Tata Steel established a new vision focused on increasing shareholder wealth through maximizing profitability while maintaining its social responsibility commitments. An analysis found some CSR activities had negative impacts on profitability. Strategies were developed to bridge gaps between current activities and critical success factors like efficient CSR implementation and quality steel production at low cost. The company aims to be economically and financially sustainable through cost-effective social and operational activities.

1. 1 Brief Description of Case
Tata Steel is known for its low cost steels and corporate social responsibility. It has paid
much attention on CSR activities that shareholders felt that the company is not giving importance
to shareholder’s value maximization. To address this, the company established a new vision geared
towards increasing shareholder’s wealth (EVA positive) without neglecting its commitment to the
community. An outcome-impact analysis was done to determine the activities that created positive
and negative impact to the achievement of the company’s objectives. Strategies were formulated
by determining activities or actions that would bridge the gap between their existing activities and
their critical success factors.
2 Framing
2.1 Who is involved?
Insiders Outsiders
Management, general employees, union Community, customers, shareholder,
members government
2.1.1 Stakeholders’ Analysis
Stake-
Interest in the Involvement in Goal Profita-
holde Current Standing CSR
Company Achievement bility
rs

Dividend and Setting of objectives Foreign shareholders
capital appreciation and targets, increase financial pressure to
investment reduce spending on CSR
Shareholders
decisions Local shareholders support
company’s CSR effort
Capacity expansion at
undeveloped locations
Investments and joint
ventures for raw material
security
 
Wages, benefits, Participation in the Employees are laid off to
healthy and safe improvement in reduce costs
Employees
General
working product quality,
environment, job social welfare and
security and business excellence.
satisfaction

2.  
Wages, benefits, Participation in The union is included in cost
Members
Union
rights of employees decision making on decisions.
are properly employee-related Unions do not resist the
observed matters changes in Tata Steel.

On time payment, Dependable and Tata Steel has entered into
assurance of quality raw long-term partnerships that
continued materials are aimed at continuous
Supplier
relationship, Develop ongoing enhancement of value along
material demand supply relationship the supply chain
and rejection and through reasonable
supplier prices.
satisfaction.

Payment of interest Source of external Creditors of Tata Steel are
Creditors
and principal financing under a concerned of the liquidity of
fair credit terms and the company due to high
policies spending on CSR activities.
 
Value, warranties, Customers call for Customers are currently
Product quality, product demanding for globally
functionality and improvement, competitive products
Customers
features that will product Customers are highly
satisfy customer development, conscious of quality, aware
needs, low cost customer retention of company’s ethics, and
and market want the lowest cost
penetration
 
Tax payments, Implementation of Public policy development
compliance with favorable laws and and participation in
regulations and regulations collaborative initiatives
Government
laws, corporate
social
responsibility,
employment,
contributions to
economic progress
and nation building

Employment Partaking in the Sustainable livelihood
generation, development of through land and water
environment and community in management, rural
Community
quality of life, various areas enterprise development and
education, vocational training.
community Early childhood education,
development Adult Literacy, Camp School
and financial assistance
for higher education

3. 2.2 Frame
Preliminary Frame:

4. 3 Looking Back
What Have Been Done So Far? What Have Been Achieved So Far?
Activities, Policies, Strategies Outcome Negative Outcome Impact
Labor:
Tata Steel coordinates with union No employee strike against Tata Steel improved employer-employee
representatives via the Joint since 1928. (Labor strike in 1920 relationship
Departmental Council, including ended in a day thanks to Dorabji Tata’s Job security
union in internal planning intervention).
Pioneered various employment Lower employee turnover Greater organizational efficiency
policies: Satisfied employees and effectiveness
Eight-hour working day Higher productivity Loyalty of the employees
Free medical aid towards the organization
Establishment of welfare Job security
department
Maternity benefit
Profit-sharing bonus
Retiring gratuity
Cost cutting by means of downsizing Reduced number of workers Employees’ trust to the Sustained profitability
the bloated workforce Decrease in employee costs resulting company will waver Higher return on equity
to a higher profit margin. Company image will dent to a
Increase in the operating profit of Tata certain extent
Steel.
Introduced improved employee Monitored employee performance and Greater organizational efficiency
performance measurement systems. efficiency and effectiveness
Education:
Tata Steel provides skills for In 2001, Jamshedpur boasts an overall Non-employees benefit more Changed the lives of
employee families and contracts with literacy rate of 76% ; 71% for women than its own employees Jamshedpur citizens
private-sector education providers to Employee satisfaction Greater organizational efficiency
provide for non-employee children and effectiveness
Customer patronage

5. Loyalty of the employees
towards the organization
Infrastructure:
Provided wide range of services and Ease of distribution of products since Excessive charity works that Better market image
infrastructure for Jamshedpur many roads have been constructed resulted to too much spending Increase in market share
citizens. Available electricity for use in the that decreases shareholder Increase in sales
Built 1,000 km road operations of Tata Steel value Sustained profitability
Provided 202 MW of power Electricity constantly available Customer patronage
Cleans and distribute running Loyalty of the employees
water towards the organization
Pumped 7.5 MGD sewerage daily
Removed 120,000 tons of garbage
Medical:
Tata Steel provides 16 medical TRSD treated a total of 2857 Excessive charity works but Better market image
centers including the 740-bed Tata tuberculosis cases between 1996 and contributes only little to the Increase in market share
Main Hospital 2000 satisfaction of shareholders’ Increase in sales
interests Sustained profitability
Loyalty of the employees
towards the organization
Customer patronage
Corporate:
Sought greater focus on increasing its Satisfied and well-compensated Increase in market value of
EVA for the shareholders shareholders stocks
Increased flexibility in raising capital Stocks sold by the firm will be
funds for the continued operations of preferred by purchasing stock
the company as more shareholders holders.
would be willing to invest on the firm
Effectively communicated the new Commitment not only by top Unified toward a common vision
vision statement and the challenges management but also by the employees Organizational citizenship of the
that are faced by the company to its on the firm’s new vision members.
organizational members Increased awareness by everyone in the
organization of the problems being

6. faced by the company
Marketing:
Produced a television commercial and a Enthused employee and customer Better market image
print advertisement featuring happy value Increase in market share
customers and employees, with the Increase in sales
“We Also Make Steel” slogan. Sustained profitability
Environment:
Extended its CSR to the natural Better work environment Better market image –
environment by emphasizing the Environment-friendly
“greening” of its own plant facilities Customer patronage
as well as the reforestation of lands
around its mines.
Operations:
Incorporated front-running Improvements in the production The company lacks expertise on Greater organizational efficiency
production technologies adopted process the new technology Higher productivity
from foreign competitors. Higher quality of products Sustained profitability
Moving towards EVA positive
vision
Constructed the Cold Rolling Mill Increased production of highly Since the product is in the Increase in sales
which produces refined steel sophisticated steel introduction stage, the company Sustained profitability
products. Higher profit margin derived from incurs high cost in capturing Moving towards EVA positive
refined steel products target market vision
Increase in the number of product lines

7. 4 Overarching Objective / Hierarchy of Objectives
Be an EVA Positive
Company
To maximize
shareholder return
To increase profit
To increase the efficiency
To maximize revenue
and cost effectiveness of
from product
social expenditure
To revitalize the core To be globally To venture into new
business for a competitive businesses that will
sustainable future own a share of our
future
To continue to be the
To adjust to changing
lowest cost producer
economic environment
of steel
To increase the efficiency
& cost effectiveness of
steel production
To uphold employee
To expand production
satisfaction
and existing facilities
To maintain a healthy
working environment

8. 5 Revisit framing
Revisited Frame:
Cost effective and efficient operational and social activities towards profit maximization and
increased shareholders’ wealth
6 Critical Success Factors (CSF)
6.1 Critical Success Factors (before Pareto)
Economic and Financial Factors External Relationships
Increased sales Quality products
Higher margin Low cost products
High dividend and Capital Appreciation Effective CSR
Lower costs spent on CSR formulation and Well-coordinated implementation of CSRs
implementation Strong brand and company image
Lower costs of capital
Higher Annual Net Income after Taxes
(ANIAT) over Cost of Capital
Knowledge and Learning Internal Processes
State-of-the-art technology Production of quality steel
Plant expansion Incurrence of minimal production costs
Forward thinking worker practices Proper decision making process
Integration of cost-consciousness in Maximum value of CSR at lowest possible
organizational culture and processes cost.
Effective leaders
Loyal Worker
Healthy working environment
Trained and skilled workers
Enhanced competencies in the formulation
and implementation of CSR

9. 6.2 Selected Critical Success Factors (after Prioritization / max. 4 per quadrant)
Economic and Financial Factors Customer Relationships
Higher Annual Net Income after Taxes Efficient CSRs and strong company image
(ANIAT) over Cost of Capital Quality products at a reasonable price
High dividend and Capital Appreciation
Knowledge and Learning Internal Processes
Enhanced competencies in the formulation Efficient leveraging ofmaximum
and implementation of CSR value/benefit of CSR and its cost.
Integration of cost-consciousness in Production of quality steel at minimum
organizational culture and processes production costs

10. 7 Gap Analysis
What have we done so far? Gap Recommendation
Labor:
Cost cutting by means of Employees’ trust to the Set guidelines on retention
downsizing the bloated workforce company will waver and termination of
Company image tarnished employees
Degradation of brand value
due to job losses
Education:
Tata Steel provides skills for Non-employees benefit Create CSR-focused team
employee families and contracts more than its own that formulate and
with private-sector education employees implement efficient and
providers to provide for non- cost effective CSR activities
employee children
Infrastructure:
Provided wide range of services Excessive charity works that Create CSR-focused team
and infrastructure for Jamshedpur resulted to too much that formulate and
citizens. spending that decreases implement efficient and
Built 1,000 km road shareholder value cost effective CSR activities
Provided 202 MW of power
Cleans and distribute running
water
Pumped 7.5 MGD sewerage
daily
Removed 120,000 tons of
garbage
Medical:
Tata Steel provides 16 medical Excessive charity works but Create CSR-focused team
centers including the 740-bed contributes only little to the that formulate and
Tata Main Hospital satisfaction of shareholders’ implement efficient and
interests cost effective CSR activities
Operations:
Incorporated front-running The company lacks Conduct trainings and
production technologies adopted expertise on the new seminars
from foreign competitors. technology
Constructed the Cold Rolling Mill Since the product is in the Engage in promotional
which produces refined steel introduction stage, the activities that would attract
products. company incurs high cost in the market
capturing target market

11. 8 TOWS Analysis
Internal Strength Weaknesses
1. Strong company image 1. Lack of competence
2. Goodwill of TATA brand 2. Lacks expertise on the new
External 3. Existing dealers and service technology
networks 3. Degradation of brand value
4. Large shareholders base for due to job losses
capital needs
5. Loyal employees (Lowest
attrition rate in India)
6. Innovativeness of TATA with
respect to its competitors
7. Excellent corporate
governance
Opportunities
1. Huge market
2. CSR conscious customers
3. Competitive position of the
company. (Second largest
steel producer in India and
the sixth largest in the
world).
4. Advancement in steel
production technology
5. The consumption of
steel has been steadily
increasingwith the rapid
investment in
the infrastructure and real
estate projects.
Threats
1. International competitors
2. Rising environmental costs
due to increased concerns in
global warming
3. Scarcity of non-renewable
raw materials
9 Key Performance Indicators (KPI)
Economic and Financial Factors External Relationships
Economic value added

12. Dividend per share
Stock price
Knowledge and Learning Internal Processes

13. 10 Action Planning
Activity:
Sub-Activities: Who is responsible? Who needs to What resources do When do we start? How do we know that
cooperate? we need? we have started?
Note: Repeat the table above for each activity planned in detail.

14. 11 Next Steps
What? Who? When?
(What activity?) (Who is Responsible?) (When to start?)
Date:
Name of Author: