ETHICAL LEADERSHIP: RATAN TATA AND INDIA’S TATA GROUP

ETHICAL LEADERSHIP: RATAN TATA AND INDIA’S TATA GROUP

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  ETHICAL LEADERSHIP: RATANTATA AND INDIA’S TATA GROUP Anshul Gupta Apourv Tiwari Chandrima Roy Parul Sharma Prachi Bajpai Sandip Choudhury Sarthak Mishra
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  INTRODUCTION • Thiscase is about the Tata Group, one of the leading business houses in India, a key emerging market. • The group had a long-standing reputation for ethical leadership and was well known for its corporate social responsibility and principles such as the "Tatas don't bribe" and the "Tatas don't indulge in politics". • Under the leadership of Ratan Tata, the group carried forward this legacy and consolidated its businesses further in India while also acquiring a global footprint.
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  CONTD…. • India,like many markets in transition, was passing through a period when excessive power was concentrated in the hands of the political elite and their cronies. • This had led to a government-dominated economy characterized by nepotism, patronage, and corruption. • Despite operating in this market, the Tata Group had managed to build its empire emphasizing the twin pillars of  "trust" and  "integrity" - so much so that these had become a key aspect of the Tata brand. • However, in 2010, the group and its leader Ratan Tata were dragged into the infamous 2G scam that broke out in India.
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  CONTD…. • Thecase study deals with one of the major challenges that organizations face in many emerging markets - CORRUPTION. • It is designed to spark a discussion on whether corruption should be encouraged; • whether this is a necessary but transient phase in the development of modern capitalism in emerging markets; • what organizations should do to fight the menace of corruption; and • whether ethical leadership is the answer while operating in emerging markets.
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  ABOUT THE TATAGROUP • Founded by JAMSHEDJI TATA in 1868 • As of early 2012 the major TATA companies were TATA STEEL TATA MOTORS TATA CONSULTANCY SERVICES TATA POWER TATA CHEMICALS TATA GLOBAL BREVERAGES TATA TELESERVICES TITAN TATA COMMUNICATIONS INDIAN HOTELS
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  ….CONTD. • Operationsin 80 countries across the globe and exported products and services to 85 countries • Revenue of USD 83.3 billion in 2010 • Employed over 425,000 people worldwide • As of early 2012, the TATA Group was a globally renowned name with its brand ranked 41st among the world’s 100 most valuable band
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  FINANCIAL SNAPSHOT OFTATA GROUP
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  TATA GROUP’S REVENUEBY SEGMENT
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  Tata Group •Each enterprise in the Tata Group operate independently with its own board of directors and share holders. • Tata Group had a series of illustrious leaders: Jamshedji Tata, Dorab Tata, Ratan Tata. • It is Ratan Tata who took over in 1991 made the company global. • Ratan Tata turn down an offer from IBM to join Tata Group (TISCO). • In 1981, he became the chairman of Tata engineering and locomotive company (TELCO) and Tata industries.
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  • To bringin greater integration Ratan Tata created the group executive office, whose members were represented on the board of Tata company. • To protect individual companies from hostile takeover he also increased the stake of Tata sons. • In subsequent years, the group sold its stakes in Merind (including Tata pharma), Goodlass Nerolac, Lakme and ACC.
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  Mergers & Acquisitions • Tata controlling stake in VSNL • Purchased Switzerland based Tyco International’s undersea telecom cables. • Acquired Daewoo commercial vehicles. • Acquired Incat International (American auto and aerospace company). • Acquired hotels like The Pierre, Ritz Carlton, Camden Place. • The iconic acquisition of Jaguar and Land Rover.
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  Ratan Tata’s Response • Leadership is the ability or authority to guide and direct others toward achievement of a goal. • Denied the allegations of 2G Scam • 2010, Approached Supreme Court • In April 2011, CBI gave a clean chit to Tata Group. .
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  Habits of StrongEthical Leaders • Ethical leaders have a strong personal character. • Ethical leaders have a passion to do right. • Ethical leaders are proactive. • Ethical leaders consider stakeholders’ interests. • Ethical leaders are role models for the organization’s values. • Ethical leaders are transparent and actively involved in organizational decision-making. • Ethical leaders are competent managers who take a holistic view of the firm’s ethical culture.
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  The most successfulleaders do not rely on one style of leadership but alternate their technique based on the characteristics of the situation. .
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  LEADERSHIP WITH TRUST • Tata Group had sought to function with ethics, integrity, social consciousness and fairness. • The Group strategy of leadership with trust sought to achieve higher value for its stake holders, better returns for society, and an ethical model of business. • The group had always been recognized as a value driven organization. • A unique feature of the group was that 63% of Equity capital of Tata Sons was held by Tata Trust, which were philanthropic in nature.
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  CONTD… • Besidesthe trust activities, like hospitals, education and research centre etc. individual group companies had taken a community development. • Employee welfare measures were also one of the major focus area of the group. • Environment protection were also figured high on the list of priorities. • To ensure that CSR measures started by the group were sustained a “social audit” was also carried out. • In order to align its CSR initiatives with business processes the Tata Group made efforts to develop mechanism for integrating social responsibilities with corporate excellence. The Group focused on developing partnership for benchmarking with the UN development program, global reporting initiative, the global compact, ford foundation and the confederation of Indian Industries
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  Tata Group Purposeand Core Values • Integrity • Understanding • Excellence • Unity • Responsibility
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  2G Scams andthe Tata’s Key Players: • A.Raja • Ministry of Communication and Information Technology • Niira Radia • R.K Chandolia • CBI
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  Time for aleadership transition • The aim of the Tata group is to build multinational businesses that would achieve growth through excellence and innovation. • Biggest Challenge: Retaining Tata group’s value system. • August 2010: Tata Group created a 5 member committee to find successor of Ratan Tata. • 2011: Cyrus Mistry (a construction tycoon, single largest shareholder of Tata Sons with 18% stake) elected as a Chairman of Tata Group