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right to buy and refuses to buy whaAlt
S•• i2 .b .Ii'g ~ ,
b ' . ' ! . - ,
~M~an~:r:~re Goods and se~ces produced toproducts manufactured through child labour. market.Greed Excessive and inordinate desire topossess Punishment Award of due monetary penaltypersonal riches and comforts. or corporeal detainment in prison, or both, forGuilt Psychological feeling of one's offence; the offences committed against the law; moralcharging one with legal offence. punishments are imposed through social strictures,stigma, and ostracising the wrong doer.Informed consumer A customer with adequateinformation before making a choice. Redress Making amends or reparation for thewrong or harm done.Legal business Businessmatters that come underthe purview of the law. Stakeholder One who has the responSibility tosafeguard another's interests.1. Why is the consumer also known as a stake-holder?2. What are the alternative descriptions of amanufacturer?3. How can a manufacturer perform ethicallywithout undermining the financial returns?1. How legitimate isthe concept of stakeholdersin business management?2. How can you ethically relate production andconsumption, and demand and supply, in aconsumerist society?port with a sc~'such contrapti'could conceivesettled for a saland what was
1
The idea ~strange way, tlunguarded m,going back onthe goal to beaRs l-lakh cawas intervie~newspaper] atI talked aboutI was asked Iabout Rs lla.'had a headliIproduce aRswas to issue
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exactly whatit would be: just take thatpeople were
The Team
Ratan Tata (spoke to mamade in partried aregiOIbut withoutsoon after
t
trooped intothe Pune pI:personal trcthe chairm:his mind bIcosts just rMakemeameasure.Thechother fiveteam. Excetherewasntheywouicof specific4. How can one find out what the consumerswant?5. How can ethical consumerism change busi-ness?6. Discuss some ofthe salient features ofconsum-erism.3. Comment on ethical consumption as a moralchoice.4. Why is moral leadership important for entre-preneurs?5.. Discuss production ethics.C.K. Prahalad and M.S. Krishnan,
The New Age o/Innovation,
Tata McGraw-Hill Publishing, 2008.
t .
The News
Shifting inflectedforms, India's Nano benumbed thesensesat the Geneva Motor Show, stealing the thunder at thesuper car exotica with consummate ease. The world'scheapest car from the Tata stable even got the topautomakers agreeing that 'small' could, indeed, be 'big~
-Financial Express (Airy 2008)The Birth of an IdeaVietor Hugo's belief that no one can stop an idea,whose time has come, is true of the man at thehelm of affairs at the Tatas, Ratan Naval Tata, thechairman of the group of companies whose nameitemblazons. The idea originated when he reflectedupon the misery of the people while commuting.He felt terrible when he saw a rickshaw puller inKolkata. The safety hazards of an entire familyconsisting of a husband, a wife, two children, anda baby in the wife's lap riding on a two wheelerbothered him. Sohe contemplated and improviseda scooter with a safety bar that safeguarded againsta fall. He tried to develop a four-wheeled trans-
•Interview iJ
b
SeeRatan'
 
lta, the
~mune
~flected[luting.Iller infamily~n,and'heeler'ovisedigainsttrans-~.. rt with a scooter engine and worked on several,~ch contraptions th~t only an ~ngineer's mind'could conceive. In his world of Ideas, he finally;§ettledfor a safe, small, environmentally frie~dly,ahd what was to be the world's cheapest car.The idea got a sudden unexpected burst. In astrange way, the word was spoken, perhaps at anunguarded moment, yet spoken, and instead of going back on it with clarifications, he set it up asthe goal to be achieved: 'It was never meant to bea Rs l-lakh car; that happened by circumstance. Iwas interviewed by the
Financial Times
[Britishnewspaper] at the Geneva Motor Sh~w (2003) andItalked about this future product as a low-cost car.I was asked how much it would cost and I saidabout Rs 1lakh. The next day the
Financial Times
had a headline to the effect that the Tatas are toproduce a Rs 100,000 car. My immediate reactionwas to issue a rebuttal, to clarify that that was notexactly what I had said. Then I thought, I did sayit would be around that figure, so why don't we just take that as a target When I came back ourpeople were aghast, but we had our goal.'bThe TeamRatan Tata did not make a secret of his idea; hespoke to many in the industry so that it could bemade in partnership but there were no takers. Hetried aregional tie-up with Singapore and Malaysia,but without success. One fme day in early 2003,soon after the famous promise at Geneva, theretrooped into his Bombay House five engineers fromthe Pune plant. They showed him slides on cheappersonal transport and were eager to know whatthe chairman had in mind. The chairman spokehis mind briefly and clearly. 'Make a real car thatcosts just marginally more than a two wheeler.Make me also part of the team', he added for goodmeasure.The chairman, the top five engineers, and an-other five hundred technicians made the Nanoteam. Except for the motivation generated by Tata,there was nothing else. There were no benchmarks;they would have to be set There was no clear brief of speCifications; it is something that was neverdone before. The work started and along with it,frustration mounted as failures increased. But noone was to be blamed. The team moved with asingular purpose under the innovative leadershipof Girish Wagh, a 35-year-old who had given theTata's most successful utility vehicle, the Ace, ashead of the small car project.However, when something isto be created andnot produced, one is at one's wit's end. The topleadership-Ratan Tata, the chairman himself andthe managing director ofTata Motors, Ravi Kant-rallied around their engineers and technicians. Oneof the things the managing director did was toanalyse the various products of the competitors,by taking them apart and making them realize whythe customers go for the products of the competi-tors. Such close and objective self-examinationsharpened their focus. What would the customerlike and at what price?
The Product
A car as cheap as a good two wheeler is like theproverbial cake that you cannot have and eat too(Narayanan 2008). Yet, Narendra Kumar Jain, ahighly respected engine engineer at the Tatasthought it was possible. For two years he scouredthe globe for an engine-all sorts of engines, in-cluding two-wheeler engines, to fit the small car:..Nothing fitted and nothing worked. So he startedwhere all great things begin, on a clean sheet of paper, at the drawing board. Several designsshowed up on his computer but nothing seemed
•Interview in
&anomie Times,
11January 2008, Mumbai.
b
See Ratan Tata's interview of 2007 athttp://tata.nano.inservices.tatamotors.com/.
 
to compute. Finally, through frustration and glim-mers ofhope, a couple of prototypes known as alfaand beta were selected. After a severe process of analysis and repetition, the chosen prototype wasfrozen. Thus, a new heart was created for a newcar (Narayanan 2008).All the rest ofthe functions of design and com-ponents too went through a severe time of test andrejection until perfection was achieved. Althoughit meant a new and unconventional turn to suppli-ers, yet all felt that they were all part of somethingsignificant in the making. In the process, thirty-fivepatents were filed, and for Tata Nano it isgoing tobe more. Indeed, it was very significant andpathbreaking and new benchmarks were set, asmany doyens of the industry said at its inaugura
c
tion in New Delhi and at the motor show at GenevaThe specifications were• Rear-mounted 624 cc engine with 34 bhp• Four-door monocoque design• Fuel efficiency 20 kpl• Top speed 105 kmph• Four-speed manual gear box• The length stretching to 3.1meters, and widthto 1.5,giving the customer slightly more innerroom than the Maruti 800• Safety survival measure at 48 kmph with fron-tal crash• Emission standards are Bharat III and EuroIV compliant
C
The PhilosophyA car is what a customer would like to have. It is adream for millions of Indians to own a car, just asthey once wanted to have a telephone. In the ab-sence of a modernized public transport, a comfort-able personal transport isa luxury that can be onlydreamed of in this country. Further, to own thisdream at an affordable price is something a com-moner cannot think of.Just the way amobile phonecan be found in every pocket, the Tata small carexpects to find its way to the front yard of everyhouse. Exactly a century ago, in 1908, Henry Fordthought of a car for every American, in the sameway. He realized his philosophy through twoprinciples, that is, the division of labour and theassembly line. These two principles reduced cost,increased efficiency, and produced cars in largequantities. It also made it possible to pay the work-ers handsomely. Ford created wealth for Americaand made the Americans realize one of their bigdreams of owning a private car.Tata proposed two principles. The first wasvalue to the customer and the second was empowera team to deliver that value. The enormous inven-tory of the car components had to be minimizedto cut costs without minimizing the quality of technology. The engineering brains had to rise tothe challenge of a new creation and design, andconvince the suppliers to follow the new philoso-phy. In the arduous process of engineering a prod-uct to take the markets by storm, no one spoke of making money or asking what is going to be theprofit when Rs 1900 crore had to be spent on theprototype. Wealth creation and making profits willtake care of themselves if one firmly believes thatall the stakes are with the customer.The PublicEver since the announcement, there was apalpablesuspense in the country in general, and in the in-dustry in particular. While the entire media., theexperts, and the automotive industrial houses sawwhy it was impossible to make a car for just onelakh, the people of India had a quiet convictionthat the Tatas could do it. This is the faith that thepeople' of India have in this company. Tatas candeliver on their promise and give value to theirmoney. A promise by the Tatas isan article of faithfor the people of India. The people of India maynot trust the very governments that they themselveshave voted and elected, but there is no reason forthem to doubt when the Tatas make a promise!The ValueWhen a client buys the Tata Nano, he should feelthat he has profited by the purchase. Such a real-ization is a turnaround in business philosophy. It isthe entrepreneur's right to earn profits. The cus-tomer too will not only have got money's worth,
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