BHARTIYA MANAGEMENT

ASSIGNMENT-3

SUBMITTED BY: Shashwat Shukla

PGDM22207

SUMITTED TO: PROFESSOR SURYA NARAYAN

Section E
 Ratan Tata
Ratan Tata - Success Story
Nobody disputes that, during his lifetime, JRD Tata was the most respected — and probably the
most admired businessman in India . On Thursday, as I watched the TV coverage of Ratan Tata
unveiling the Tata Nano in New Delhi , I was struck by a sudden thought: Ratan has finally
inherited JRD's title. He is clearly the most respected and admired businessman in India today.

And then, I thought back to that phase, 10 years ago, when the Tatas struggled to reinvent
themselves in the post-JRD era. I thought of how Ratan was perceived then: awkward,
untalented, unworthy of the job, out of his depth and full of vindictive anger against many of the
satraps of the JRD regime. It was a time of change. New groups were springing up out of
nowhere. The certainties of the old protectionist economy and the license-permit- quota raj had
collapsed. Reliance had made the transition from being seen as a parvenu to being regarded as an
industrial behemoth. The Infosys legend, personified by Narayan Murthy's personal simplicity
and marked by the world-class skills of his high-tech partners, had just begun.

At Tata headquarters, however, the crises mounted: record losses at Tata Motors, the much-
derided plan to launch the Indica, criminal charges over Tata Tea's alleged links with Assam
militants, allegations of foolishness in the sale of Tata Oil Mills' assets, a plan to launch a
domestic airline with Singapore Airlines that was comprehensively scuttled and more. And many
of us wondered if we were watching India 's greatest industrial group diminish before our very
eyes.

The house that JRD had built was crumbling. Poor, shy, inept Ratan seemed unable to cope.

And yet, a mere decade later, here was the same Ratan being feted by the world's media as the
man who reinvented, if not the wheel, then certainly the motorcar. A man who did what no
global carmaker believed was possible: to build a car that looked this good and drove so well for
so low a price. And here was a new Ratan, his legendary shyness temporarily in remission, as he
joked about calling the car the 'Pachauri' (after the environmentalist who chose to attack the
Nano as a pollution threat, a charge that the Nano has easily beaten) or even the 'Mamata' (after
the nutcase) or 'Despite Mamata'.
The following day, the Nano managed the impossible: there was not one negative review of note
and the raves kept coming. To the chagrin of his rivals, Ratan even kept to the price
commitment. Though input costs had gone up, he said, the Tata's would still price the basic Nano
at a lakh because "a promise is a promise".
The triumph of the Nano was merely the crowning glory in a series of successes. Throughout the
21st century, the Tatas have beaten every doom-laden prediction and silenced every critic. Tata
Motors came back from losses of over Rs 600 crore to make huge profits on the back of the
Indica, the all-Indian car that had been Ratan's dream, and — to his detractors — the vanity
project that would sink the company.
Infosys had fulfilled its early promise but even then Tata Consultancy services(TCS), a company
that had been little noticed in the 1990’s had grown to dominate the Indian IT sector , its size
dwarfing Infosys. . Tata Steel had defied Rusi Mody's predictions, had been whittled down to a
slim and lean company, and had even gone ahead and bought Corus, a global giant, after a
bidding war during which Ratan had shown nerves of steel. And even as Ratan was unveiling the
world's cheapest car, the Tatas were on the verge of clinching the purchase of Jaguar, one of the
world's great luxury cars.
How had so many people, who should have known better, got Ratan so wrong? Business pundits
will tell you — in the kind of detail that I will never be able to master — just how the Tatas
turned themselves around. I'm sure they are right. But remember, most of these pundits were the
same guys who wrote Ratan off to begin with, a decade or so ago.
I have a few theories of my own — based on the interviews I have done with this otherwise
reclusive man — on the remarkable rise of Ratan Tata.
Ratan realised India was changing much before the other big houses did. He recognised that the
old feudal, paternalistic structure that had worked so well in the JRD era, where the old man was
the emperor and the companies were run by viceroys, would not work in the new India . He
professionalized the Tatas, democratized the management, abandoned the feudalism (remember
Rusi Mody's massive birthday tamashas in Jamshedpur ?) and made the group adopt a low-key,
matter-of-fact, get-things-done style that had no room for satraps and stars.

He saw the wisdom of embracing the future. Hence, the focus on TCS. And hence the
determination to go global: we talk about Corus, the Pierre, Tetley etc , but the big successes are
only the tip of the iceberg. Years ago, Ratan told me that he was determined to use Indian
managerial ability and Tata capital to globalize the group. In 2000, this seemed overly ambitious
and grandiose. But he has grabbed the opportunities for globalization like no other Indian
industrialist has.
At the same time, he put his faith in young India . The team behind the Nano is young — the top
guy is 35 — and overwhelmingly Indian. So it was with the Indica, a truly Indian car. One of the
dichotomies of Ratan's personality is that while he can be shy and reticent in social situations, he
is warm, outgoing and able to motivate teams at work.

He told the government to go to hell. No group has faced more unfair governmental harassment
than the Tatas — right from the Tata Tea case where they were framed by the Assam
government to the telecom tangle where they were bullied by an arrogant Dayanidhi Maran. Not
once did Ratan agree to pay a bribe. He wouldn't even go and complain to Manmohan Singh
(who has immense respect for him). Instead, he stood his ground. If in the process, he lost a
project, he lived with the loss but maintained his principles. So it has been with Mamata
Banerjee's foolish Singur campaign: he will never buckle under it or try and buy her off.
He let his heart guide him. Early in his career, when Nani Palkhivala persuaded the Tatas to
liquidate the Central India Mill even though it could have been turned around with an infusion of
just Rs 50 lakh, an angry and disgusted Ratan gave his own annual Tata salary bonus to the
officers of the company. "They were perfectly blameless people who had now lost their jobs
through no fault of theirs because of a bad corporate decision. They had homes to run and
children to educate," he remembered in an interview to me in 2005.

It was his heart that told him to build the Nano. He would see families of four on a single
scooter. The father would keep his son in front and the mother would hold on to her baby. He
wondered why it was not possible to give such families a car where they could be safe and
comfortable for the same price. Plus, they would keep their dignity.

The Tatas had gone through good times and bad times. But they had always given nearly all of
their profits to charity. They had consistently refused to break the law and encourage corruption.
Older generations of businessmen thought they were silly and shortsighted to do so considering
that everybody else played the game.
When we see Ratan Tata refusing to pay bribes, refusing to lick politicians' boots and refusing to
bend the rules — and still taking the Tatas from strength to strength, still buying the world's best
companies, and still reinventing the rules of the car industry — well then, we know that there is a
better way.
It's possible to be honest and principled. And still beat the rest of the world.
That's the strength of the new India .

Skeptical moves
 In ’93, when detergent wars were at the peak, Ratan sold 420 crores worth detergent &
soap major, Tata Oil Mills Co to HLL.
 In 96, Tata pulled out from JV with HLL by selling Lakme brand to HLL.
 The biggest of all was Tata ‘s exit from cement business, one of the core industries of any
economy in the year of 1999.
 When New Tata group corporate mark & logo was unveiled. Group companies told to
pay royalty fee to Tata sons for using the Tata brand name.

Deteriorating values impacting business: Ratan Tata

 India's outlook not too bad but deteriorating values impacting business: Ratan Tata
 Expressing an optimistic attitude, Tata Group head Ratan Tata said India's outlook "might
not be as bad" as one might think. However, India is facing a struggling phase cause of
many changes of government.
 "India (may have) had many changes of government, but the outlook 'might not be as bad
as you might think...I would have hope," said Ratan Tata to media.
 Meanwhile, despite the optimistic approach, the tycoon showed concerns over
deteriorating Indian values and ethics which is impacting the business culture as well.
 "India was slowly deteriorating in the fabric of its values and ethics, especially in the
business community," added Tata.
 Humane and Dignified
Indeed, dignity in the manner in which he conducts himself is one of the key attributes of
Tata as an entrepreneur.
 Tata hardly ever lets himself get involved in public spats.
 He knows such spats can get inelegant and that ‘s never going to be an option with him.
 Various business houses were giving funds for Kargil martyrs and their families. What
Tata decided to do was unusual. He convened a meeting of senior people in the group and
asked them instead to find a way to ensure that the company could reach relief to the
right people who were really in need of assistance. Around four to five meetings were
held, a welfare trust was set up and Rs. 14 crores raised. The money was given also to
next of kin of martyrs who died in the 1964 and 1971 wars. Funds were specified for
education, prosthetics etc and reports sent every six months. To me, it was a moment of
revelation.
 Tata defined the problem instead of blindly aping Corporate India. This humane side of
Tata captures the attention of anyone who has known him.

Principles Of Ratan Tata

 Nothing worthwhile is ever achieved without deep thought and hard work.
 Good human relations not only bring great personal rewards but are essential to the success of
any enterprise.
 Success is worthless unless it serves the needs or interests of country & its interests by fair and
honest means.

What Ratan Tata did for the Mumbai Terrorist Attack Victims
All category of employees including those who had completed even 1 day as casuals were
treated on duty during the time the hotel was closed. Relief and assistance to all those who were
injured and killed. The relief and assistance was extended to all those who died at the railway
station, surroundings including the Pav- Bhaji vendor and the pan shop owners. During the time
the hotel was closed, the salaries were sent by money order. A psychiatric cell was established in
collaboration with Tata Institute of Social Sciences to counsel those who needed such help.
1. The thoughts and anxieties going on people‘s mind was constantly tracked and
where needed psychological help provided. Employee outreach centers were
opened where all help, food, water, sanitation, first aid and counseling was
provided. 1600 employees were covered by this facility. Every employee was
assigned to one mentor and it was that person‘s responsibility to act as a ―single
window clearance for any help that the person required. Ratan Tata personally
visited the families of all the 80 employees who in some manner – either through
injury or getting killed – were affected. They were all accommodated in Hotel
President for 3 weeks. Ratan Tata himself asked the families and dependents – as
to what they wanted him to do.
 2. In a record time of 20 days, a new trust was created by the Tatas for the purpose
of relief of employees.

Rajat Gupta Failure

The issues involved with the Rajat Gupta case and relevant learnings
The need for ethics
One of the reasons for Gupta’s downfall was his greed. In a wire-tapped phone call, Rajaratnam
said, “And I think here he sees the opportunity to make $100 million over the next five years or
10 years without doing a lot of work… he wants to be in that [billionaire’s] circle.” As Gupta
became enthralled by the lifestyle of the opulent Rajaratnam, Gupta’s greed for more allegedly
drove him towards divulging corporate secrets. The fact that he had been involved in several
philanthropic activities makes his lapse in judgement more perplexing. Maybe even the best men
could fall prey to greed.
In the past, successful businesses have failed due to a lack of business ethics and values.  For a
business to be sustainable, it must focus on customer relationships and always strive to establish
trust with the community it is serving.  To accomplish this, businesses need to facilitate a caring
foundation for its customers and establish a strong connection that will leave a long-lasting
impression.  Without following the values and ethics of a business, an organization cannot
succeed.  Gupta’s professional career had inspired many future business leaders to establish
strong ethical frameworks and pursue a life of honesty.  From growing up as an orphan and
graduating from Harvard Business School on a scholarship, Gupta had inspired many people to
pursue their dreams even when given little resources.  As the global head of McKinsey and later
joining the boards of companies like Goldman and Procter & Gamble, Gupta focused on
establishing the ethical frameworks and values of many firms, which ultimately lead to their
success.  With his recent prosecution however, business leaders need to be aware that ethics is an
extensive concept and is not all about generating profits and making the numbers.  Ethics is
about establishing a strong connection between businesses and the world surrounding them.

Ethical and moral analysis of Rajat Gupta with Ratan Tata

Would a virtuous person have leaked the information to Raj Rajaratnam? Rajat Gupta showed a
failure of character:
Integrity: Integrity is honesty and truthfulness or accuracy of a person’s action. Rajat Gupta does
not show integrity to his company Goldman Sachs, where he was a Board of Director. Instead
gives away insider information for personal benefits.
Trust:  Rajat Gupta broke the trust to other Directors on Goldman’s board and to of other people
with whom he has done business. His actions affect the relationship with McKinsley &
Company.
Fairness: Rajat Gupta’s  actions are not fair for two reasons. First, other investors who do not
have the information on Buffett’s deal are at a disadvantage. Second, he uses the information
entrusted to him to benefit himself and Rajaratnam.
Honesty: He was not honest with Goldman Sachs and his fellow board members to whom he
implicitly promised not to share inside information.
Self-Control: If Rajat Gupta had self-control he would not have leaked inside information to
Rajaratnam for personal gain.
Gupta was commended by people who knew him as a person who helped others. He was very
active in providing medical and humanitarian relief to the developing countries. Born to humble
circumstances, he became a pillar of the consulting community and a trusted advisor to the
world’s leading companies and organizations. A word that was used repeatedly in media
coverage for Rajat Gupta during his trial was “respected.” In the past, much less so now, we
assume people in leadership positions are virtuous. However, instances like the Rajat Gupta
insider trading case and other financial scandals remind us that the assumption is not well-
founded.