Business Ethics lesson from the case study

1. Ethical
Leadership
Ratan Tata and India’s Tata
Group
Group 1
Aniket Sorte
Apurva Kumar
Harsh Mewar
Kumar Kashish
Bhawesh Begani
Damneet Kaur
Anshu Sharma
Gaurav

2. Introduction
• Ratan Naval Tata, Chairman of Tata Sons Ltd.
• Was credited for transforming Tata Group.
• Name drawn into the infamous 2G scam.
• Tata had been synonymous with ‘Trust’ and
‘Integrity’.
• CSR, ‘Tatas don’t bride’, ‘Tatas don’t indulge in
politics’.
• Unable to expand in home country.

3. Introduction
• One of the leading business houses in India.
• The Group had a long standing reputation.
• The Group carried forward this legacy and consolidated
its business.
• This had led to a government –dominated economy.
• Build its empire emphasizing the twin pillars.
• Total 100+ Companies in Six Continents.

4. About TATA
• Founded by Jamshedji Tata in 1868.
• As of early 2012 the major TATA Companies were-
TATA Steel, TATA Motors, TCS, TATA Power, TATA Chemicals, TATA
Global Beverages, TATA Teleservices, TITAN, TATA Communications.
• Group had Operations in 80 countries across the globe, and exported
products and services to 85 countries
• Revenue of USD 83.3 billion in 2010
• Employed over 4,25,000 people worldwide
• TATA brand ranked 41amongs the world’s 100 most valuable brands.

5. TATA Group’s Revenue by Segments
Materials, 32%
Services, 4%
Engineering, 35%
Energy, 6%
Consumer
Products, 4%
Chemicals, 3%
IT &
Communication,
16%

6. Additional Information
• Each enterprise have its own board of directors and shareholders.
• Ratan Tata took over in 1991 and made the company global
• Ratan Tata turn down an offer from IBM to join the Tata Group(1962)-
TISCO.
• In 1981, he became the chairman of Tata Engineering and Locomotive
Company (TELCO).

7. About TATA
• In 1997 tata had 84 companies which includes steel, automobile, tea,
oil ,mills, chemicals, power, etc.
• Ratan tata strongly believed that to achieve growth in the tata group,
it is necessary to create technologically superior and exciting
products.
• Tata wanted to differentiate itself from the competitors as an
innovation and low cost.

8. About TATA
• Tata thought that he was not a globally recognized because of which
in 2005 went into the international hotel industry and acquired The
Pierre(New York), Ritz-Cartlon(Boston),Camden Place(San Francisco).
• In 2007 Tata Steel acquired Anglo-Dutch steel company Corus.
• In March 2008 Tata Motors acquired the iconic Jaguar and Land Rover
from Ford Motor Company.

9. Leadership With
• According to Ratan Tata function with ethics, integrity, social
consciousness and fairness were integral part of the group.
• The group strategy of ‘Leadership with Trust’ sought to achieve higher
value for its stakeholders, better returns for society, and an ethical
model of business.
• “No success or achievement in material terms is worthwhile unless it
serves the needs or interests of the country and its people”.
• The unique feature of the group was 63% of equity capital of TATA
Sons was held by TATA Trusts, which were philanthropic in nature.

10. Leadership With
• Trusts has promoted a number of institutions of national interest including
hospitals, education & research centres and scientific cultural
establishments.
• Employee welfare majors were also one of the major focus of TATA Group.
• JRD Tata strongly believed that CSR initiative of TATA Group should be
institutionalised.
• Ratan Tata formed TATA Council for Community Initiatives (TCCI).
• TCCI established Tata Group Environment Network.
• The TATA Group made efforts to develop mechanisms for integrating social
responsibility with corporate excellence.

11. 2G and the TATAs
• TATAs were the 1st private player in Indian telecom sector.
• Initially government intervention was very low in this sector.
• In 2010, 2G scam broke out and TATA was dragged into it along with
several other private telecom companies.
• Due to this CAG reported initial loss of $40 billion.
• With the approval of Home ministry, income tax department had
tapped Radia’s telephone conversations between 2008 to 2009.
• In 2010 these tapes were leaked in media.
• The new York times observed and revealed the major players involve
in telecom scandal.

12. 2G and the TATAs
• The tapped conversation of Radia was ensured that the Tata got the
spectrum at the same rate as to Reliance communication, Swan Telecom,
Unitech Wireless.
• Alleged that Radia had inside information about the changes in telecom
policy, those information was shared with Ratan Tata ( Chairman of Tata
Group) and other Tata teleservices employees.
• Radia effective influence for getting cheaper spectrum to Tata teleservices
in 18 circles.
• Tata teleservices was given undue preference in licence allocation.
• In Nov 2008, Tata teleservice sold 26℅ of stake to major Japanese operator
NTT DOCOMO.

13. Ratan Tata’s Response
• Ratan Tata denied the allegations that TATA Teleservices had been a
beneficiary of 2G scam.
• For getting its share of spectrum the company had to fight 83 day
legal battle with the government.
• In 2010, Ratan Tata approached SC claiming that the Radia tapes
infringed upon his right to privacy.
• Some observers found it hypocritical that Ratan Tata on one hand
spoke of high moral ethical standards while on the other hand he
wanted to deny the right of Indian public for transparency in Radia
matter.

14. Ratan Tata’s Response
• In April CBI gave clean chit to TATA Group.
• In the same month Ratan Tata faced questions about the groups
relationship with the DMK party and number of related issues from
the parliament’s Public Accounts Committee which was probing the
2G scam separately.
• Taking the fight to its critics some of the transcripts of Radia tapes
had shown how the group has been disadvantaged in its mining
related projects in Jharkhand & MP.
• On 2nd Feb 2012, SC ordered scrapping of 122 Telecom licences
including those issued to TATA Services.

15. Time For Leadership Transition
• TATA Group was focusing on new technologies and innovation to drive
its business in India and Internationally.
• The biggest challenge for the group was retaining its value system as
it grew bigger and more diverse.
• Ratan Tata’s age and the fact that he was a bachelor gave rise to
concerns that his departure might result in the groups break up.
• In August 2010, the TATA Group created a 5 member committee to
find a successor to Ratan Tata.
• Committee chose Cyrus P. Mistry, a construction tycoon with 18%
stake of TATA Sons.

16. The Road Ahead
• Under the two-decades reign of Ratan Tata, the TATA Group had been
transformed in to global company.
• But, the believe that integrity and TATA were synonyms had come into
question following the 2G scam.
• In his words “I think corruption has been worse and if you chose not
to participate in this you leave behind a fair amount of business. You
have non-level playing field and those who are not participating in
these (Bribes) live at a disadvantage”
• In this scenario, one of Ratan Tata’s prime concerns was how to deal
with the problem of bureaucratic delays, arbitrary regulatory
decisions with wide-spread corruption?