CSR Activities of TVS Group(Case: Business Ethics & Corporate Governance) Submitted to: Prof. Biswajit Chowdhury Submitted by: Shubha Brota Raha Roll no. 23041, EMBA 2011-14, SIBM-B
Case Facts:Corporate Social Responsibility (CSR) is a concept whereby firms integrate social andenvironmental concerns in their business operations and the interactions with their primaryand secondary stakeholder. TVS motors and Sundaram Clayton ltd performs its CSR activitiesthrough Srinivasan Services Trust (SST). SST is the social arm of TVS motors, established in1996, which works for the economic development, education, infrastructure, environmentand health care of villagers and helps to make villagers self reliant. Over the 14 years ofservice, SST has played a pivotal role in changing lives of people in rural India by creatingself-reliant communities that are models of sustainable development.SST is working in partnership with a number of research organizations, NGOs, financialbodies, Governmental agencies and local institutions. The purpose of developing suchrelationships is to work towards a mutual goal in such a way as to bring together in depthtechnical knowledge and local expertise to help the people in a cohesive and effectivemanner. At present, SST is working in more than 700 villages, spread over in the States ofTamil Nadu, Karnataka, Maharashtra, Gujarat and Himachal Pradesh. One of the ways toinvolve rural women in community development has been through Self Help Groups (SHG).CSR initiatives have helped TVS build brand reputation, bring employee satisfaction andloyalty. It has given the community and the industry a sense of mutual trust and belonging.Today the environment around the industry is friendly and protective of each other. Thisbecomes obvious from the fact that the attrition rate is low and the employee morale ishighAnswers to Questions:Q.1.What is wrong if TVS Group uses CSR to build its brand or uses it as a branding strategy?Ans. SST is the social arm of TVS motors which works for the economic development,education, infrastructure, environment and health care of villagers and helps to makevillagers self reliant. TVS, by indulging in CSR is definitely giving a lot back to the society, it isalso gaining a lot back in terms of publicity, coverage, tax benefits and goodwill to name afew. All this helps to build a positive image for TVS, boosts the morale of its employees andgets it more customers and investors. Thus brand building comes naturally with CSRactivities. But if CSR is done solely as a PR activity for advertisement stint and the motive isto do it just for the sake of doing, while at ground level nothing substantial is being done,then it is completely wrong. The prime objective of CSR activity should be to give back to thesociety and gain business sustainability in return. So there’s nothing wrong in TVS, using CSRto build its brand until its prime intention to do CSR is to do good to the environment andsociety.Q.2 How is BE & CG correlated to CSR?Ans. Ethics is a branch of philosophy that studies moral and immoral behaviours and arrivesat suggestions or recommendations. Business ethics is a form of applied ethics thatexamines ethical principles and moral or ethical problems in a business environment. Like a
society is able to function if its members adopt a code of behaviour and restrain their selfinterests for the greater long term good of the society, similarly a business will be able tosustain only if it helps in the sustainability of the community.Corporate Governance deals with adherence to standards, compliance, guidelines andprinciples mandated by legal frameworks.CSR is an umbrella term under whose ambit comes the ethical rights and duties of a firm orcompany. Business Ethics is about moral awakening to do good to the society andenvironment, while Corporate Governance is about doing things that are legally right.Business Ethics is about doing things right and Corporate Governance is about doing rightthings, while CSR is all about doing right things right so that the entire community andenvironment has greater sustainability and the business in turn also has a greatersustainability. Business Ethics and Corporate Governance is part of CSR.Q.3 Can TVS use this communication to convince stakeholders that they are doing CSR forlong term benefits than short term profits?Ans. Stakeholders for TVS are people who have interest or are affected by its business.There are two types of stakeholders, primary and secondary. Primary are the shareholders,employees, suppliers, etc while secondary are the society, government, etc. The activities ofSST does not reap immediate business benefits but helps in the society becoming self reliantand sustainable and thus in the long run helps TVS become sustainable, because anybusiness can be alive only when the society is alive. By involving in CSR activities and ethicalpractices, TVS can send out the message of trust. By trust I mean, trust that financial reportsand other disclosures are correct, trust that the production of its motorcycles is not harmingthe society or environment, trust of giving back to the society through SST, trust that itcomplies with the standards and laws of the nation. This trust is important for both theprimary and secondary stakeholders. It can boost the morale of its employees and reduceattrition rate. It can lure investors. It can make its suppliers proud of their association withTVS and lead to long term relationship. It helps the business owners in risk managementbecause the records are clean. It helps to establish positive brand image in the minds ofconsumers. There are many such benefits which ultimately result in TVS remainingprofitable without negative impact on the society. And this is exactly what any stakeholder,primary or secondary wants from a business. Thus TVS can very well use this communicationto convince its stakeholders that it is doing CSR for long term benefits than short termprofits.