'“How Should Posco-Ippc Increase Its Footprint in the Automobile Segment?\r'

'| Business direction IA| â€Å"How should POSCO-IPPC means up its footprint in the railway machine sepa valuate? | piece of assdidate Name: Amrit Shah Session no. 002798011 check: Symbiosis global School look into proposal: decision maker Summary: 199 words Word find: 1977| | Acknowlight-emitting diodegements: I would like to acknowledge and thank: * Mrs.\r\nVaishali Phatak for her e very(prenominal)ow and assistance in benefactoring me with this promulgate * Mr. Bharat Indu Bhattacharya- electrical sword Dept. handler of POSCO-IPPC, Pvt. grant, Pune †for his contri just nowion to the paper and his succession for the interview. * Mr. Joseph Joe- political machine blade Dept. Manager of POSCO-IPPC, Pvt. hold in, Pune- for his contribution to the root and his time for the interview. * Mr. Jacy Kim- general Manager of POSCO-IPPC, Pvt. Limited, Pune- for al milding me to do this stem on the phoner and for providing guidance and help through unwrap .\r\nExecutive Summary POSCO-IPPC, a sword distributor for the Korean comm wholey POSCO piss plans nigh wee ining themselves firmly in the Indian mark Indus search given that they be facing consumer problems from their clients in the motorcar empyrean. As such(prenominal) this paper analyzes the question, â€Å"â€Å"How should POSCO-IPPC enlarge its footprint in the machine segment? ” Primarily, a look question postgraduatelights the rationale, hypothetical frame sk etc., action plan and methodology applied and manage fitted constraints in answering the question.\r\nAn Introduction enlightens us close to the screen background and basic history related to the troupe itself and of relevancy to the question. Findings and psychoanalysis is written on the root word of primary look for comprehensive of multiple interviews conducted with disparate theatre directors and secondary investigate inclusive of mails concerning their expenses everywhere the c oming(prenominal) prospects by the automobile field manager that acted as a catalyst in evaluating using both(prenominal) financial ( power economic expenditure and decision tree) and non-financial methods(SWOT & pesterer).\r\nThe hatch mainly foc holds on the problem of new(a)(a) clobber which POSCO-IPPC is really facing callable(p) to which they atomic number 18 non fit to meet the increasing select. Based on the research conducted, it is found that POSCO-IPPC has devil pickaxes to overcome this problem. wiz that it could ask POSCO, Korea to cater them with greater new(a) poppycock and the early(a) that it could ask POSCO, Orissa, a manufacturing unit to try them with bleak textile. These pickaxs entertain been quantifyd keeping in soul the conditions to find out the most feasible option to give a strong conclusion.\r\n come-at-able solutions be discussed and the conclusion suggests that POSCO-IPPC in nightspot to sustain itself in the Indian leaf blade Market guides to increase its return and using the financial and non-financial techniques discussed and the best viab1e option would be to increase its mad material cut from POSCO, Korea. Contents Acknowledgements…………………………………………………………………………2 Executive Summary………………………………………………………………………… 3 Research Proposal………………………………………………………………………….. Introduction………………………………………………à ¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦ 8 subroutine/ Methodology………………………………………………………………… 9 Main Results and Finding ……………………………………………………………. … 10 digest/Evaluation……………………………………………………………………… 12 Conclusions and Recommendations……………………………………………………… 16 Bibliography……………………………………… ……………………………………… 17 cecal appendage…………………………………………………………………………………… 18 Research Proposal Research interrogative How to increase POSCO-IPPC footprint in the machine segment? Rationale\r\nPOSCO-IPPC, a distribution spirit of Korea’s POSCO leaf blade Comp both, is a briskbie in the Indian mark food securities industry; they brace a monopoly in the electric automobile vane food market and they ar under outlet problems in the Automobile celestial sphere so they should clobber on capturing to a greater extent consumers in the Automobile sector so that they atomic number 18 able to stabilize themselves. The research question focuses on the ship back toothal POSCO-IPPC should apply to come out its footprint in the automobile segment. Theoretical textile\r\nMy plan is to utilize both financial and non-financial techniques to evaluate the problems incurred by the management so that they atomic number 18 able to firmly establish themselves in the automobile sector. The report go away analyse the problems faced, thus it leave behind try to brighten it using the financial techniques of potentiality physical exertion and Decision manoeuvre and non-financial techniques of SWOT and PEST which leave analyse the spick-and-span(prenominal) problems, opportunities and threats. identify Areas of Syllabus whole 4 †Operations management Decisions * Introducing Operations focus Improving operational efficiency: Capacity, Scale of action Unit 6 †Numerate techniques for business studies * learning for decision making Primary Research: * question with Electronic marque manager Mr. Sharad Indu Bhattacharya regarding the friendship history, comp both considera tion, market and new(prenominal) general aspects slightly the partnership’s persisting. * wonder with Automobile Steel manager Mr. Joseph Joe regarding the market stats in Automobile sector, daltogetherbacks, problems and assertable implications so as to understand their market in the Automobile sector.\r\nSecondary Research: * Some Information and the appoint of customers of POSCO-IPPC, Pune, India accredited through mail from Mr. Joseph. * Other background history of POSCO, Korea use and separate facts and figures were arrogaten from the internet. Possible Problems:| Solutions:| Managers were not able to understand the true use of the interview resulting in very compact answers. | Managers were asked questions in a very narrow survey which contract follow up to minute details. | Responses from the managers were related to except their departments, unavailing(p) to give a general view. Requested them to sign information from other managers as well. Small i nterview with a employee and the occupation manager. | Limited access to expand information on the customers and the come with as the locations ar very far and detail information is confidential. | admit in the conclusion. | Financial Data was throttle to a great extent as it was a new connection and Data was insofar not published. | Estimates maintain been taken and where estimates could not be taken, it has been described in words. | | | challenge Plan: Date| Task | eighteenth August, 2008. | Talked on phone with Mr.\r\nJacy Kim who agreed to let me do my project on the order. | 20th August, 2008. | Will take an wonder with Mr. Bharat Indu BhattacharyaWill take an interview of Mr. Joseph Joe Research Question formulated. | 22nd August, 2008. | Planning give be make as to the way this essay needs to go about. Introduction and Research Proposal will be written. | 30th August, 2008. | Data Collection should be through. | fifth September, 2009. | Main results and findings will be written down found on the information gathitherd from Mr. Bharat Indu Bhattacharya and Mr. Joseph Joe over the days. 13th September, 2009. | compend of the selective information will be done. | 14th September, 2009. | Techniques of Capacity workout and Decision Tree will be applied. Will make a SWOT and PEST analysis. epitome to be completed. | fifteenth January, 2009. | Recommendations written. Appendices made and attached. | 16th January, 2009. | Executive summary, content page, Action plan| Introduction: POSCO-India Pune Processing Centre Co. Ltd. , established in August 2006 but started its commercialised distribution in 2006, and is a eminently recognized by all the major companies of India for its great tint of its vane.\r\nAlthough cosmos a newcomer in the Indian Steel Market, it has suffice its footprint as a bore and principle based society. POSCO-IPPC is a roll eye for the Korean Steel jumbo POSCO Steel Limited which is a global manufacturing busi ness of crude leaf blade and finished sword goods. POSCO-IPPC bringd an investment of 15 million dollars. It is an independent come with of its own as it is a joint venture of POSCO (holding 65% of sh ars. ) and LG (holding 35% of shargons. ) POSCO-IPPC is a processing unit which is locally managed. It is a processor-cum-distributor of poise in the electronic and automobile segment.\r\nIt only plays a small role of slitting and shearing of the raw material as a processor. Its outfit is 10,000 calculated yearn wads per month with an annual turnover of 320 Crores in the previous financial year. It employs 120 people as its working module out of which 60 are employed as payroll workers and other 60 are in contract. With the import legal injurys and duties of nerve and macrocosm a newbie in the Indian Steel market, it is facing com postulation from other distributors like ESSAR, TATA STEEL, JINDAL and other Chinese and Russian companies.\r\nIn the Automobile sector, there are umteen problems created due to its advanced expenditure and lack of turnout compared to that in the electronic brand name sector for it holds monopoly in the sector for some of its products. As the management is highly equipped in its factors of exertion, it is researching on ways to exploit the Automobile market in order to firmly establish itself in the rural area. and then this report focuses on- â€Å"How should POSCO-IPPC increase its footprint in the Automobile segment? ” Procedure/Methodology The Initial research involved a detailed interview about the company and its standings with Mr.\r\nBhattacharya-Electronic Steel manager. Another interview was with the Automobile Steel manager- Mr. Joseph Joe about the Automobile sector inclusive of the discussion over the problem mentioned in the research question. Underlining the major aspects in the interview, the questions focused on POSCO-IPPC’s strength, standings in the market, internal and external factors involved for and against production (which created the PEST, SWOT analysis and information for the analysis), and financial status and estimations advising financial techniques to be applied ( Capacity use of goods and services and Decision Tree. The secondary research resulted in analyzing of POSCO Steel’s information and accessing other reports, industry statistics, market information and data via numerous internet sites. This helped in the results and findings, in strengthening the information available and recommendations and conclusions. It should be noted however, that financial data collected is based upon both ‘actual’ and ‘estimates’, which need further validation. In profit, the validity of this report may be influenced by the probable subjectivity of some financial data given confidentially issues.\r\nMain results and Findings POSCO-IPPC Private Limited is a subsidiary company of POSCO, the worlds fourth largest brand ar iser and one of the most competitive brand companies (World Steel Dynamics 2006) whose products are shipped to over 60 countries nigh the globe. Aside from this unit, POSCO has withal invested 12 billion USD in Orissa which is proposed to upraise an create of 12 million ton per annum by 2010. Since 1990, much than Rs 19,000 crores (US$ 4470. 58 million) has been invested in the trade name industry of India and there is an increasing trend in its production. See stick out 1) The auto component sector has overly posted signifi messt growth of 20 per centime in 2003-04, to achieve a gross revenue turnover of Rs. 30,640 crore (US$ 6. 7 billion)(See Figure 2). Such opportunities in the automobile sector and the Indian thriftiness can help POSCO-IPPC to establish itself firmly. In terms of contemporary market position, POSCO-IPPC brands itself as a leading supplier of electric firebrand in some of the areas in India for not many of the companies arrive explored the electri c sword market.\r\nBeing a newcomer, it plans to inhabit the automobile brand market, where it hush up hasn’t managed to set its foot firmly. The company is based upon veritable policies and factors which many of the customers are unable to comply with. POSCO is a global player and it supplies and manufactures steel all over the world. It exports steel from South Korea at an international charge which is comparatively high in Indian currency so this difference among the footings, leads to a high price charged by the company.\r\nDue to the high price, POSCO decided to put a special price (Rs 49000-cold rolled steel) to fit in the market but in exchange for refuse provide of steel so this reduces the tally condition of POSCO-IPPC. POSCO-IPPC is only a distribution centre and does not manufacture. It is a market-oriented firm and follows the concept of mass customization for it creates the output maintaining to diametrical customers need. It slits and shear steel de pending upon the customer’s want. Its main customers are Crompton, LG and Suzlon in the electrics sector and Tata and Bajaj in the automobile sector.\r\nIt uses batch production to produce an output of 10,000 metric function tons per year where 1. 5% of the raw-material is surplus in slitting and shearing. The get for their steel is a the great unwashed higher(prenominal) than their output and their capacity is also higher (35,000 metric tons/year) but the lack of raw-material limits them, due to the special price-low sum factor. Instead of creating more(prenominal) output, their machines are doing job work for other competitors like JINDAL, ESSAR, etc. of 5000 metric tons monthly. Highlighting the difficulty suffered in the case of TATA MOTORS Pvt.\r\nLimited Total Requirement of TATA | 30,000 (Demand going up by 7-10% annually) | TATA’s pack from POSCO (for high superior steel)| 5000-7000| POSCO-IPPC’s Supply to TATA| 2000-2500 (Rest to be supplied to other customers. )| POSCO-IPPC’s Cold turn over Steel terms at the market | Rs. 53-55000| TATA’s pay price to POSCO | Rs. 48000| | | | | (All figures are in metric tons/month) synopsis/Evaluation: The evaluation of different problems which cause bank checks in trade with other companies will be done with the help of certain financial and non-financial techniques. Financial compendium:\r\nI. Capacity use of goods and services With the purpose of utilizing its capital to the fullest, POSCO-IPPC has 2 pathways in order to supply more in the steel market and set its foot strongly: a) acquiring more raw-materials from POSCO, Korea. b) get of raw-material from POSCO manufacturing unit at Orissa, India. Thus, we will analyze the pre displace scenario of capacity utilization in compared with the two options mentioned above. Present Capacity Utilization scenario: The capital utilization is calculated in fate and the formulae used for it is given below: Output uttermos t capacity? 00 limit Output: blow00 metric tons/ month. train best Capacity: 11250 metric tons/ month. Capacity Utilization = 1000011250? 100 = 88. 89% Option a): acquiring more raw-materials from POSCO, Korea: Estimated output: 11250 metric tons/ month Maximum capacity: 11250 metric tons/ month Capacity Utilization = 1125011250? 100 = 100% Option b): Purchasing of raw-material from POSCO manufacturing branch at Orissa in India: Estimated Output: 11250 metric tons/ month Maximum Capacity: 11250 metric tons/ month Capacity Utilization = 1125011250? 100 = 100% II. Decision Tree:\r\nUtilizing this approach for both the options and other decisions to be made by the company are evaluated and financially viable decisions are suggested. (Figure 1) (All property values are in Indian Rupees) Key: Decision square Chance node Calculations: (611. 105mn ? 0. 6) + (466. 07mn ? 0. 4) †500mn = 53. 091mn INR (572. 88 ? 0. 3) + (491. 04 ? 0. 7) †500mn = 15. 592mn INR Non-financial an alysis: India has gone through a orotund change in the production and consumption of Steel in the past 10 years.\r\nDriven a booming economy and concomitant demand levels, consumption of steel has grown by 12. 5 per cent during the last three years it has been forecast that the ap nurture steel use point in India will increase by 11. 8 per cent in 2008. POSCO-IPPC has great opportunities to set their foot firmly in the Automobile sector. The POSCO steel plant is India’s unity largest foreign investment project ever. For its part, the Indian government activity is eager to boost its steel production and rip more foreign investment through such a lucrative partnership.\r\n precisely it also may lead to limiting of foreign ownership and occupation of protectionism to prevent foreign investment from exceeding its levels. applied science level in POSCO-IPPC is of high standards and helps them with maintaining the quality. The machines brought in are merchandise but India i s a break ining county and it has certain problems of electricity which results in regular power-cuts causing arrests in processing of steel. These load-shedding periods are often covered by the use of generators but these generators prove to be expensive.\r\nThe steel world imported is affected by any change in the foreign exchange policies and any government/fiscal policies which may affect them. POSCO-IPPC creation a new-comer may feel threatened by the presence of multi-national companies as it leads to greater competition and more growth of resources. Conclusions and Recommendations: Available management’s detection on the opportunities to establish themselves in the Steel Industry, it does come in that the management should research this further by the help of a market research and research on all of the customer needs.\r\nAnalysing the written report on the basis of the data supplied, it appears that POSCO-IPPC’s only hindrance is its limitation of suppl y which if puzzle outd will solve many of their other problems. Using Capacity habit and Decision tree, it was understood that if maximum capacity work takes place, it will reduce the price; increase the output; increasing the output will lead to long term relationships with the customers; it will involve maximum habit of resources. Maximum capacity utilisation is only possible with the increase in output which can be only done by increase in the supply of steel.\r\n on that point had been two options discussed with the help of decision tree to look for the best and cheapest way to increase the supply by deciding upon the source. The analysis showed that get from POSCO, Korea at the special price is more moneymaking (53. 091mn INR) but this is only possible if POSCO, Korea agrees to supply them at the special price. The second possible option was from purchasing steel from the other branch of POSCO at Orissa, India but this would prove less(prenominal) profitable (15. 592mn I NR) as they would stag it at the selling price in order to save their profits.\r\nOther factors which tend to support POSCO-IPPC to set its foot in the Automobile sector include in the non-financial analysis: growing Indian economy and its Steel Industry; disposal support; bang-up Quality Steel; modern technology used with tight disciplinary issues which makes them a good supplier. Recommendations: As such, my recommendations would be: * Undertake further research in terms of specific of customer requirements and problems, by do a market research and research on the clients, as many of my findings are generic to the company’s knowledge. More accurately determine the hairsplitting nature of the costs and profits upon purchasing steel from the sources analyzed in the written report. * Embark upon gigantic research as to search other ways to increase the output and also request POSCO, Korea to supply more at the special price. However, my analysis is limited; it does not cover all the aspects of this topic due to the restraints of the data supplied. The research was not more vast because the unit was far away and many meetings were not possible with the officials as this would interrupt in their work .\r\nWith only two personnel interviewed, a wider perspective from other departments must also be obtained . The report is a reference material, the research can be more extensive and proper results can be achieved if access to more data was possible. The Report is still in progress; there are many issues which need to be solved which can be done with the help of the recommendations and more access. Bibliography Books: AS take aim and A level Business Studies, Peter Simpson, Cambridge University Press, Cambridge, 2002, Websites: http://www. stratfor. com/analysis/india_poscos_steel_investment_challenge Steel, India Brand Equity Fund, http://www. bef. org/industry/steel. aspx India Steel Industry, parsimoniousness Watch, http://www. economywatch. com/ india-steel-industry/ India Automobile Industry, rescue Watch, http://www. economywatch. com/business-and-economy/automobile-industry. html Corporate overview, POSCO-INDIA, http://posco-india. com/website/company/corporate-overview. htm APPENDIX: * appendix 1: Interview copy with Mr. Bharat Indu BhattaCharya * vermiform appendix 1: Interview Transcript with Mr. Joseph Joe * Appendix 3: SWOT Analysis * Appendix 4: PEST Analysis * Appendix 5: Graphs * Appendix 6: Mail from Mr. Joseph Joe Appendix 1: Interview Transcript with Mr.\r\nBharat Indu Bhatta Charya, Electric Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune 1) skillful Afternoon, Could you please enlighten us about your company? * legal Afternoon, POSCO-IPPC stands for POSCO †India Pune Processing Unit. We are situated in the Talegaon Horticulture and Industrial Park in the dist. Of Pune. POSCO-IPPC is a curl centre as known by its parent company POSCO, which is a steel manufacturer giant in South Korea. It is the fourth largest producer of steel in the world and its distributors and manufacturing units are spread all over the world.\r\nFrom the start of this company to the present date, POSCO has led to massive advancements in the socio-economic status of South Korea. overture back to POSCO’s investment in India, this is POSCO’s third investment, the other two existence in Delhi and Orissa. Although POSCO is POSCO-IPPC’s main investor but it is an independent company which is locally managed. POSCO entering in a new market planned to establish this processing unit as a joint venture with LG International, where POSCO has 65% of contends and LG international owns the rest 35%.\r\nA make sense 15 million $ was invested in this project and it commercial processing started in 2006. 2) rear end you emphasize more on your commercial processing and the working of this unit? * POSCO-IPPC processes the raw material which comes from POSCO, South Korea and distributes it to the customers. By processing, we baseborn the steel which comes from POSCO is slatted and sheared according to the customers need. We receive our steel in the form of coils, this is one reason for our being known as coil centre, then the coil is put in a machine which slits and shears it based on the dimensions set.\r\nThis is then packed and sent to the respective customers. Our major customers are Crompton, LG, Suzlon, TATA and Bajaj. Our company produces output for electric steel as well as automobile steel. Although in the electric steel market, we hold a monopoly but in automobile, we are yet to expand our approach. These are the different types of steel we produce: Electric Steel * CRGNO- Cold trilled texture Oriented Steel * CRNO- Cold Rolled Non-Grained Steel Automobile Steel * HR ; PO- Hot Rolled and Pickled ; Oiled Steel Cold Rolled Steel * Stainless Steel White Goods * Electro-Galvanised Steel We have 120 people as staff, out of which 60 are on payroll and 60 are on contract. We follow the batch production for our processing unit. Our output is 10,000 metric tons / month with an annual turnover of 320 Crores as of last year. The raw material which comes to us, we add a value addition of 10% and sell it in the market. Our capacity to produce is 135,000 metric tons per annum where as its output is low because of the lack of raw material so the capacity utilization is not up to the mark.\r\nSo to involve our other machinery, we do job work for other companies of 5000 metric tons. 3) Can you please tell me about the managers of this company? * The managers at all the leading posts in the company are all from South Korea and they have been assigned by POSCO for a fixed period of years for a perfect start in the Indian Steel market. These are very see and are strict followers of discipline and quality. The work at POSCO-IPPC is efficient and advancing due to these managers. These are: * Gil Ho Bang †Managing Director Jongyeol Her †General Manager * Jung Chule Kim †General Manager * Woon Tae Jung †General Manager 4) Can you please tell us about the difficulties you are facing as a new company in the Indian Steel market? * We have a monopoly many in the market for Electric steel so we don’t have any problems in that sector but in the automobile sector, our competitors are well established and they have a far greater market share than POSCO-IPPC in the market so it creates pressure on us to create our product better than theirs to check in the market.\r\nOur competitors: TATA STEEL, JINDAL, ESSAR, ISPAT and other Chinese and Russian companies. The two main difficulties which our company is facing are: * There has been a Star paygrade which the Indian Government has started on the electric appliances. This effect of BAE Star Rating on the consumption of Electric Steel. * The Automobile sector in India is booming and has a grass of area so POSCO-IPPC is trying to increase its footprint in the Automob ile steel segment. There is a lot of demand for POSCO’s quality steel in the Automobile sector. 5) What is your SWOT? SWOT Strength * whatsoever downfalls can be supported by POSCO-Distribution of quality steel †Inherits a quality name in the market from POSCO- Maintains strict disciplinary levels- Market leader in Electric Steel- Demand for its quality steel in the Automobile sector-Machinery is very advanced and the apprehend employed are few but skilled. Weaknesses * non enough raw materials-Is not yet able to firm its stand in the Steel market-The high price of their product due to the currency of Korea being more powerful †Language/ Cultural ranch amid India and Korea. Opportunities To increase its output and meet the high demand †Lack of high quality steel in the Automobile market gives them a sorry opportunity †India encouraging foreign investments- Increasing International trade between the countries- Rate of high economic and the countrys e conomy gradually increasing- extra Reduced expenditure for the steel. Threats * Price of the raw material is highly dependent on the foreign exchange †POSCO holding a small share in the market is comparatively smaller than its multi-national counter split -Low output due to lack of raw materials which may result in the loss of customers and a long term relationship.\r\nAppendix 2: Interview Transcript with Mr. Joseph Joe, Automobile Steel Dept. Manager of POSCO-IPPC, Pvt. Limited, Pune 1) Good Afternoon, What can you tell me about POSCO-IPPC in relevance to the Automobile market? Good Afternoon, POSCO-IPPC is a subsidiary of POSCO which as you know is a global producer and distributor of high quality steel. So as its parent company, POSCO-IPPC is also known for its high quality in the Indian Steel market.\r\nAutomobile conjunction requires high quality steel for the chassis parts of the automobile, usually such parts are imported or substitute quality steel is bought so due to the lack of high quality steel producers in India, there is a lot of demand for the emerging POSCO-IPPC’s Steel. Though POSCO-IPPC has so many opportunities to set itself firmly in the market, it has many hindrances preventing it from doing so. 2) Can you pleases talk about the hindrances in little more detail? * There are many factors which sum up to conclude as a hindrance for POSCO-IPPC.\r\nThe major ones are: * High cost of POSCO-IPPC’s Steel leads to a discouragement to the Indian customers. * POSCO-IPPC is sounding for big customers so they are able to establish themselves by directly targeting at the higher end. * POSCO-IPPC is strict in its payment dates which are not favoured by all its customers for they need a margin to harmonize their accounts. * Although the main problem is the lack of raw material from POSCO. Due to the Special price-low supply condition between POSCO and POSCO-IPPC, there is low supply of raw materials.\r\nThe demand is high for POS CO-IPPC’s steel but due to low output, it cannot adhere to every customer’s needs. POSCO-IPPC is capable to produce more output than its current production but due to the lack of raw material, it has to restrain itself and do job production. * POSCO-IPPC’s customers attend a same price and supply guarantor for three months which is not possible for POSCO-IPPC as it imports its raw material and it is subject to foreign exchange policies and other government policies which affects its price.\r\nThe supply surety cannot be given due to lack of supply of raw material. * also the defaulting of POSCO-IPPC’s price and bargaining to pay less price by the customers is discouraging POSCO-IPPC to expand itself so quickly as they are losing on their profits. * But overall, the lack of raw material is a big issue and solving that issue can solve many other problems related and in the flesh of time, brisk movements of trade will solve other problems too. 3) What ca n you tell about the special price-low supply condition? POSCO is a global player and it distributes its steel at a common international price (Rs 59000) to the world but as that rate is very high in terms of Indian currency, it would not settle down in the Indian market so in order to satisfy its Indian customers, it reduced the price and this is known as special price (Rs 45000). But as POSCO reduced the rate for POSCO-IPPC, it only did this for a condition and this condition was that POSCO-IPPC will receive only a limited supply from POSCO, Korea. ) Since TATA is one of your major customers in the automobile segment, can you please put light on the company’s relationship with TATA? * Sure, TATA Motors is a major customer of ours and there is a considerable amount of transaction with TATA. Tata itself produces steel but is partly dependent on POSCO-IPPC for high quality steel for the chassis of their automobiles. They need good quality for the outer body of the car for it to be firm and more attractive for which they take the support of POSCO-IPPC.\r\nTata requires 30,000 metric tons/month and the demand is going up by 7-10% / year. Tata demands 5000-7000 metric tons/month from POSCO-IPPC but it can only supply 2000-2500 metric tons/month to TATA for out of its bring output, it also needs to supply to other customers in order to remain in the market and also to stabilize it. The customers in the market are also asking for POSCO-IPPC’s steel like General Motors, Volkswagen and Fiat. For which TATA has supported POSCO-IPPC in sending a petition to POSCO to supply more steel.\r\nPOSCO-IPPC distributes cold rolled steel in the open market at Rs 53-55000; the price keeps on fluctuating, whereas TATA gets it at Rs 48,000 (maximum. ) Thus, such factors are creating hindrances in transaction between TATA and POSCO-IPPC. 5) What is your PEST? * PEST policy-making & LEGAL * Central Government encourages the foreign investment- Change in the centra l Government may result in change in different trade policies †Indian Economy has shown relatively high levels of development, stability and potential growth. -Korea having a high level of percentage of investment in the Indian market\r\nEconomical * Indian Economy is booming-Growth in its gross domestic product and economic growth-Fluctuations in the exchange rates -Social ties and contacts between India and China is increasing-Expansion of a basic industry is of all time favoured- Company also gives importance to maximum exploitation of resources. Social * Opened a school for the children of its workers- Helped to develop the village Talegaon -Increase in the capacity of the unit, there will be more employment in the area-Adapt the Indian Culture-It believes in job satisfaction and motivation of its staff\r\nTechnical * POSCO-IPPC uses advance technology to process its raw material-High dependency on technology-India is a developing country where there is a great problem with electricity so load shedding takes place-Alternative method to use generators during the time of load shedding proves expensive-Supply of diesel in such large quality proves to be a negative factor. Appendix 3: POSCO-IPPC SWOT Analysis Appendix 5 †Graphs Figure 1: Figure 2: Appendix 6: Mail from Joseph Joe This was a mail from Mr.\r\nJoseph Joe giving out some information. investing: 500 mn INR | | | | | | | | | | | | | Probability | | Difference| | character Company | | Cost Price/ metric ton | | Selling Price/ metric ton| | quantity Purchased and sold| | Total Revenue| | | | | | | | | | | | | | 0. 6| | Special Price| POSCO, Korea| | Rs 45000| | Rs 55000| | 11111| | 611. 105 mn INR| 0. 4| | No Special Price| POSCO, Korea| | Rs 59000| | Rs 55000| | 8474| | 466. 07 mn INR| 0. 3| | Wihtout O. H. E| POSCO, Orissa| | Rs 48,000| | Rs 55000| | 10416| | 572. 88 mn INR| 0. | | With O. H. E| | POSCO, Orissa| | Rs 56000| | Rs 55000| | 8928| | 491. 04 mn INR| ———R 12;——————————†[ 2 ]. Refer to Appendix 1 †Interview with Mr. Bhattacharya [ 3 ]. Refer to Appendix 1 †Interview with Mr. Bhattacharya [ 4 ]. Refer to Appendix 1 †Interview with Mr. Bhattacharya [ 5 ]. POSCO-INDIA, â€Å"corporate overview”, http://posco-india. com/website/company/corporate-overview. htm. (20th September, 2008. ) [ 6 ]. Refer to Appendix 5- Graphs [ 7 ]. Economy Watch, â€Å"India Steel Industry,” http://www. conomywatch. com/india-steel-industry/, (20th September, 2008. ) [ 8 ]. Economy Watch, â€Å"India Automobile Industry,” http://www. economywatch. com/business-and-economy/automobile-industry. html, (23rd September, 2008. ) [ 9 ]. Refer to Appendix 5- Graphs [ 10 ]. Refer to Appendix 2 †Interview with Mr. Joseph Joe [ 11 ]. Refer to Appendix 1 †Interview with Mr. Bharat Indu Bhattacharya [ 12 ]. Refer to Appendix 2 †Interview with Mr. Joseph Joe [ 13 ]. Refer to Appendix 1 †Interview with Mr. Bharat Indu Bhattacharya [ 14 ].\r\nRefer to Appendix 6 †Mail received from Mr. Joseph Joe [ 15 ]. India Brand Equity Fund, â€Å"Steel,” http://www. ibef. org/industry/steel. aspx (3rd August, 2008. ) [ 16 ]. SWOT Analysis [ 17 ]. PEST Analysis [ 18 ]. http://www. stratfor. com/analysis/india_poscos_steel_investment_challenge [ 19 ]. PEST Analysis [ 20 ]. SWOT Analysis [ 21 ]. PEST Analysis [ 22 ]. SWOT Analysis [ 23 ]. PEST Analysis [ 24 ]. http://www. economywatch. com/business-and-economy/steel-industry. html [ 25 ]. http://www. economywatch. com/business-and-economy/automobile-industry. html\r\n'