Tata Steel Limited Tata Iron and Steel Company Limited, abbreviated as TISCO is an Indian multinational steel-making company headquartered in Mumbai and a subsidiary of the Tata Group. Its marketing headquarter is located at Tata Centre in Kolkata, West Bengal. It is the twelfth-largest steel producing company in the world Tata Steel is a multinational corporation with operations in numerous countries. Its largest plant is located in Jamshedpur, Jharkhand. Price Pricing Strategy: A pricing strategy must be conceived in relation to overall business objectives and marketing strategy.
The success of any business depends upon a blend of long run profit, growth and survival objectives. Price, because of its influence on unit sales volume and profit margins, affects long run profit objectives. And maintaining profitability through sound pricing practices is necessary to ensure the firm is survival over time . The pricing strategy adopted by Tata Steel is the Market Penetration Strategy This strategy is based on the assumption that demands for the product is highly elastic. By setting relatively low price Tata Steel has managed to obtain large market share.
The advantage of this kind of pricing is that it discourages competition since there is less opportunity to reap unusual benefits on investment. Since Tata Steel is in control of large iron ore deposits it has increased its capacity manifold and so enjoys economies of scale. It has thus maintained prices of its products lower than of its competitors and has increased the scale and efficiency of operations, since it has lower production costs. Competitor Competition: Existing and potential competition inevitably affects pricing strategy by setting an upper limit.
The amount of latitude a firm has in its pricing decision largely depends on the degree to which it can differentiate its products in the minds of buyers. Pricing strategy is also influenced by the anticipated reactions of competitors to pricing decisions. Price reductions on products that are undifferentiated are generally met immediately by all suppliers, resulting in little shift in market share. The major competitors of Tata Steel in India are Steel Authority of India Ltd, JSW Steel Ltd and Essar Steel Limited.
Tata Steel’s rare advantage is that it has captive iron ore mines with capacities far in excess of its current needs . Therefore, it makes imminent sense to expand its primary steel-making facilities in India and look for finishing capabilities elsewhere. Greater the volumes, lower the production costs and hence lower the prices at which its products are offered. This shows that the ability to maintain lower prices of its products have given Tata Steel the edge over its competitors . Competitors? Analysis The various competitors of Tata Steel are: SAIL JSW Essar Steel
JSW They are moving ahead with a two prong strategy wherein on one side the focus is on the domestic market EM segment by servicing them with all value added products customized to their requirement and on the other hand a special drive in the retail segment will continue by opening of state-of-the-art branded steel retail is the largest players in the private outlets with brand name ? JSW Shoppe?. SAIL : Following are the strategies adopted by SAIL for effective pricing :a)Cost reduction and increased productivity through advanced technology and improved processes. ) Production of value added and customized products to create niche markets c) Avoid inventory build-up and make production strictly market driven Revenue The revenue of TATA Steel has a annual crude steel capacity of 23. 5 million tonnes, and the largest private-sector steel company in India measured by domestic production Introduction Nisha Pricing strategy Riti Revenue Profit Competitor Swati Name| Last Price| Market Cap. (Rs. cr. )| Sales Turnover| Net Profit| Total Assets| Tata Steel| 400. 90| 38,935. 99| 33,933. 46| 6,696. 42| 75,910. 28| SAIL| 85. 5| 35,295. 34| 46,341. 79| 3,542. 72| 55,908. 53| JSW Steel| 756. 95| 16,888. 86| 32,122. 66| 1,625. 86| 30,799. 71| Visa Steel| 47. 30| 520. 30| 1,365. 91| -118. 85| 1,437. 66| (1) REvENuE| | | 22 165 (a) Revenue from operations 902. 14| | | Less: Excise duty 3,072. 25 2,505. 79| | | 33,933. 46 29,396. 35| | | 23 166 (b) Other Income 886. 43 528. 36| | | ToTAL REvENuE 34,819. 89 29,924. 71| | | (2) ExPENSES| | | 24 166 (a) Raw materials consumed 8,014. 37 6,244. 01| | | 25 166 (b) Purchase of finished, semi-finished and other products 209. 2 180. 20| | | 26 167 (c) Changes in inventories of finished goods, work-in-progress and stock-in-trade (220. 72) (173. 65)| | | 27 167 (d) Employee benefits expense 3,047. 26 2,837. 46| | | 28 168 (e) Depreciation and amortisation expense 1,151. 44 1,146. 19| | | 29 168 (f) Finance costs 1,925. 42 1,735. 70| | | 30 168 (g) Other expenses 11,824. 49 9,024. 82 25,951. 78 20,994. 73| | | (h) Less: Expenditure (other than interest) transferred to capital and other accounts 478. 23 198. 78| | | ToTAL ExPENSES| | | | | |