODUCERS AND CI USERSMany companies have CI departments, and most of these groups serve a given set of users.

Often, however, there are inherent disconnects between the users and producers of intelligence.Users of CI characterize the information theyre receiving in terms of the following attributes:

Information is too shallow. The information doesnt have much depth and mostly contains thepublic relations viewpoint reported by the media or by the competitor. Credibility. The information and analysis were assembled by a 25-year-old MBA who has littlework experience in the industry. How can such a person possibly know more about whats going onwith a key competitor than a 20-year industry veteran? Timeliness. Many users need the information today. If it takes a couple of days to assemble anintelligence report, it may be a couple of days too late.No clear objectives. Users often wont share with the CI group exactly what type of decision theywant to make with the information theyll be getting. This is basically like going to buy a car andexpecting the car dealership to help you, but not telling the salesperson the kind of car you want.Not enough time to satisfy all the users. When a CI function adds real value, it soon becomes verypopular with its constituency. Users then send a deluge of requests, and they ultimately become toomuch for the CI department to handle. Different needs of multiple users. Some users want more in-depth information (deep divers), andsome want high-level information (skimmers). Too much information to get through. With all the information available on the Internet today, aswell as all the subscription-based services from third-party research bureaus, the flood ofinformation is simply too much for the analysts to wade through. No sharing of information. Users find it difficult to obtain information from the field. The axiomKnowledge is power holds true to form. Users fear that if they have to share whats in their heads,theyll lose any career positioning advantage within the company. [3 ]

GLOBAL STEEL INDUSTRIES SCENERIO :

After two years of deep economic recession, signs of economic stability are now visible in thedeveloped world. Though growth rates in the economies of developed world are still moderate,countries in the developing region, in contrast, have been registering high GDP growth.

IMF estimates a positive economic trend in 2010 and the global economy to register a sharp 4%growth. The WTO also projects world trade to expand by 9%, with the developed regions growing

by nearly 8% and the emerging regions by over 11%.

Following the world-wide economic crisis, the steel industry had demonstrated visible signs ofdemand pick-up and price stabilization during the last quarter of 2009. However, as a result of thedeep recession through most of the year, global crude steel production had dipped by 8% during2009 in comparison to the previous year. Major steel producing countries, such as, USA, Germany,Russia, Japan and South Korea had witnessed drop in production ranging from 25% to 36%. Incontrast, however, crude steel production in China and India had grown by around 13% and 3%respectively. The global downturn of 2009 and the subsequent recovery have accentuated the


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importance of China and India to the world steel industry. Due to the widespread economicrecession, global steel consumption had declined by nearly 7% during 2009, in comparison to theprevious year. Finished steel consumption during 2009 was 1121 Million Tons. Steel consumptionin China and India grew by around 24%and 8% respectively, while other major steel producingnations had registered significantly lower consumption. Since May, 2010, however, global steel-demand has stagnated and prices are under heavy pressure. The slow recovery of US and European

economies had a dampening impact on overall steel consumption.[8]

World Crude Steel Production Summary 23 January 2012egatonnes (Mt) 2006 2007 2008 2009 2010 2011 %2011/2010

Europe 355.0 365.0 344.3 266.1 314.4 329.0 4.6of which:EU (27) 206.9 210.2 198.2 139.4 172.6 177.4 2.8CIS 119.9 124.2 114.3 97.6 108.2 112.6 4.0North America 131.8 132.6 124.5 82.6 111.4 118.9 6.8of which:United States 98.6 98.1 91.4 58.2 80.5 86.2 7.1South America 45.3 48.2 47.4 37.8 43.9 48.4 10.2Africa 18.7 18.7 17.0 15.3 16.6 14.3 -13.8Middle East 15.4 16.5 16.6 17.7 19.6 20.9 6.9Asia 674.1 757.3 783.0 810.4 915.8 988.2 7.9of which:China 421.0 489.7 512.3 577.1 638.7 695.5 8.9Japan 116.2 120.2 118.7 87.5 109.6 107.6 -1.8Australia/New

Zealand 8.7 8.8 8.4 6.0 8.1 7.2 -11.1

World 1,249.0 1,347.0 1,341.2 1,235.81,429.

91,526.

9 6.8

The Largest Steel-Producing Countries- 23 January 2012Megatonnes (Mt)

Rank 2011(p) 2010 2009 2008 2007 2006 %2011/2010

1 China (1) 695.5 638.7 577.1 512.3 489.7 421.0 8.92 Japan 107.6 109.6 87.5 118.7 120.2 116.2 -1.8

3UnitedStates 86.2 80.5 58.2 91.4 98.1 98.6 7.1

4 India 72.2 68.3 63.5 57.8 53.5 49.5 5.7

5 Russia 68.7 66.9 60.0 68.5 72.4 70.8 2.7

6SouthKorea 68.5 58.9 48.6 53.6 51.5 48.5 16.2

7 Germany 44.3 43.8 32.7 45.8 48.6 47.2 1.08 Ukraine 35.3 33.4 29.9 37.3 42.8 40.9 5.79 Brazil 35.2 32.9 26.5 33.7 33.8 30.9 6.810 Turkey 34.1 29.1 25.3 26.8 25.8 23.3 17.0The 64 countries included in this table accounted for more than 98% of total world crude steel production in 2011.

(Source : worldsteel.org)


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INDINA STEEL SCENERIO :

India currently stands at an impressive record of economic growth. The average GDP growth in2007-2010 was recorded at 8%. Besides, there was acceleration even within the tenth five year planperiod (2002-2007) where the growth rate in the last four years (of the plan) had averaged 8.7%,making India one of the fastest growing economies in the world. Also, India exhibited resilience inthe face of global economic crisis by posting a growth of 6.7% in 2009 as the worlds economycontracted by 2.1%.

Latest projections of steel consumption by World Steel Association peg finished steel consumptionin India to reach 71 Million Tons by 2011. Several major world steel companies are planning tie-upwith Indian counterparts to produce value-added steel products in India. The first six months of 2010has seen a marked increase in steel demand due to strong growth in key user sectors, such as,automobile, infrastructure, consumer goods etc.

Owing to the glut in overseas steel demand, there has been a significant increase in dumping ofcheap steel into India, much to the detriment of the domestic steel industry. Imports of both flat

products as well as long products has increased substantially.

Various brown field and green field expansion programmes have been announced, keeping in mindthe current consumption pattern as well as the projected demand growth. Domestic steel demand isexpected to be robust and grow by 12% annually. Capacity additions continue to be undertaken byIndian steel majors and it is estimated that steel-making capacity would increase by 20% during2010-11. However, no large green field steel project has been able to take-off, due to a stringentregulatory environment in terms of land acquisition, forest clearances, grant of mining leases etc.Poor infrastructure facilities also tend to increase overall costs, with an avoidable impact on thefinances of the steel industry. [21 ]

Share of Companies/Segments in Country's Crude Steel Capacity (%)

Producer /Segment 2002-03 2003-04 2004-05 2005-06 2006-07

SAIL 31.4 28.9 26.8 25.1 22.6

RINL 7.2 6.6 6.1 5.7 5.1

Tata Steel 8.7 8.0 8.3 9.8 8.8

ESSAR+Ispat+JSW 11.8 13.1 13.7 14.0 17.2

Other EAF and Mid Size 9.9 10.2 9.5 8.9 12.0

Induction Furnaces 31.0 33.1 35.6 36.5 34.3

Total Crude Steel Capacity 100.0 100.0 100.0 100.0 100.0(Source: Annual Statistics, Joint Plant Committee ,Kolkota, India)

Capacity additions by major steel producers to meet increasing demand

India was the worlds fifth largest producer of crude steel in 2009 and is expected to become theworlds second largest producer by 20152016. Total crude steel capacity in India is expected to bearound 112.5 million tonnes by 2015 a growth rate of 9%.


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Expected capacity additions

Crude steel capacity

(millions of tonnes)

Year-ending 31 March

2007 2008 2009 2010 2012E 2015E

Tata Steel (India) 5 5 6.8 6.8 6.8 12.7

Essar Steel (India) 4.6 4.6 4.6 4.6 9.2 9.2

Ispat 3.6 3.6 3.6 3.6 3.6 3.6

JSW Steel 3.8 3.8 3.8 7.8 11 11

RINL 3.5 3.5 3.5 3.5 3.5 6.3

JSPL 2.9 2.9 2.9 2.9 4.9 6.9

SAIL 13.8 13.8 13.8 13.8 15.9 24.7

Bhushan Steel 0.3 0.3 0.3 0.3 2.2 5.1

Bhushan Power& Steel 1.4 1.4 1.4 1.4 1.4 1.4

Others 17.9 20.9 25.6 28 28 31.6

Total crude steel capacity 56.8 59.8 66.3 72.8 86.6 112.5ource: n a teel ector: n a n outper ormer n steel , ar as ecur t es v a omson researc , 1 cto er 1

SWOT Analysis of the INDIAN Steel Industry

The SWOT analysis of the steel industry, as per Draft Steel Policy framed by Ministry of Steel,Government of India are:(Source: National Steel Policy. Govt .of India, 2005)]

Strengths

Availability of iron ore and coalLow labour wage ratesAbundance of skilled labourMature production base

Weakness

Unscientific miningCoking coal import dependenceLow R&D investmentsHigh cost of debtInadequate infrastructure

Opportunities

Unexplored rural marketGrowing domestic demandExportsConsolidation

Threats

China becoming net exporterProtectionism in the westDumping by competitors

OPPORTUNITIES AND THREATS INDIAN STEEL INDUSTRIES :

OpportunitiesThe projected GDP growth, strong prevailing trends in the Index of Industrial Production (IIP) andincreased governmental spending on core infrastructure projects are expected to drive domestic steelconsumption. Indian steel demand is likely to reach 100Million Tons in the next few years, offeringa tremendous scope to Indian steel producers to tap the huge potential. Sustained growth in

infrastructure, automotive and manufacturing sectors would ensure a steady demand accretion for allsteel products. With a perceptible improvement in demand from semi-urban and even ruralsegments, hitherto unexplored markets are being looked-into, thrust is accorded on retail penetrationand service centres are being set-up to reach the major consumption points.On the global front, demand in European Union countries is now expected to be better balanced, inthe long-run, in the wake of sovereign fiscal interventions.ThreatsThe world-wide economic crisis and financial turbulence had resulted in a sharp dip in global steelconsumption during 2009. After several months of deep recession, based on the backing of a fiscal


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stimulus-led global economic recovery, the steel industry demonstrated signs of demand pick-up andprice stabilization during the last quarter of 2009.Though the fortune of Indian steel industry appearsbright, the road ahead may not be very smooth and is likely to be topsy-turvy on several counts.Some of the threats looming large over the Indian steel sector are:- Sharp increase in prices of raw materials, such as, iron ore, coke and coking coal. Increase in power tariff Frequent interruption in iron ore supplies.

Continuing exports of iron ore and consequent impact on domestic prices. Inadequate infrastructure Delays in regulatory approvals for raw material linkages. Various hurdles in acquiring land for green-field steel projects. Dumping of cheap steel products into India and the consequent pressure on domestic prices

SWOT ANALYSIS OF MAJOR INDIVIDUAL STEEL PRODUCER IN INDIA:

The steel industry is characterized by cyclical fluctuations in prices of finished steel products as wellas those of the key inputs. Any downward cyclical movement in the steel sector could reduce thedemand for steel and reduce our profitability.

JSWStrength

Major player in the steel sector and have a diversified client base, withstood the cyclic fluctuationsthat have characterized the steel industry in the past. Ha have sourcing arrangements with suppliersof power and oxygen which reduces our vulnerability to fluctuations in the prices of these rawmaterialsWeaknesses

Debt / equity ratio or gearing is relatively high compared to some of the other integrated steelproducers in India. Profitability of Company is dependent on prices of key inputs such as iron ore,coal and zinc. It does not own mines for some of its basic raw materials. Although the company isfocusing a on R&D, the budget is only a fraction of what international competitors can afford toinvest in their R&D activitiesOpportunitiesCold rolled products are used in the automobile sector. There is a major opportunity for its productson a large scale to the automobile sector resulting from robust growth in the demand for automobilescombined with stringent regulations on pollution control pertaining to old vehicles.

JSPL - Jindal Steel & Power (JSPL),operates in India part of the Jindal Group, is engaged insteel manufacturing, power generation, coal and iron-ore mining, and exploration and mining ofminerals and metals. JSPL. It is headquartered in New Delhi, India and employs about 15,000people. The company recorded revenues of INR109,133.7 million (approximately $2,381.3 million)in the financial year ended March 2009 (FY2009), an increase of 97% over FY2008Threats

The cyclical nature of the steel industry means that the company needs to control its cost and have

efficient production processes throughout. The company also needs to manage its rapid growtheffectively and not go off track. This is another area which of concern and is likely to be themanagements top priority. Operating margins could come under pressure if there is a fall in thedemand for steel and increase in input costsSAIL- Steel Authority of India (SAIL),Indian Public sector , primarily operates in India is engagedin the business of manufacturing and marketing steel and its allied products. It is a fully integratediron and steel maker, producing both basic and special steel products for construction, engineering,power, railway, automotive, and defense industries. The company employs about 121,300 people.The company recorded net sales (sales net of excise duty) of INR431,767.6 million (approximately


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$9,421.2 million) in the financial year ended March 2009 (FY2009), an increase of 9.1% overFY2008. The operating profit of the company was INR75,600.2 million (approximately $1,649.6million) in FY2009, a decrease of 22.8% compared with FY2008. Strength : Public sectororganization, having own mines and Financial support from Govt.

TATA STEEL ,Group is one of India's largest integrated private sector steel companies. The group

manufactures and distributes steel, welded steel tubes, cold rolled strips, bearings, and other relatedproducts. Tata Steel Group operates across Asia, Europe, and Australia. Tata Steel Group isheadquartered in Mumbai, India and employed 81,269 people as of March 2010. The group recordedrevenues of INR1,023,931.2 million ($21,615.2 million) during the financial year ended March 2010(FY2010), a decrease of 30.5% compared to FY2009.

The Indian steel industry is highly competitive. We face substantial competition in the steelindustry, both from Indian and international companies. Domestic as well as international steelmajors like Tata Steel, POSCO and Mittal Steel have announced plans to set up manufacturingfacilities in India. This could lead to excess capacity and consequently downward pressure on theprices of finished steel products.Competitiveness of the Indian Steel Industry

Competitiveness of the Indian steel industry has been examined by various experts atdifferent points of time. While the increased presence of the Indian steel companies in the worldmarket over the last decade has been taken as a pointer to increasing competitiveness of the industryin India, the operational performance of most of the steel plants, small or big, have been found to befalling short of the level achieved by the international bests. It is widely reported that the Indian steelplants are relatively inefficient in specific energy and raw materials consumption. [1 ]

[ Figs in

MnT]

208

Fig. 7 INDIA : Finished Steel Production Trend

(Ref. :JPC / Ministry of Steel /Estimates)-India shall be producing & consuming over 400 million tons of steel like china

1.25

6.6

12.2

42.7

1948-

49

1973-

74

1991-

92

2005-

06(E)

2019-

20(P)


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Sectors Consumption

in 2006-07

(Mt)

Projected

Consumption

in

2011-12 (Mt)

Projected

Consumption

in2019-20

(Mt)

CAGR

(%)2006-

07 to

2019-

20

Manufacturing 10.0 16.0 37.0 10.6Construction 13.3 31.0 70.0 13.6

Tube Making 3.0 5.0 9.0 8.8

ColdReducing

5.2 8.0 17.0 9.5

Railways 1.5 2.0 4.5 8.8

HouseholdAppliances

1.5 2.5 5.0 9.7

Auto 3.0 3.5 8.5 8.3

Oil & Gas 2.8 8.0 25.0 18.3

Others 4.0 6.0 8.0 ==

Total

FinishedSteel

44.3 82.0 184.011.6

Opportunities Threats: Iron Ore Production India,Export of Iron Ore has grown 3 times in

last 5 years.Fig. 9

How can the concept of relevance contribute?Ubiquitous knowledge hides the problems of harnessing it in plain sight. If everyone can find

knowledge everywhere, competition will be in finding the right facts for the chosen purpose.Similarto the days when finding any information at all was the challenge, the difficulty today lies indeciding which information is important (relevant, timely) and which is not. The ability to prioritize,analyze and act on the exact , correct subset of data from all available knowledge is decisive. Itsolves the problem of data overload and allows the information process to become efficient.However, organizations can only use this ability to its full extent if they know the big picture: anoverview of the current business reality including a future outlook (assumptions and analysis: whatwe believe will happen), vision (creativity and belief: where we believe we should be going) anddirection (leadership: lets go!). The problem with the big picture is that is seems only partiallybased on facts. Instead of being a topic of explicit discussion in the Direction phase of the BI-cycle,a large part of the big picture is usually made up of implicit assumptions, interpretations and culturalbeliefs.Consequently, the image of the big picture is colored by corporate culture, current events, mediacoverage and (corporate) politics. As if this is not enough, in deciding which details are relevant to acompany, management and employees have a predetermined set of ideals and presumptions thateffect the future outlook, either as wishful thinking or as experienced preparation. The future outlook(and with it the big picture) are further influenced by the organizations mission, vision andpreviously chosen strategic direction

What can Indian Steel Sector gain?

The value of better decision making is intangible and difficult to quantify. However, we usuallybelieve that having access to the right information increases the quality of decision making.Effective decision making in terms of increased competitive power, operational results or growth canbe achieved by providing better (more relevant) information to the decision makers. However,

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

20 00 -01 200 1- 02 2002 -03 2 003- 04 20 04- 05 200 5- 06

Production Growth

RateExport Growth Rate

Domestic Consumtion


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collecting as much information as possible about markets and competitors will not aid anyorganization in reaching its goals faster or better than its counterparts. Even if the organizationmanages to set up a large data warehouse which distributes all the right data, at the right time to theright people in a consistent manner, it will not necessarily outperform its competitors., The chancesof better decision-making so farIndian Steel Sectoris concerned, increase if the relevant informationis both available and used. Here CI Plays the right Role. [4 ]

CONCLUSION:The viability and success of modern enterprises are subject to the increasing dynamic of the

economic environment, so they need to adjust rapidly their policies and strategies in order to respondto sophistication of competitors, customers and suppliers, globalization of business, internationalcompetition. Perhaps the most critical component for success of the modern enterprise is its ability totake advantage of all available information - both internal and external. Making sense of all thisinformation, gaining value and competitive advantage through represents real challenges for theenterprise

In being competitive, the implication is that Company competing to serve the customer.But sometimes that fact gets lost. Intelligence should assist company, ultimately, in serving its

customerCompanies in India monitors competition using either Passive Intelligence and Semi Active

intelligence and Human Intelligence. Organizations in India are discreet about competitiveintelligence. They do not call it competitive intelligence. Leading companies in India monitor theenvironment through open source emissions such as Financial Times, Economic Times and othernewspapers. Business houses in India also watch business news channels. Scanning of theenvironment is done using external auditors, internal auditors and legal experts. Organizations useanalysis tools such as Five Force Analysis, Strength, Weakness, Opportunity and Threat Analysis,Value Chain Analysis, Political, Economic, Social and Technology Analysis are used by employeesin the organizations. Indian businesses derive low cost advantage as white collar workers come atlower salaries. [20 ]

The CI output needs to be Future-oriented - The past can be a dangerous predictor of thefuture The better analytical methods for CI will be future, as opposed to historically, oriented. Theywill be predictive in addition to being descriptive and explanatory, Accurate - Although achievingperfect accuracy is desirable in theory, it is often less desirable in practice and requires that theanalyst make trade-offs against other conceptual and pragmatic considerations, Resource-efficient -When data being used in analysis comes from primary sources (i.e., most "human intelligence", itpotentially lowers the level of analytical accuracy, and it requires greater skill to elicit what isactually required from the primary sources. Nevertheless, many secondary databases may give greataccuracy and timeliness but little in the way of a future-orientation, despite their high price. Useful -suggests that the analytical outputs and process must be clearly communicated in a language that canbe easily explained and understood by the recipient and above all Timely-Certain methods of

analysis may provide the intelligence required, but take far too long to develop. On the other hand,other methods of analysis may require little time but do not deliver the required features ofobjectivity, accuracy, utility, and resource efficiencies. Valuable analysis will provide decision-makers enough time to allow the company to implement the course of action recommended by theanalysis [5]

Technological innovations like Corex, Finex Tech, Dry Coke Quenching etc have providedthe competitive edge to the technologically strong companies like Tata Steel & JSW. Smooth andquick transfer of technology has, however, meant an increasingly competitive pressure on the


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companies to be ahead of the others in the race for technological superiority to maintain and, ifpossible, to strengthen the bottom lines.

In the context of natural resources, where market does not seem to be very well organizedto the competitive levels and there are no strong conditions that favour the process of pricediscovery, the government policy actions have had a substantive impact on the competitiveconditions for the steel industryReferences :

1 A.S.Firoz (2008), Competition Issues in the Context of the Steel Industry in India, White Paper,S NRSR, New Delhi,India, 1st October 2008

2 Boyd, J. R.,(2002), The Fighter Pilot Who Changed the Art of War, Boston: Little, Brown, 20023 Bret Breeding, (2000) CI and KM Convergence: A Case Study at Shell Services International ,

Competitive Intelligence Review, Vol. 11(4) 1224 (2000). John Wiley & Sons, Inc

4 Collins, Jim, (2001) Good to Great, Collins Business5 Craig Fleisher, Babette Bensoussan, (2000), A FAROUT way to manage CI analysis, SPICEVol. 03

No. 02, April - June 20006 Galvin, R.W. (1997, Spring). Competitive intelligence at Motorola. Competitive Intelligence Review,

8(1),pp 36.7 Gilad, Ben, and Jan P. Herring (eds.). (1996). Advances in Applied Business Strategy, Supplement 2,

1996: The Art and Science of Business Intelligence Analysis. Part A: Business Intelligence Theory,Principles, Practices, and Uses. Greenwich, CT: JAI Press

8 Gilles Calis,(2006) A report on New competitive realities in steel,, MILLENNIUM Steel Consult,International, Amsterdam, The Netherlands, 2006,

9 Hans Gieskes,(2000) , Competitive Intelligence not just an exercise, Competitive Intelligence,Magazine,Vol. 3(2), pp 5

10 Helen N. Rothberg, G. Scott Erickson(2010) Stacking the Strategy Deck with CIKM ,ScipInsight,Vol.3,Issue.3,March 2010 pp1-2

11 Jay Liebowitz, (2006)Strategic Intelligence Published in 2006 by Auerbach Publications Taylor &Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 Pp 52 -59,

12 John E. Prescott, Stephen H. Miller (2001), Competitive Intelligence Lesson from the Trenches,Society of Competitive Intelligence Professionals.,. Published by John Wiley & Sons, Inc

13 Kam, E., (1988) Surprise Attack, Boston: Harvard University Press, 1988, p. 12014 Pugna, Irina, Albescu F.(2007), Knowledge Integration for management use, International Conference

on Accounting and Management Information Systems (AMIS) vol.2 June 2007, Bucharest15 Steinberg, A. N., C. L. Bowman, and White Jr., F. E., (1998) "JDL Data Fusion Model," Proc. of

Third NATO/IRIS Conf., Quebec City, Canada, 199816 The Information Edge(2001): Imagery Intelligence and Geospatial Information In an Evolving

National Security Environment, Report of the Independent Commission on the National Imagery andMapping Agency, Washington, D.C., January 9, 2001

17 Waltz, E. L., and D. M. Buede, (1986)"Data Fusion and Decision Support for Command andControl," IEEE Transactions on Systems, Man, and Cybernetics, Vol. SMC-16, No. 6 November

December 1986, pp. 86587918 Weiss Arthur(2002) A brief guide to competitive intelligence Business information Review , (ISSN

- 0266-3821) vol 19, nb 2 June 200219 www. worldsteel.org20 www.ezinearticles.com/?expert=Vivek_Raghuvanshi/ Competitive Intelligence in India21 www.indiainfoline.com/Markets/Company/news/company-news/JSW-ISPAT-Steel-Ltd/500305

Anil Barik - Final-strategic Approachci_relevance of Competitive Intellegence in India Steel Sector

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