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Assignment # 3 Business Environment Corporate Governance and Its Effectiveness

Assignment # 3 Business Environment Corporate Governance and Its Effectiveness

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Published by: rohandefined on Dec 17, 2009
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 Tata Motors Limited
Since Tata Motors is a part of a large conglomerate company it needs to have a strongcorporate governance to ensure that its employees act ethically and the business continues torun smoothly especially during the ever changing and dynamic global economy. “TataGroup’s corporate governance is founded upon a rich legacy of fair, ethical, and transparentgovernance practices” (tatacarsworldwide.com). One of the more important parts of this isthe transparency of the company people have a right to know what the company is doing notonly to ensure ethical practices, but for the insurance of their many shareholders whom havea right to know the inner workings of the companyTata has created some models for employees to guide themselves through everyday business practices to ensure that the corporate governance is continuously being upheld. The Tata business excellence model is upheld by Tata quality management services. Qualitymanagement is an in-house group dedicated to helping the various Tata companies achievetheir business objectives through specific processes. The two main processes that the qualitymanagement services employees focus on are business excellence and business ethics. Thesetwo objectives have helped build Tata into the strong, dynamic company it is today. Thesemodels are entrenched in the company’s ethnical standards and Tata feels strongly aboutenforcing both throughout the company. “Tata quality management services plays the role
of supporter and facilitator in the journey that Tata enterprises undertake to reach the peaksof business eminence while, at the same time, adhering to the highest ethical standards(Tata.com).To further prove their commitment to quality and ethical practices Tata has introducedannual quality awards for those companies conducting business with the utmost quality.These awards are called the JRD quality value awards named after the late chairmen JRDTata. These awards are presented annually on July 29
, the birthday of JRD Tata. Tata hascommitted to ensuring quality and ethical standards not only within Tata Motors, butthroughout their many other branches and sectors of the Tata Group. They have done so by benchmarking quality standards through the Tata business excellence modelas well as providing incentives for companies to strive to improve the quality of their service, by awarding JRD quality management awards.
Tata Motors have increased its earnings over the years through their various acquisitions and joint ventures with truck manufacturers in Southeast Asia. Gross profit in the year 2006 was1,160.9 million and increased to 1,510.1 million in the year 2007. Earnings after taxes alsoincreased significantly between 2006 and 2007 increasing from 336.6 million to 405.5million in 2007. After a large drop in revenues from 2004 to 2005 when the company firstwent public on the NYSE it has been increasing revenues greatly annually, from 4,422.0million in 2005 to 7,354.0 in 2007.
Tata Motors is able to maintain, as well as increase, their market share by capitalizing ontheir core competencies. Tata Motors is active, competitive, and dynamic in all aspects of the automotive industry, which means that there must be many different activities going onin all areas of the company. As a result of the ever evolving automotive industry Tata Motorsmust always be changing and one way to stay at the forefront of the industry is to makecontinuous improvements in technology through research and development. One way thatTata Motors has done this is by producing one of the most efficient and low cost vehicles onthe market. Acquisitions, mergers, and expansion is another core competency that TataMotors has is embedded in their company structure and philosophy. Another corecompetency that Tata Motors holds is being located in the India. This location has allowedthem to understand not only the Indian market but also the dynamics of emerging anddeveloping markets. This market understanding and knowledge allows Tata Motors tomanufacture their products at lower costs, sell them to emerging markets while making profits as well as take advantage of the strong labor base in India.
Ashok L eyland
The Board of Directors and the Management of Ashok Leyland are committed to theenhancement of shareholder value.>through sound business decisions, prudent financial management and high standards of ethics throughout the organization.>by ensuring transparency and professionalism in all decisions and transactions.>achieving excellence in Corporate Governance by conforming to, and exceedingwherever possible, the prevalent mandatory guidelines on Corporate Governance and byregularly reviewing the Board processes and the Management systems for furtheimprovement.The company has adopted a Code of Conduct for the members of the Board and senior management, who have all affirmed in writing their adherence to this Code.
Another significant step has been the appointment of an Ombudsman to deal with anyreferences, complaints or grievances about the Company, its employees or its dealings.If the suppliers, employees or customers have any suggestions on governance issues or grievances or complaints on Ashok Leyland's practices - inclusive of its executives invarious functions - which they feel ought to be raised with the Ombudsman and not with theusual channels of business, they may do so.It is advised that the regular business dealings should be through the usual businessfunctional channels. The Ombudsman will not deal with them under normal circumstances.The Ombudsman is
Mr.T. AnanthaNarayanan
, a former Executive Director of theCompany, with an excellent understanding of Ashok Leyland as an organization and itsfunctioning, having been with the company for nearly 30 years.
1. Philosophy on Corporate Governance
The Board of Directors and the Management of Ashok Leyland commit themselves to:• strive towards enhancement of shareholder value through — sound business decisions — prudent financial management and — high standards of ethics throughout the organization• ensure transparency and professionalism in all decisions and transactions of the Company• achieve excellence in Corporate Governance by — conforming to and exceeding wherever possible, the prevalent mandatory guidelines onCorporate Governance

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