Assignment:

Corporate Strategy, Governance and Ethics

By:

Instructor:

Course:

Program:

University:

Date of Submission:
2|Page
 Table of Contents
1. Introduction ............................................................................................................................. 5
2. Tata Group – Company Profile ............................................................................................... 6
2.1. Tata Group’s Vision ......................................................................................................... 6
2.2. Tata Group’s Mission ....................................................................................................... 6
2.3. Core Values ...................................................................................................................... 7
3. Rationale for Topic Selection .................................................................................................. 7
4. Strength in Leadership ............................................................................................................. 7
5. Organizational Structure .......................................................................................................... 8
6. Business Operations of Tata Group ......................................................................................... 8
7. Tata’ Business Model and Strategy ....................................................................................... 10
8. Business Performance of Tata ............................................................................................... 11
8.1. Financial Performance.................................................................................................... 11
8.2. Group's capital market performance .............................................................................. 12
8.3. Tata Group as a Market Leader ...................................................................................... 13
8.4. Sustainability Goals........................................................................................................ 13
9. Global Reporting Initiative .................................................................................................... 15
10. Corporate Governance Model of Tata Group .................................................................... 16
10.1. Issues of Corporate Governance ................................................................................. 17
10.1.1. Removal of Wadia .................................................................................................. 17
11. Mechanism and Control for corporate Governance ........................................................... 18
12. Ethics and Integrity of Tata Group .................................................................................... 19
13. Code of Conduct of Tata Group......................................................................................... 19
13.1. Principles .................................................................................................................... 19
13.2. Employees .................................................................................................................. 20
13.3. Customers ................................................................................................................... 20
13.3.1. Products and services .............................................................................................. 20
13.3.2. Fair competition ...................................................................................................... 20
13.3.3. Dealings with customers ......................................................................................... 21
13.4. Communities............................................................................................................... 21
13.5. Environment ............................................................................................................... 21
13.6. Value Chain Partners .................................................................................................. 21
13.7. Financial Stakeholders ................................................................................................ 22
13.8. Governments ............................................................................................................... 22

3|Page
14. Conclusion ......................................................................................................................... 22
15. References .......................................................................................................................... 23

4|Page
 1. Introduction

The long-term success of a company is ensured by the effective facilitation, advisable and

entrepreneurial management provided by the corporate governance. The system that controls and

directs the companies is known as corporate governance. Board members of company are

accountable to the board of directors and shareowners of the company, who are responsible for

the governance of their company. Furthermore, the company’s behaviour has implications

towards its customers, employees, shareholder, stake holders, company financers and the

business operating communities (Abdullah and Valentine, 2009).

A new vision of business known as global citizenship is emerging, that includes a set of basic

values, relationship with management, accountability to the shareholders, protection of

environment, encompassing the human rights and measures against corruption. Business ethics

are related to the applied ethics as it is based on the application of ethical norms, morals and

values of business (Kolk, 2008). Ethics is defined as a standard of human conduct following a set

of principles through which the behaviour of an organization or individuals is governed. Around

the world, there is intense pressure on business leaders regarding the building and maintaining of

public trust, managing new risks, strategies to respond the new societal expectations and by

remaining competitive and profitable in the global economic market (Rossouw, 2005).

This all brings the subject of corporate citizenship under spotlight, that is evident from the fact

that all leading companies are now moving beyond the limitations of philanthropy, public

relations and legal compliance for becoming more involved in the corporate governance, risk

management, strategy formation and maintaining the reputation. The world’s successful

companies are now defined by the values driven by their performance that aims at building a new

5|Page
corporate value and protecting the existing corporate value by focusing on strictly evaluated

targets regarding public surveys and metrics (Abdullah and Valentine, 2009).

2. Tata Group – Company Profile

The Tata Group is a global enterprise that was founded by Jamsetji in 1868, headquarter of the

group is in India, and it comprises of over hundred independently operating companies. The

group is currently operating in more than hundred countries across the world. Tata companies are

promoted by the Tata Sons that is the principal investment holding company. Philanthropic trusts

are responsible for sixty six percent sharing of capital equity of Tata Sons, because they support

heath, culture, art, livelihood generation and education. In 2016-17, the total together income of

Tata companies was 100.39 billion dollars and over 695,000 people are currently employed in

the Tata companies. The board of directors and shareholders are responsible for the supervision

and guidance of each independently operating Tata enterprise or company. There are twenty-nine

publicly known and listed Tata companies with a collective market capitalization of around

130.13 billion dollars. The significant scale of Tata companies includes Tata Motors, Tata

Powder, Tata Steel, Tata Constancy Services, Tata Global Beverages, Tata Chemicals, Titan,

Tata Teleservices, Tata Communications and Indian Hotels (Tata, 2018).

2.1. Tata Group’s Vision

The vision of Tata Group is to be the world’s global steel industry for Corporate Citizenship and

Value Creation (Tata, 2018).

2.2. Tata Group’s Mission

6|Page
Mission is to improve the quality of life of the communities globally through stakeholder value

creation by using strategy of leadership with trust and integrity (Tata, 2018).

2.3. Core Values

Tata has always been driven by core values that help to direct the business and growth of Tata

companies. The five core values are below (Tata, 2018):

 Integrity: Group ensures honesty, transparency, ethical conduct and fair in everything to

make sure the test of public investigation.

 Excellence: Passionate for achieving the highest standards of quality and excellence and

company always promote merit.

 Unity: Company enables continuous learning along with the formation of collaborative

relationships based on mutual respect and trust by investing in partners and people.

 Responsibility: Tata integrates social and environmental values in the businesses by

ensuring the benefits for all.

 Pioneering: Company takes the challenges boldly and courageously by innovating

solutions using customer insight.

3. Rationale for Topic Selection

The research shows that Tata group has been one of the most prestigious corporate, as it is

governed by the principles of business morals. Various institutions and bodies have recognized

the company’s foray in the international business. Due to global presence and strong corporate

governance and ethical business models, this company has been selected (Tata, 2018).

4. Strength in Leadership

7|Page
The Tata Group has formal organizational structure and the strength of the entire group lie in the

leadership. The company is renowned for the philanthropic activities, along with this, the group

has innovative products, services and the large business portfolio creates differentiation from

competitors. This is the large family-owned group of India and leading manufacturing,

technology and services industry (Tata, 2018).

5. Organizational Structure

Figure 01: Organizational Structure of Tata Group

(Source: Tata, 2018)

6. Business Operations of Tata Group

During the last two decades, Tata Steel has spread globally to pursue high standards of quality

and excellence in business. There are seven defined sectors in which the Tata Group of

8|Page
Companies (114 enterprises and subsidiaries) are currently operating, the sectors are:

Engineering, Information Technology, Energy, Communications, Chemicals, Materials and

Consumer Products. Tata Steel has secured a highest place among the other top manufacturers of

steel in the world due to its procurement of Corus and has become a flagship Company. Different

sectors have other Group Companies such as Tata Consultancy services (TGS), Tata Motors,

Tata Powder, Tata Communications, Tan Chemicals, Tata Global Beverages and Indian Hotels

(Tata, 2018).

The vision of Tata Group of Companies has always based on collaborative growth and to emerge

as one of the world’s successful and most respected business conglomerates. The Tata Group’s

route of growth passes through six continents by embracing the diversity of cultures. In 2010-11,

the total income of Tata companies, recorded collectively, was 83.3 billion dollars that is around

3,796.75 billion rupees, where fifty eight percent of this amounts came from their business

outside the country. By focusing on sustainable development and coping up with the economic

challenges, the Tata Group has been successful in raising India name in the global map. There

are around 425,000 employees of Tata companies worldwide and is the largest employer in the

private sector in India and it continues to work with same integrity and commitment towards its

communities (Tata, 2018).

The Tata Group promotes and encourages the social, educational and economic development in

India through its policies, that focuses on returning wealth to the communities they serve.

Philanthropic trusts take care of two third of the equity of Tata Sons and are responsible for

improvement in these sectors. The Tata group has been one of the most prestigious corporate, as

it is governed by the principles of business morals. Various institutions and bodies have

recognized its foray in the international business. Tata Group was ranked 41st among hundred

9|Page
top brands in 2011 by a Consultancy firm based in UK, after it evaluated the Tata brand at 15.75

billion dollars. among the fifty Most Innovative Companies list, Tata Group was ranked 17th by

the Business Week Magazine and another USA based institute raked it 11th on the list of world’s

most reputable enterprises in 2009 (Tata, 2018).

Tata Group is now focusing on breaking new grounds in development of products along with the

introduction of new technologies regarding its operations. In 2008, the Eka supercomputer was

ranked as the world’s fourth fastest supercomputer, the auto industry also boosted up with the

launch of Nano that contributed to the economy and industry in general. The Tata Group, due to

its vision and objectives of dedicated workforce, holistic approach and deeply rooted belief in

corporate citizen and value creation is always ready to face challenges and enhancing the

Company’s performance by shaping the dreams into reality (Tata, 2018).

7. Tata’ Business Model and Strategy

The Tata Business Excellence Model (TBEM) has been devised to improve business strategies

by providing strategic direction to the company. Furthermore, it aims at capturing the processes

and practices of global business and to achieve excellence by following their inherent dynamism

in their integration with the other companies. The vision of Tata business excellence model is to

contribute to the success of marketplace, maximization of their capabilities, enhancing

stakeholder’s values, personal learning and organizational delivery. Moreover, The TBEM

matrix contributes in the organizational accountability of Tata companies, awards, recognition

and effective feedback service. Furthermore, three supportive roles are played by TBEM for

strengthening the competitiveness of Tata Group (Tata, 2018):

 It improves business capabilities, excellence and results

10 | P a g e
 It provides facilitation of communication using common language and by sharing best

business strategies

 To serve as a bridge for managing organizational performance, providing guidance

regarding planning and identifying learning objectives.

8. Business Performance of Tata

8.1. Financial Performance

(Figure 02: Financial Overview)

11 | P a g e
 Figure 03: Revenue of Tata Group

(Source: Tata, 2018)

The above statistics show the income equity of Indian conglomerate Tata Company from the

financial year 1996 to 2017. In the financial year of 2017, Tata Group’s annual income was more

than 100 billion U.S. dollars (Tata, 2018).

8.2. Group's capital market performance

Over the last three years, the shares of Tata Group on India stock market have been high.

Tendency in total market capitalisation of group along with the collective market capitalisation

of Bombay Stock Exchange is given below (Tata, 2018):

12 | P a g e
 Figure 04: Capital Market Performance

(Source: Tata, 2018)

The overall market capitalisation of Group’s 29 registered companies exceeded INR100.000

crore, with the TCS records on August 25, 2004. Due to which the group gained the rank of

having the highest market capitalisation among other companies in both private and public

sectors. Out of total market capitalisation of BSE, Tata Group has 6.6 percent of it. 4.4 million

Investors trust in Tata Companies. Figures are shown in US billion dollars in the brackets (Tata,

2018).

8.3. Tata Group as a Market Leader

With the total brand value of $15 billion and revenue of $109 billion, Tata is not only considered

India’s 147-year-old leading brand but it also holds 65th position for being one of the world’s

most valuable brand, as well. According to one of the published studies by Brand Finance, by the

name of The Brand Finance India 100, it claimed and ranked Tata as the top brand, followed by

the State Bank of India, which is a government-run banking system, alongside, Life Insurance

Corporation, and finally followed by Airtel and Reliance, which are the two leading telecom

companies in India (Tata, 2018).

8.4. Sustainability Goals

13 | P a g e
The value system of Tata is deeply rooted in the notion of enabling other human beings to excel

and nourish as well as benefit from the world’s economic resources. Therefore, the work that it

does, as part of corporate social responsibility (CSR), well explains what their value system and

vision is. By instilling social, ethical and environmental principles into their work, they make

sure that they create long-term bond with their stake-holders, thereby reaching and touching the

hearts of more than a quarter of our world’s population. The central focus of their CSR activities

revolve around uplifting the disadvantaged and marginalized communities, while keeping the

United Nation’s sustainable development goals, into perspective. Moreover, company’s activities

are not only contextualized according to local, national and international level, but also involve

partnering with the stakeholders, such as local government or NGOs (Tata, 2018).

14 | P a g e
 Figure 05: CSR Principles

(Source: Tata, 2018)

9. Global Reporting Initiative

Previously, Global Reporting Initiative was one of the projects implemented by UN Environment

Programme, wherein, today it stands as an independent organization, while emphasizing on

Triple Bottom Line (TBL) approach. In India, Tata Steel is known to be one of the first

companies to initiate the TBL style while recording it in their CSR reports. There are around 19

businesses, labour and civil society along with Tata, around the world, involved to serve to the

UN Global Compact. It is observed that only Mr. Muthuraman from India represents business

15 | P a g e
group on the board. Tata steel is known as the founder member of Global compact. Moreover,

around 2500 companies are participating over 90 countries; it is recognized as the world’s largest

voluntary corporate citizenship initiative taken. It is said that, Jamshedpur among six other cities

around the world is to be chosen as a participant in the UN Global Compact Cities Pilot

Programme. Primarily, keeping their practices and performance into perspective, alongside the

Triple Bottom line approach initiated by them, Tata Motors were even bestowed with an award

in 2006 (Tata, 2018).

10. Corporate Governance Model of Tata Group

In order for the society to benefit as a whole, a change in approach as well as perspective is

important. A successful company’s true essence does not lie in how much capital they have

earned, but it is through how many lives they have been able to change. Thus, for this primary

purpose, it is important for all stakeholders, whether primary or secondary, to instil a sense of

ownership, in order to promote collective responsibility and action. Moving on, Tata has played

a great role in initiating new laws and policies, especially laws pertaining to labour welfare, such

as the maternity benefit law applied in 1946. Moving on, it is important to note that for Tata,

their shareholders play a crucial part, which is followed by the company’s Board of Directors

and finally the management. However, the Board of Directors are not involved in day-to-day

decisions, where their primary responsibility revolves around taking care of the operational,

directional as well as structural aspect of the companies(Tata, 2018).

16 | P a g e
 Corporate Governance Model

Baldrige Model Tata Values Indian Management

Tata Group’s Corporate Governance Model mainly comprises of the Baldrige model which

caters to the Tata Business Excellence Model (TBEM), followed by the Tata Values and finally

the Indian Management Practices, and thus, in true meaning, Tata proves to be an Indian

company (Tata, 2018).

10.1. Issues of Corporate Governance

Most likely the dispute between both Ratan Tata and Cyrus Mistry has paved ways for future

studies regarding corporate law and authority (Tata, 2018).

10.1.1. Removal of Wadia

Since SEBI who is a capital market regulator decided to go with the explanations provided by the

Tata Group against the former Chairman Cyrus Mistry, therefore, the Mistry camp is destined for

another misfortune. According to one of allegations by Nulsi Wadia, he claimed that Tata Sons

has placed false accusation against him in-front of the shareholders. Therefore, in his defence he

asserted that it was due to this false allegation, due to which he was voted out by the

shareholders as the independent director. Thus, Wadia has now filed defamation suit of 3,000

crore (INR) against Ratan Tata, the former chairman of the Tata group, alongside Tata Sons and

the board of directors. However, by analysing the current requirements, it was observed by the

board, that the termination process was comparatively less rigorous than the appointment cycle.

17 | P a g e
Therefore, the notion of passing a special resolution for the termination of the independent

directors, was stressed upon. Although after careful analysis, a conclusion of making the

termination process stricter was reached, but this by no means, affected the Nusli Wadia’s

demotion decision taken by the shareholders (Tata, 2018).

11. Mechanism and Control for corporate Governance

Having good corporate governance gives a company an upper edge, wherein they stand out from

other companies, eventually resulting in an increase in their share price performance. Therefore,

it is generally perceived that the companies which are in their developing stages, is at an

advantage, wherein they are exposed to an opportunity to unleash their potential and move

towards better performance. Therefore, the knack to great success is to have a proper systematic

governing system, since companies with this will more likely attract potential investors and thus

experience growth at an exponential rate. Moreover, Corporate Governance is considered the

need of the time, especially in a developing country like India. This is primarily because the tools

and mechanisms incorporated in the Corporate Governance enables the companies to deal with

inefficiencies that usually are a result of moral incompatibility. Alongside ethical diversion, other

issues pertaining to the planning and designing the mechanism for Corporate Governance could

be (Tata, 2018):

 Monitoring the productivity of the Board of Directors.

 Giving the members of the board and other associates, their respective salaries.

 Keeping a check on the responsibilities of the Audit committee, alongside, monitoring the

principles and policies pertaining to accounting as well as observing the process through

which external auditors are hired.

 Apprehensions and concerns according to Government rules.

18 | P a g e
  Recognizing the scheming and planning loopholes of the competition.

 Managing the labour market as well as comprehending the issues of control mechanisms.

12. Ethics and Integrity of Tata Group

In order to maintain discipline and adequate behaviour, Tata Group follows a Code of Conduct,

under which Code of Ethics also falls. A person who is associated with Tata Group, whether it is

the chairman or low-level employees, are automatically liable to follow this code, which aims to

maintain ethical behaviour at the work place. A company like Tata is hard to find, who has a

strong value system and ethics as their company’s solid foundation. Today, their values and

ethical system is so well established, that it goes without saying that none of the Tata executives

could be bribed for money or would go Code of Conduct (Tata, 2018).

13. Code of Conduct of Tata Group

For Tata Group, code of conduct is not simply a document with clauses, it is a commitment and

responsibility towards each of their stakeholders, including the societies and the communities

they primarily work in. Whenever they are situated in an ethical dilemma, this guideline serves

as a road map for all the Tata employees as well as executives, thus making sure that they do not

navigate away from the value and ethical system established as the foundation of the Tata Group.

Although, the core of the conduct, which will be discussed, remains unchanged, but nevertheless,

every year, this guideline does go through some changes, keeping the emerging times and

situations in mind, thus making it relevant for all generations (Tata, 2018).

13.1. Principles

The true essence of Tata philosophy lies in their belief system of equal say and representation.

Therefore, they believe that companies should not only be managed while keeping the interests
19 | P a g e
of the upper management into perspective, but should also cater to the needs of the employees

associated with the company, alongside the customers who demonstrate their trust in the

company by buying their products and finally the company’s responsibility towards their own

motherland (Tata, 2018).

13.2. Employees

Providing equal opportunities and facilitating the people who truly deserve, is what Tata Group

believes in. Thus, neither do they follow nor allow any kind of discriminatory behavior towards a

person on basis of his caste, race, color, creed, gender, sexual preference, age etc.

13.3. Customers

13.3.1. Products and services

Quality is considered as a top preference for the Tata Group, wherein they make sure that their

customers are provided with the best kind of service. A service which would conform with all

the applicable policies and laws, such as packing and labelling of the product, as well as

providing after-sales service to their customers. Moreover, there is zero allowance to market

their company’s own products by demeaning the products and services sold by their competitors.

Thus, integrity lies at the heart of Tata’s customer service(Tata, 2018).

13.3.2. Fair competition

Tata strongly supports involving themselves in the practice of fair competition, where their

market value stands firm on the basis of the company’s quality, price and customer’s satisfaction.

Therefore, there is an unwavering support towards open market and trade, thus promoting market

liberalisation (Tata, 2018).

20 | P a g e
 13.3.3. Dealings with customers

Customer’s safety is Tata’s top priority when dealing with customers, wherein they understand

their responsibility towards protecting their customer’s personal information, thus maintaining a

professional and honest relationship with them (Tata, 2018).

13.4. Communities

There is a strong sense of responsibility towards the communities in which Tata operates,

thereby, promises to uplift the lives of the people residing in those communities. Moreover, they

are in constant touch with them, as well as with the other stakeholders, in order to make sure that

their business activities are not affecting the local people as well as the environment or

atmosphere they live in. Moreover, even the employees of Tata are encouraged to involve

themselves into service projects, especially in the communities in which Tata operates (Tata,

2018).

13.5. Environment

Necessary measures are undertaken in order to make sure that during their process of production,

the environment is not damaged or destructed in any way. Moreover, Tata strongly advocates the

notion of environmental protection and therefore, does not promote any kind of wastage of

resources, including water and energy and neither are involved in any kind of disposal of

hazardous substances into water, which thus causes damage to the marine life (Tata, 2018).

13.6. Value Chain Partners

The recruitment and selection of suppliers is based on an apparent and clear process, preferring

those service providers who share the same value and ethical system as Tata’s (Tata, 2018).

21 | P a g e
 13.7. Financial Stakeholders

Tata strongly believes in abiding the rules and regulations pertaining to shareholders and their

respective rights. This also includes communicating with shareholders time to time and

informing them about the important decisions and measurements taken by the company, which

may or may not indirectly affect their position as a shareholder. Moreover, demonstrating a

strong commitment towards improving shareholder value which may benefit all shareholders of

their company (Tata, 2018).

13.8. Governments

There are no political affiliations of Tata with any party and therefore, does not support any kind

of campaign or political candidate. Thus, their business intervention has no concern with

interrupting the government order or influencing the state activity in any way, for example,

through public elections. Moreover, compliance with the rules and regulations of the respective

government, where Tata is operating, is strongly supported (Tata, 2018).

14. Conclusion

The above report has addressed the corporate governance and ethical practices of Tata Group. It

has been identified that group has keenly implemented the code of conduct, corporate

governance principles and ethical practices within the business operations that is also evident

from the success of the giant group. They have been engaged in philanthropic activities, but

faced corporate governance issues that under the legal proceedings.

22 | P a g e
 15. References

Abdullah, H. and Valentine, B., 2009. Fundamental and ethics theories of corporate
governance. Middle Eastern Finance and Economics, 4(4), pp.88-96.
Kolk, A., 2008. Sustainability, accountability and corporate governance: exploring
multinationals' reporting practices. Business Strategy and the Environment, 17(1), pp.1-
15.
Rossouw, G.J., 2005. Business ethics and corporate governance: A global survey. Business &
Society, 44(1), pp.32-39.
Tata (2018). Becoming the best in the business via @tatacompanies. [online] tata.com. Available
at: http://www.tata.com/article/inside/Becoming-the-best-in-the-business [Accessed 26 Apr.
2018].
Tata (2018). Corporate governance via @tatacompanies. [online] tata.com. Available at:
http://www.tata.com/aboutus/sub_index/Governance [Accessed 26 Apr. 2018].
Tata (2018). Our businesses via @tatacompanies. [online] tata.com. Available at:
http://www.tata.com/businesses/index/Our-businesses [Accessed 26 Apr. 2018].
Tata (2018). Tata Business Excellence Model (TBEM) - Tata Business Excellence Group.
[online] Tatabex.com. Available at: https://www.tatabex.com/about-us/tata-business-
excellence-
model?pid=XVcwbG0KHrqA/8bD6TGCl8pJ8INC0CgA&SectionId=md1wfHfhXtItw7Rb
wLnRGC6R/VVSL6un [Accessed 26 Apr. 2018].
Tata (2018). Tata Group | Tata Precision Tubes. [online] Tataprecisiontubes.com. Available at:
http://www.tataprecisiontubes.com/about/tata-group/ [Accessed 26 Apr. 2018].
Tata (2018). Tata Steel Business Model & Strategy | Corporate Strategy that drives business
growth. [online] Tatasteel.com. Available at: http://www.tatasteel.com/corporate/our-value-
chain/business-model-strategy/ [Accessed 26 Apr. 2018].
Tata (2018). Values and purpose via @tatacompanies. [online] tata.com. Available at:
http://www.tata.com/aboutus/articlesinside/Values-and-purpose [Accessed 26 Apr. 2018].

23 | P a g e