The organizational structure of Ittehad Steel Group is a very diverse one. While key aspects of decision making and goal setting lies in the center for a better control and a centralized decision making, a strong organizational structure still exists.
Owner / Director Reg. Manager Manager Manager Asst. Manager Asst. Manager Advisors Team Coordinator Labors Clerks / Receptionist Office Mill
41 The aspect of work specialization is in place to ensure work speed and work quality where employees work on their own individual specialized department of specialization and functional departmentalization ensures a very apt and adequate management.
The chain of command at ISL (PVT) is to ensure all department managers report back to the director and the employees report to one manager. This helps in ensuring work distribution and target achievement clarity.
The span of control of every manager is maintained in a scope that would be easily manageable. The main aim at ISL (PVT) is to ensure their employees are not put under too much strain. Not only does it harm the employee but also work quality as the employee is under constant pressure to achieve far more than he is doing. As a result he is never content with his work if the span of control is kept too wide.
Formalization is in place at ISL (PVT) very strictly in some areas while in others there is a bit of leniency towards it. For jobs at the very basic level, standards are laid forth to ensure product quality and standard operating procedures ensure both safety and quality.
The design of the organization is therefore a very strictly mechanistic one at the lower staff level because in the business they are in, quality is of the essence and a mechanistic approach ensures that very well. The approach at the top managerial levels however is more of an organic one. No strict guidelines need to be followed for the top managerial posts however programmed decisions are kept in store for reference in the future.
ISL (PVT) aims at developing its employee‘s skills and capabilities to ensure a constant growth for the company in today‘s testing times. Employee induction is done through a rigorous interviewing and a critical selection process to ensure that a selected employee is a devoted one and one that will be faithful to the organization after all the investment they make on him.
Employee training is done through an array of traditional methods including mentoring, on the job training and workshops etc.
The ISL (PVT) management believes in employee compensation and benefits. The aim is always that when an employee shows true determination and persistence, he should be rewarded for it. This is helpful in both keeping employee morale up and also in encouraging other employees in
42 doing the same. As a result, the whole organizations work standard is raised by a simple act of compensation and benefits. Pension and health care are 2 benefits offered by ISL (PVT) to its employees. Also ISL (PVT) ensures its employees are listened to and their individual needs addressed. In a case where an employee has a family related issue, ISL (PVT) offers leaves without causing any problems for the employee.
All these actions have acted together to bring ISL (PVT) to where it is today. Established in 1913, Ittehad Steel (Pvt.) Limited is one of the leading steel rolling mills in Pakistan. The company has excelled in steel industry with expertise in manufacturing steel bars for reinforcement of concrete and sectional steel products of different grades and sizes.
ISL (PVT) is best known for its state-of-art technology, high standards in quality and commitment to the development of Pakistan. Success of the company can be gauged by the portfolio of mega-projects in which it has participated over the last few decades.
ISL (PVT) Group of companies is a premier industrial establishment of Pakistan; involved in diverse business activities like steel casting, foundries, re-rolling, rice processing and textiles. The group‘s history in steel business goes back to 1913 when the foundations were laid down by opening of a trading house for steel products. This humble beginning soon turned into a strong countrywide distribution network selling products of world renowned Tata Steel and Nippon Steel.
The group first entered into manufacturing line in 1976 and since then has strengthened its position as a trend-setter and a technology leader in the area. Today the group has as many as five manufacturing units with the capacity of hundred thousand metric tons 100000 m/tons in its folds – with two new units under installation.
All these go to show that indeed ISL (PVT)‘s structure, design and most importantly human resource processes are very successful ones indeed which have given the company the success it has today.
43
SWOT Analysis
Strength
Pakistan has rich mineral resources. It has abundance of iron ore, coal and many other raw materials required for iron and steel making. It has the fourth largest iron ore reserves (10.3 billion tons) after Russia, Brazil, and Australia. Therefore, many raw materials are available at comparatively lower costs.
Weakness
These are inherent in the quality and availability of some of the essential raw materials available in Pakistan, e.g., high ash content of indigenous coking coal adversely affecting the productive efficiency of iron-making and are generally imported. Advantages of high Fe content of indigenous ore are often neutralized by high basicity index. Besides, certain key ingredients of steel making, e.g., nickel, Ferro- molybdenum is also unavailable indigenously.
However, most of the weaknesses of the Pakistan steel industry can be classified as systemic deficiencies. Some of these are described here.
Steel is a capital intensive industry; steel companies in Pakistan are charged an interest rate of around 14% on capital as compared to 2.4% in Japan and 6.4% in USA.
Opportunity
Excellent potential exists for enhancing steel consumption in other sectors such as automobiles, packaging, engineering industries, irrigation and water supply in Pakistan. New steel products developed to improve performance simplify manufacturing/installation and reliability is needed to enhance steel consumption in these sectors. Main objective here have to be improvement of quality for value addition in use, requirement of less material by reducing the weight and thickness and finally reduction in overall cost for the end user.
Threats
The demand for steel is a derived demand and the purchase quantity depends on the end-user requirements. The traders tend to exhibit price sensitivity and buy when there are discounts. This volatility of demand often affects the integrated steel manufacturers because of their inability to tune their production in line with the market demand fluctuations.
44 Some other threats are:
Ever decreasing import duty on steel.
Dumping of steel by developed countries.
High quality products from developed countries available for import at very competitive
prices.
Non-availability of capital from financial institutions for iron and steel sector.
Michael Porter’s Five Forces Model
Backed by robust volumes as well as realizations, steel Industry has registered a phenomenal growth across the world over the past few years. The situation in the domestic industry was no exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy. However, the current liquidity crisis seems to have created medium term hiccups. In this article, we have analyzed the domestic steel sector through Michael Porter‘s five force model so as to understand the competitiveness of the sector.