Case study and problems faced by TATA Industries

The following report is based on the case study for TATA industries, which is a well known multinational organization from India and have shown a remarkable growth and diversification over the last few decades to have become one of the most prominent and promising international player in global business market. Through this report, one source problem faced by TATA industries have been discussed, which needs to be addressed by the organization, as well as some secondary problems faced by the industry. The aim of the study is to analyze the cause and effects of these problems and how the company can address and overcome these problems to ensure better survival of the organization in the international market in the long term. Alternative strategies have also been outlined which the organization can consider to address the problems as well as key recommendations for the company and how they can help in the long term sustenance. Moreover, strategies to implement the outlined measures and how to follow up with their progress are also discussed in the report.

Since the foundation in 1868 by Jamsetji Tata, the TATA industries have grown exponentially, expanding its business to more than 100 independent companies and operating from more than 100 nations, making it one of the biggest international organizations. Its headquarters are located in India. TATA is involved in several industries such as iron and steel, automotives, consultancy services, teleservices, hotel and hospitality, beverages and also telecommunication and employs more than 660,000 people and its revenue between 2015 and 2016 was estimated to be around USD 103 billion.

Despite the major success of TATA industries, a significant challenge faced by the organization is in the management in this huge number of employees through efficient leadership strategies and maintain their commitment to their stakeholders and the communities through effective corporate social responsibility programs. The case study have shown that the organization is struggling to maintain an effective engagement with the CSR activities, because of which they are not able to achieve the desired results from their CSR programs and facilitate better engagement with the stakeholders and causing a fragmented leadership. One of the biggest factors that are responsible for the fragmented leadership is the inability of all the companies of TATA to act as a single functional unit.

• TATA Global beverages:

One significant accusation that was made on TATA industries and more specifically on TATA Global Beverages was of systematic violation of Human Rights of the employees, working in the tea plantations. According to some reports the tea pickers working in tea gardens of TATA were seriously underpaid and overworked. The reports have also complained that the workers live in poor living as well as working conditions, and proper measures are not in place to prevent workplace hazards or to ensure the workers against work related injuries and accidents. Moreover, it was also reported that the employees are often coaxed to purchase the shares of the company, which is an unethical act.

• Lack of Leadership:

The report also shows that the organization is highly fragmented with more than 100 companies having its own structure and there is a significant lack of consolidation and coordination among the different businesses. Due to this fragmentation, there is no central strategy that is followed by the entire organization and only a small fraction of the TATA employees spearheaded by TATA and Sons are in a leadership position. However, according to FP Staff (2016), due to the large diversity in the businesses under TATA group, they were not able to implement an effective leadership strategy that can lead the entire organization, and instead have a fragmented leadership across the various businesses. This is causing failures in companies such as TATA Motors.

TATA Global Beverages

TATA Global Beverages:

TATA Global Beverages is one of the most prominent global tea businesses and is the largest tea brand in India in terms of its brand value and the volume of sales and it contributes to approximately 36% of the turnover of the organization. Financial reports from 2017 showed an improvement in the profits by TATA Global beverages from 2016 to 2017. In addition, the company has significant investments in their CSR policy which helps to support its brand image. However, the allegations of human rights violations have adversely affected the reputation of the organization that invests more than 50 million USD towards its CSR programs, undermining its efforts to improve the company’s image.

Lack of Leadership:

One of the biggest reasons of a lack of leadership faced by TATA is because of the lack of leadership values of the current CEO of the company Cyrus Mistry, as a result of which there has been a significant reduction in the CSR activities of TATA as well as a reduction in its revenues and increase in the debts of the company. During the Tenure of Ratan Tata, the company prospered under his efficient leadership and his values of improving the quality of life across various communities that serves the organization, which showed down after the company was handed over to Cyrus Mistry.

Getting back the trust of the stakeholders and communities:

In order to win back the trust of the stakeholders, TATA can ensure the full implementation of its CSR programs to help the different communities, and maintain regular updates of the progression of the program for the public to follow. This can help to improve transparency and clarity of its CSR programs and helps to gain positive publicity.

Retention of experienced employees:

Retaining experienced employees is another strategy that can help the organization to maintain its orientation towards the organizational objectives by leveraging the experiences of the employees to guide and mentor the employees who are new to the organization and helping them to understand the organizational commitment to improve the wellbeing and quality of life of the people of the communities serving TATA.

Involving independent reviewers:

Independent reviewers can help the CEO to keep a close observation of the operations of the organization and whether they are helping to uphold the organizational objectives and values, and whether the operations follow the organizational policies. The independent reviews also can ensure an unbiased and impartial assessment of organizational performance.

Damage Control:

It is also vital that in order to overcome the adverse effects of the reports of human rights violations by TGB, the company implements damage control policies to rectify the situation and how that the organization is takes accountability and responsibility for the wrong actions, is committed to remedy the situation and ask for forgiveness from the communities affected by the human rights violations by TATA.

Getting back the trust of the stakeholders and communities:

It has been proposed by many authors that gaining trust of the stakeholders is one of the most important strategies for any business that has suffered tarnishing of its brand image through a loss of trust of the stakeholders. According to authors, one the trust of the stakeholders are lost, gaining it back becomes more difficult, and the organizations needs to give more effort to show their commitment and the ability to accept their mistakes and the willingness to overcome them and show better responsibility to the stakeholders .

Lack of Leadership

Involving independent reviewers:

Studies have also shows that involvement of independent and external reviewers to assess the organization’s performance helps to maintain an unbiased reporting of the organizational performance thus helping to achieve better audits or organizations operations.

In order to implement and control the recommended action, the organization can increase its CSR activities, highlighting the organizations commitment to acknowledge rectify its mistakes, helping the affected communities (tea pickers and employees of the tea business) and keep the shareholders informed of its progress to show that the organization is actively involved to ensure it is taking care of its responsibilities to the community. The organization can also employ independent boards and professionals to audit the performance of the organization in its CSR programs, and if the programs are able to achieve the key milestones and objectives identified by the organizations and whether it is able to uphold the organizational values and improve the brand image of the company, winning back the trust of the stakeholders.

Conclusion:

TATA industries are a large organization that spans across various countries, diversified across several businesses, making it one of the biggest international organizations. The organization has tremendous growth since its founding about 150 years ago. The company had very powerful commitment towards its CSR policies, however since the succession of leadership from Ratan Tata to Cyrus Mistry, the company’s focus on CSR activities has been affected and there have been accusations of Human Rights Violations in TATA Global Beverages. Due to which, the organization should step up their CSR programs to gain back the trust of the people and control the damage done by the business. Using independent reviewers can ensure unbiased assessment of the performance and ensure compliance to the organizational polices.  

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