Tata Steel Limited: Fighting Commoditization by Creating Innovative Services And Solutions

The case explores the journey of Tata Steel Limited (TSL), India's largest and one of the world's top steel manufacturers, to find ways of getting closer to consumers to combat commoditization. This century-old organization has weathered many disruptions from significant regulatory changes, globalization, and technology changes. The company is renowned for its high quality, operational excellence, and delivery reliability. TSL was one of the earliest steel manufacturers (as early as 2003) to recognize the need to build strong relationships with both business-to-consumer (B2C) and business-to-business (B2B) customers. This case describes the efforts of the organization to continuously introduce innovative ideas into the business, including branding various company products, such as Tata Shaktee for steel roofing sheets and Tata Tiscon for thermo-mechanically treated rebars, which are mainstay products in consumer markets. Despite its efforts to reinvent itself continually, the firm faces repeated challenges of price cyclicality and commoditization, which are characteristic of the steel industry. The company faces stiff competition from both local and global players and growing pressure on profitability. To overcome these challenges, the firm is consistently seeking ways to get closer to its customers (in B2B markets) and consumers (in B2C markets). The case highlights the nuances of TSL's market-sensing efforts, spotting the idea of making steel doors that closely resemble wooden ones, taking the product to market, and the thought process of various internal divisions. The case concludes with the leadership team of TSL facing major challenges in deciding how to continue innovating in the marketplace after the early success of the Pravesh initiative.

Learning Objectives

After reading and discussing the case, students should be able to

1. develop the mindset required for an organization operating in a mature industry to continuously think of innovative ways to combat commoditization,
2. understand the process of spotting, incubating, and scaling new ideas,
3. appreciate the need for fostering an environment conducive to corporate entrepreneurship, and
4. elaborate on the structural changes needed to sustain innovativeness.