This action might not be possible to undo. Are you sure you want to continue?
CORPORATE SOCIAL RESPONSIBILITY & BUSINESS STRATEGY - A CASE STUDY ON THE TATA GROUP UNDER MR RATAN TATA
Pednekar. Mahesh C. Research Student, JJTUniversity, Rajasthan firstname.lastname@example.org Dr. Jha Nishikant Associate Professor, Thakur College of Science & Commerce, & Research Supervisor, JJT University, Rajasthan, email@example.com Introduction:
As Chairman of Tata Group, India's largest and most diversified industrial house, Ratan N. Tata presides over a sweeping business and philanthropic landscape. The Tata Group operates more than 80 companies ranging from software and automobiles to steel, consumer goods and telecommunications. With 200,000 employees across India, it is the nation's largest private employer. The Tata Group is also unique in that nearly two thirds of the equity of the parent firm, Tata Sons Ltd., is held by philanthropic trusts endowed by Sir Dorabji Tata and Sir Ratan Tata, sons of Jamsetji Tata, who founded the family business in the 1860s. These multipurpose trusts, chaired by Ratan N. Tata, include two of the earliest and largest private grant making organizations in India. Through these trusts, Tata Sons gives away on average between 8 to 14 percent of its net profit every year. Trained as an architect at New York's Cornell University, Ratan N. Tata opted instead to enter the family business, putting in time on the shop floors in key Tata industries. After assuming the Chairmanship of the Group in 1991, he proceeded to streamline the sprawling Tata Group around seven core business sectors. A pioneer in several areas, the Tata group has consistently followed the path of innovation, growth and development. Tata is credited with pioneering India's steel industry, civil aviation and starting the country's first power plant. Tata was the market leader in several diverse fields - it had the world's largest integrated tea operation, was Asia's largest software exporter, and is the world's sixth largest manufacturer of watches (Titan). Objectives: We have undertaken this study to understand the importance of CSR in not just nation building but as a strategy to successfully build up a business. We shall try to understand how the Tata group under the leadership of Ratan Tata has successfully carried forward the vision of his forbearers and used it to further develop the business of the Tata Group CSR and the Tata Group In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence." - Jamsetji N. Tata, Founder, Tata Group. "Corporate Social Responsibility should be in the DNA of every organization. Our processes should be aligned so as to benefit the society. If society prospers, so shall the organization..." - Manoj Chakravarti, General Manager - Corporate Affairs and Corporate Head - Social Responsibility, Titan Industries Limited in 2004.
" Today's buzzword.they have done it all. "The Tata credo is that 'give back to the people what you have earned from them'..Tata Sons Limited is held by Tata trusts. unity and responsibility. the Tata’s aggressively worked for the upliftment of the community.com).Maratha Mandir’s Babasaheb Gawde Institute Of Management Studies The guiding mission of the Tata group was stated by JRD Tata in the following words: "No success or achievement in material terms is worthwhile unless it serves the needs or interests of the country and its people. Over the recent years too as earlier. "The wealth gathered by Jamsetji Tata and his sons in half a century of industrial pioneering formed but a minute fraction of the amount by which they enriched the nation. Tata Chemicals runs a rural development programme at Okhamandal and Babrala.the highest by any corporate house in India.5 billion on community development and social services during the fiscal 2001-02 . rural development. Tata Tea's education programme and Tata Relief Committee (TRC) which works to provide relief at disaster affected areas. to which the group brings a unique set of capabilities. And that is what the company does. Titan has employed 169 disabled people in blue collar workforce at Hosur. he always thought of his workers' welfare and requirements of the country. they have been very forthcoming." Moreover 'he says that for any business to sustain in the long run they have to look beyond business. Even while he was busy setting up textile ventures. the Tata group has played an active role in nation building and socio-economic development since the early 1900s. The company's values were imbibed from the founder of the group and his successors who took on the leadership of the group. Tata initiated various labor welfare laws. which lays great emphasis on CSR. Be it relief measures. The core values espoused by the group included integrity. The group's mission statement states. from Rs 670 million in 1997-98 to Rs 1. excellence. So from the very inception.36 billion in 1999-2000. like the establishment of Welfare Department was introduced in 1917 and enforced by law in 1948 or Maternity Benefit was introduced in 1928 and enforced by law in 1946. The group's policy is to provide livelihood instead of giving money. the Tata group has taken up a number of initiatives for the development of society. All the individuals who headed Tata institutions emphasized the importance of philanthropy and the utilization of wealth to enhance the quality of public life. which are philanthropic in nature. or charitable organizations headache. Telco is fighting against Leprosy at Jamshedpur. Jamshetji Tata and his family have been following this principle. In the fiscal year 2004 Tata Steel alone spent Rs 45 crore on social services. Jamshed Irani. Director. as in the late 1990s. A survey conducted by the website www. understanding. During natural calamities . our purpose is to improve the quality of life of the communities we serve. A unique feature of the group is that 63 percent of the equity capital of the parent firm .. Even when economic conditions were adverse. From its inception. the Tata philosophy to 'Give back what you get' has been followed by all their enterprises across India. 1. "How long can you give rice and dal? What is required is the means to live. the financial commitment of the group towards social activities kept on increasing. Ages ago when Corporate Social Responsibility was either the government. the Tata Group's contribution to society has been phenomenal. Like Tata Consultancy Services runs an adult literacy programme. "At the Tata group. Different Tata companies have been actively involved in various social works. health care. hospital and atomic research centre to providing relief and rehabilitation to natural disaster affected places . says. Corporate Social Responsibility or CSR has been part of the Tata Group ever since the days of Jamshetji Tata. Tata Sons Ltd.com revealed that Tatas spent Rs. From granting scholarships for further studies abroad in 1892 to supporting Gandhiji's campaign for racial equality in South Africa to giving the country its first science centre. As result every year. The values of the founders are reflected in the mission statement of the group. We do this through leadership in sectors of national economic significance.indianngos.tata. According to a statement on the Tata group's website (www. education and art and culture. Considered as pioneers in the area of CSR.The group has always been recognized as a value-driven organization.
Their failure to do so would contribute to a poor India with continued shortages and inequities. and the benefits are relatively great. and lead to a greater quality of life that benefits all.' This clause stated that group companies had to actively assist in improving the quality of life in the communities in which they operated. However. He further states that there is not much difference in his fundamental vision. Their efforts result in a more prosperous country." In another bid to institutionalize the CSR charter." Since inception.. the efforts of the group in recent years have been directed towards synchronization of the Triple Bottom Line (TBL). After the Gujarat earthquake the group built 200 schools in two years and they rendered help during the Orissa floods when people lost cattle. the cost is relatively small. a clause on this was put into the group's 'Code of Conduct. All the group companies were signatories to this code. suitable amendments were made to the Articles of Association of the major Tata group companies in the 1970s.Maratha Mandir’s Babasaheb Gawde Institute Of Management Studies there are two phases of assistance — relief measures and rehabilitation programme. Even after the Tsunami disaster members of TRC immediately reached the places and figured out what is required. In order to build social capital in the community. but the fabric of the field of work has changed with time and the demands of philanthropy in India are today both in dimension and scope in some ways more intense than they were before. None of that has changed. CSR was one of the eight key business processes identified by TISCO's management and considered critical to the success of the company. the sure foundation of prosperity. Mr Ratan Tata serves on the board of the Ford Foundation and the program board of the Bill & Melinda Gates Foundation's India AIDS initiative A July 2004 cover story in Business Week [India] quotes an investment banking source as noting that the company’s r challenge is to "ensure that the Tata group's sense of social obligation doesn't collide with shareholder value creation . either through the costs of corporate social responsibility or taxation. who was a business partner and relative of JN Tata. the Tata group has placed equal importance on maximizing financial returns as on fulfilling its social and environmental responsibilities . our own and the health and welfare of our employees.. Named Business Man of the Year for Asia by Forbes in 2004.. Ratan Tata: Carrying the mission forward In corporate social responsibility he has given new direction and focus to the Tata Group's disparate activities with the creation of the Tata Council for Community Initiatives (TCCI) in 1996. when he stated. His predecessors decided that their efforts would not only raise the level of the quality of life for people of India. According to Ratan Tata’s view these two objectives are not incompatible. . the group has got its senior management involved in social programs. CSR was included as one of the key business processes in TISCO. What the company has done in their discharge of social responsibility should be of value to their shareholders. so all companies pay one way or another. shareholders.popularly known as the triple bottom line. After decades of corporate philanthropy. Newly included was an article stating that the "company shall be mindful of its social and moral responsibilities to consumers. "We do not claim to be more unselfish. JRD Tata. and has encouraged employees to share their skills with others and work with community-based organizations. employees.. Therefore. the Tata group aimed at harmonizing environmental factors by reducing the negative impact of its commercial activities and initiating drives encouraging environment-friendly practices. Through its TBL initiative. but they would also deal in human development.. This was realized by JN Tata way back in 1895. society and the local community. Companies end up supporting these societal needs. strongly believed that the CSR initiatives of the Tata group should be institutionalized and it should not be left to individuals to carry them forward. CSR and Business Strategy The Tata group has long accepted the idea that CSR makes business sense.. more generous or more philanthropic than others. but we think we started on sound and straightforward business principles considering the interests of the shareholders. the son of RD Tata.
the Pune-based R&D division of TCS. which doesn't give us a lot of comfort in channeling money in that direction.villages starved of water that have had no livelihoods -. A few years ago. to get people away from moneylenders. and this has come out of that effort. professionally managed grantees or NGOs. and whatever they have seen there is just amazing. contaminants and sediments. and initiatives of a nature which at the time were more about nation building than ours are today. A number of their grantees have worked with villages -. the filter is the result of years of research and field trials by scientists at the Tata Research Development and Design Centre (TRDDC)." explains Ratan N.TRDDC is working with Sir Dorabji Tata Trust. Another possibility is the computer learning initiative to promote literacy for adults. "They've been trying to bridge the divide between the IT world and the rest of India. on water harvesting and conservation. Further he states that the company will keep their efforts largely at home. Tata.and with water harvesting and conservation.Striving for Business Excellence To ensure that Tata group companies achieved high levels of business excellence. into building an organization that will survive beyond them. These villagers are using a household water filter that relies on commonly available agricultural waste to screen out harmful pathogens. and they are looking at doing something similar in Indian or Asian studies in another institution outside of India.a division of Tata Sons) had been entrusted with the task of . they've created year-round water supply and changed the entire fabric of these villages. in moving more to small community initiatives. to have a meaningful presence in the country. Developed specifically for rural areas. Some of their water conservation grantees have transformed the areas in which they are working. but not many organizations are doing these things. for example. but they're still individuals. It's one of our biggest problems. almost cajoled. The few the company has found. They are also exploring opportunities in computer based functional literacy and vocational skills in South Africa. on creation of awareness of things like discrimination against the girl child. There are a lot of calls for money but there is often inadequate professionalism and management. But barring some isolated instances of this nature. because they have problems locating and funding appropriate grantees. they still need help in creating institutions. but not all of them have the organizational strength to really grow in this area. on microfinance. Simply putting more money into the same type of programs as they have been doing is difficult. Today. and help for water harvesting and water conservation.Maratha Mandir’s Babasaheb Gawde Institute Of Management Studies In the early days. Recently he donated a huge sum to Harvard University. TBEM . the project exemplifies Tata philanthropy's emphasis on rural communities and water conservation and is squarely in keeping with TRDDC's mission to use research to transform lives . they have found that the greatest challenge is to find appropriate. the results are phenomenal. clean and safe drinking water is available for the first time for thousands of households in rural Maharashtra. They have recognized that those people have to be encouraged. From their own grant giving. There’s a tremendous need to move into grassroots levels and create savings programs in villages. Thanks to a partnership between the research lab of software giant Tata Consultancy Services (TCS) and a range of local NGOs. philanthropy was about creating development institutions such as hospitals. the company’s philanthropic initiatives have greater focus. the Confederation of Indian Industry and local NGOs to pursue scaling up deployment of the filter technology in various regions of the country One of the things Mr Ratan Tata is looking at with the Trusts is another round of building major institutions. This needs to change -. More and more people are being driven by a real dedication. Tata Quality Management Services (TQMS . Where they do operate. they support very heavily.they have to recognize that a nonprofit has as much responsibility for being professionally run as a corporate body. the company reactivated the Chair in development economics at the London School of Economics established by Sir Ratan Tata at the turn of the century. their philanthropic activities will be focused mostly on India. such as his predecessors had built. Philanthropic institutions in India still believe they're charitable and therefore must operate on a shoestring that creating an organization is almost a luxury. hygiene awareness. While the connection between information technology and low-tech water filters may not be obvious. education.
Tata executives emphasize that even now. but not for a country like India. which was orchestrated by the state. TISCO was also conferred the Global Business Coalition Award in 2003 for its efforts in spreading awareness about HIV/AIDS. Says Irani. Irani proudly claims that none of the Tata Board of Directors will ever be in the list of rich people. In July 2004. announced that in future TISCO would not deal with companies." Suggestions Thus. "We generate wealth but personally don't get any of it. CSR as a future strategy While today eyebrows are being raised about corporate doing social work.. given the state of underdevelopment in vast sections of the Indian Society and the success of the Tata group over the years shows that it is possible to reconcile social objectives with profitability and other corporate need to emulate this strategy and this will surely take India into the league of developed nations. They have a trust that accumulates the profits of the company. Thus. Muthuraman stated. As the only Indian company trying to put into practice the Global Compact principles on human rights. India’s is primarily the story of an enterprising private sector. We are far away from reaching that phase of economic development where government is solely responsible for the basic needs of the public. where in the West companies are doubtful of spending the shareholders money and corporate are considering discontinuing Corporate Social Responsibility. So till then corporate houses should fill the gaps." concludes Irani. and recognize excellent performance and identifying and sharing best practices. which are then disbursed for various social causes. enhance organizational performance capabilities and the delivery of results. While that rise is often traced to free-market reforms that began in the early ’90s. These trusts accumulate the funds and disburse accordingly. manage planning activities and organizational learning. Muthuraman. The TBEM is a tool based on the Malcolm Bald ridge National Quality Award. Conclusion Tata is a window into the rise of India. The United States sees India as an outsourcing . Moreover. Over a period of time it has been witnessed that corporations die out if they do not support the masses. TISCO was awarded 'The Energy Research Institute (TERI) award for Corporate Social Responsibility (CSR)' for the fiscal year 2002-03 in recognition of its corporate citizenship and sustainability initiatives. The governments of the western world have a strong social security net so corporate can concentrate on making profits and paying taxes regularly but in this regard India still lags behind. which do not confirm to the company's Corporate Social Responsibility (CSR) standards.Maratha Mandir’s Babasaheb Gawde Institute Of Management Studies institutionalizing the Tata Business Excellence Model (TBEM).The role of TQMS includes setting up of standards of business excellence using the TBEM framework and assisting group companies in achieving those established standards. The different group companies have received several awards for their fulfillment of social responsibility. Tata Steel Limited (TISCO). In any society there is one section that makes huge profits and richer than the rest which leads to disparity. For instance." Further he explains that for any establishment to be successful public support is vital. We don't have a social security. Recognition of CSR The dedicated CSR efforts by various Tata group companies have been globally recognized. the company grows despite obstacles thrown up by red tape and special interests. One cannot be a spike of prosperity on the sea of poverty. we have seen in our case that CSR is truly very important in the Indian context. adequate health and education services. "We will not either buy from or sell to companies that do not measure up to Tata Steel's social responsibility standards. It aims to facilitate the understanding of business performance imperatives. labor and environment. Managing Director. the Tata Group feels it is the need of the hour. Speaking at the annual general meeting of the Madras Chamber of Commerce and Industry. Unlike China’s boom. B. "Which is fine for them.. The TBEM provides each company with an outline to help it improve business performance and attain higher levels of efficiency.
Milton & Milton friedman.' CSR Initiatives of Tata Group.Corporate Social responsibility. References 1) 'Visionaries.indianngos. Ratan Tata says his company is not driven to grow “over everybody’s dead bodies. Tata Sons. In recent years.IBS center for management research . Business week 4) Forerunners in corporate social responsibility March 16 2005 The Indian express 5) Tata. 'Social Responsibility Vital for Tata Steel Dealings.indianngos. December 2004. www. go to charity. many armed with Western M.A.' The Hindu Business line.' Tata Group.” Some 66 percent of the profits of its investment arm.The Indian economy Blog Oct 24 2005 6) Excerpts taken from Case Study: The Tata Group: Integrating Social Responsibility with Corporate Strategy. 2004. 3) Cover story –July.” to use the Western buzzword.com.s who have all read about GE and many of their American tactics—from mass layoffs to hostile takeovers say these are violations of the Tata way. July 03. “corporate social responsibility. www.com.B. December 2004. At Tata. and executives make clear they have no intention of relinquishing control to Wall Street.Maratha Mandir’s Babasaheb Gawde Institute Of Management Studies economy that threatens to siphon off service jobs but India’s wider potential is mirrored in the range of Tata’s ambitions—from luxury hotels and jewelry to the 1 Lakh Nano cars. Americans often compared Tata to the model —conglomerate they know best: General Electric. Filed under: Business — Yazad Jal @ 7:49 am . But Tata executives. as Tata began listing some of its affiliates on Wall Street. 2) 'Tata Champions. Case Code: BECG050 . 2004. has real money behind it.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.