Doing well by doing good is simply good business

Thanks to Mr. Francis for referring this article about an Indian enterprise which is becoming more and more global every year. This enterprise is nothing but the 70.8 billion dollar flagship indian group called TATA(established in 1868 by Jamsetji Nusserwanji Tata) which is conglomerate of around 90 companies.Tata group employed around 350,000 people in 80 countries and have presence in industries like hotels, consumer goods, mining, steel manufacturing, telecommunications, trucks and cars , electric power, credit cards, chemicals, engineering, and IT services and business process outsourcing..
Money :
Year Revenue Profit
1992 : $5.8 Billion $320 Million,
2008 : $62.5 billion $5.4 billion

* CSR related social expenditures in 2009 - $159 million

International Acquitions :

2000 : Tetley Tea Company, Britain for US$450 million
2007 : Anglo-Dutch steel giant Corus Ltd. for $12.1 billion;
2008 : Jaguar Land Rover (JLR) for $2.3 billion

Key people :

  • Alan Rosling , executive director of Tata Sons
  • Ratan Tata , Group chairman


Examples of corporate social responsibilities(CSR) :

  • One of few those company who believes in relationship and moral values and thus TATA became live example by selling Tea plantations business to its own former employees.
  • In 1892, he created one of the world’s first charitable trusts, the J.N. Tata Endowment for Higher Education. This scholarship program sent bright young Indians of limited means overseas for training in science, engineering, law, government administration, and medicine. One early grant recipient, a woman named Freny K.R. Cama, would go on to become India’s first gynecologist. It was especially important to Tata that Indians be admitted to the civil service, which was closed to them under the British Empire; this would show that they were capable of governing themselves. By 1924, with some restrictions lifted by the British, one out of every five Indians in the civil service would be a J.N. Tata Scholar. (Today, the same scholarship is one of the most prestigious education awards in the country.)
  • After the November 26, 2008, terrorist attack on Tata’s flagship Taj Mahal Palace hotel in Mumbai Tata responded back and the hotel was repaired and reopened less than a month after the attack. Tata provided best of the world medical treatment to injured staff members and paid generous health and school tuition benefits (including the assignment of a “counselor for life”) to the families of all slain individuals, including railway employees, police officers, and passersby who had had no direct connection with the hotel before the attack. “The organization would spend several tens of millions of dollars in rebuilding the property,” noted Dileep Ranjekar, a management speaker who met with Tata Hotels senior executive vice president H.N. Srinivas after the attack. “Why not spend equally on the [people] who gave their lives?”
  • All Tata businesses annually earmark part of their operating expenditures for social, environmental, and education programs. For example, Tata Steel sets its budget for social services in the community as a % of pretax operating income. In good years, it might be 4%, and in lean years, 18%, but the absolute amount does not change. At Tata Steel, money goes to employ doctors, teachers, rural development experts, athletic coaches, geologists, social workers, and others - often known internally as members of corporate sustainability teams - in ongoing community service activities in Jamshedpur and the surrounding rural villages.

Who control TATAs - A chiritable trust :

Tata has 11 charitable trusts that together own 66 percent of Tata Sons and that are intimately involved in its governance. (Family members own only 3 percent.) . The trusts fund a variety of social projects ; they founded and still support such cherished institutions as the IIS, Tata Institute of Fundamental Research, the National Centre for the Performing Arts, and the Tata Memorial Hospital, an innovative cancer treatment center in Mumbai. Each Tata company, in turn, channels more than 4 percent of its operating income to the trusts, and every generation of Tata family members has left the bulk of its wealth to them. This makes the Tatas noticeably less wealthy as individuals than their counterparts at other Indian family-owned megacompanies.

Values :

  • Tata’s leaders believe the group can survive on the world stage only by being both too big to beat and too good to fail.
  • “We had set ourselves certain goals, chief among which was to go global - not just to increase our turnover but also to go to places where we could create a meaningful presence and participate in the development of the country.” - Ratan Tata
  • It operates on the premise that a company thrives on :

    • social capital (the value created from investing in good community and human relationships).
    • Hard assets for sustainable growth.

With every generation, Tatas has nurtured and improved their capability for “stakeholder management”: basing investments and operating decisions on the needs and interests of all who will be affected. For Tata, this means shareholders, employees, customers, and the people of the countries where Tata operates - historically India, but potentially anywhere.

  • Tatas have always carefully avoided any activities with even a tangential link to “sin” industries - a term that for the Tatas encompasses not only tobacco, liquor, and gambling but also motion pictures, given the association in India between Bollywood and organized crime.
  • “We may be among the few companies around the world who think and act first as a citizen,” says R. Gopalakrishnan, an executive director of Tata Sons Ltd., the privately held holding company of Tata, and a director of several Tata companies. Indeed, the primacy of citizenship - a philosophy associated historically with J.N. Tata - continues to be used as a corporate credo: “In a free enterprise, the community is not just another stakeholder in business, but is in fact, the very purpose of its existence.”
  • If social benefits are one major goal of Tata’s strategies, another is rapid and continuing growth, in as many industries and venues as possible, on behalf of both philanthropic and fiduciary commitments. “We are hard-nosed business guys,” says Gopalakrishnan, “who like to earn an extra buck as much as the next guy, because we know that extra buck will go back to wipe away a tear somewhere.”
  • Tata’s leaders argue that their emphasis on “family values” represents a critical aspect of their corporate culture. It is strong enough, they say, to hold Tata’s family of companies together as it diversifies and expands outside India. It is also essential to the group’s sustained financial success. Moreover, Tata’s corporate image, as measured by independent groups such as the New York-based Reputation Institute, is viewed more favorably than that of Google, Microsoft, GE, Toyota, Coca-Cola, Intel, and Unilever. And, as billions of people move up from the bottom of the pyramid (as writer C.K. Prahalad calls the economic milieu of the poorest third of the world’s population), the group’s combination of developing-country experience and socially progressive business values may give it a distinctive edge.


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