BUSINESS ENVIRONMENT

WAC FOR TATA NANO

Name : Vaibhav Bala Krishna

PRN : 17021141111
Section : B
What responsibilities companies have to the society in which they operate beyond
making a profit if any? Are social and environmental performances just constraints
within which company has to operate in order to minimise profits?

Since a company gets employees, market and money from the society it owes lot to
the society.
Following are the responsibilities companies have to the society.

 Their actions should be innovative, productive and beneficial to the society.

Any of their action should not cause any unrest in the society.
 Their action causes minimal harm to the environment.
 Its good if the product they produce is affordable and useful for large parts
of the society and does not compromise on safety.
 They should be sensitive to social and environmental issues caused by them.

For example when Ratan Tata saw families of four riding on a two wheeler, he
proposed to bring a car which would be affordable to low income groups and
provide safe transport to their families. He conceptualized Tata Nano to lure India's
burgeoning middle classes away from motorcycles, at a least price of ₹ 1 Lakh which
would have low cost design and would create a new market.

Apart from need of the society they must also consider what the society actually
wants and fulfil the promises they make.
For example when Tata acquired land for the production of Tata Nano at Singur in
West Bengal, it had to face agitations from the local farmers as the they considered
the compensation as inadequate and got support of Trinamool Congress leader
Mamata Banerjee. Hunger strikes, shooting and rallies created disturbances and
forced Tata to exit Singur plant. Mr. Ravi Kant, vice chairman of Tata Motors, said
that they could have build the factory at Singur but couldn't run it as they didn't
want to compromise on the safety of their engineers.

Yes sometimes social and environmental performance becomes constraint in a

company operation. For example as we can see in Tata Nano case, agitation from
the local farmers in Singur West Bengal supported by Trinamool Congress leader
Mamta Banarjee forced Tata had to exit the plant at Singur and move to Sanand,
Gujarat 2000 km from Kolkata. Though the factory could have benefited the local
farmers and the state in a lot way, Tatas had to bear the 1400 crores loss.
Environmental constraint also affect the decisions of a company as it can be inferred
that Girish Wagh, who designed Tata Nano, with his team of young engineers (under
35 years) designed Tata Nano to fulfil the requirements of Bharat Stage Emission
Standards (BSES) and causes minimal harm to environment.
How can companies manage political activism in the country where they operate?
What kind of due diligence should they undertake to manage the resulting risk?

It's better to guess lull before the storm. Political activism arises when there is
agitation among people, inside or outside the company. Generally there are a group
of unorganized people who have some grievances with the company and don't
possess any real threat till they become organised. The political activists help them
get organized and fight for a single cause. To manage political activism company
should work on the root cause of agitation and try to solve it before they become
organized. They should try to split the group agenda into individual grievances.
It would be better to talk to the leader and find a solution to the issue.

However if company faces the bad they should take help of local government and
administration to tackle the problem.

However as a precaution:
 They should abide by the rules of the country in which they operate.
 Their actions should be innovative, productive and beneficial to the society.
 Any of their action should not cause any unrest in the society.

As we can see in case of Tata Nano, the company has to face agitation from local
farmers who got support of Trinamool Congress leader Mamata Banerjee. With the
help of local administration they tried to solve the issue. But hunger strikes,
shootings and rallies created disturbances and forced Tata to exit Singur plant. For
the safety of their engineers Tatas decided to leave Singur plant and move to
Sanand Gujarat, approximately 2000 km from Kolkata.

In your opinion what are the major causes for Tata Nano’s setback? Did Tata
Motors behave in a way that promoted political health in west Bengal?

Though Singur failure added monetary losses to Tatas, the main cause for the failure
of Tata Nano was their “Marketing Strategy”. As stated by Delna Avari, marketing
head for passengers vehicles at Tata Motors, that from being "People's car" it
became "cheapest car", a poor man's car. Even the later efforts, by Ratan Tata and
his team to create a new image to go with the car, failed to work. Sales of the car
didn't even reach anywhere near to the expected 250000 mark.

The car was launched with great expectations to create a new market i.e. between
two wheelers and conventional cars at a least price of 1 lakh. The “People’s car”
was targeted for low income group which would provide affordable and safe
transport to families. It was supposed to be 21% more spacious than its nearest
competitor.
However all these features couldn't tempt the buyers as "People" often associate cars
to their status symbol.

“
On 23 September 2008, Tatas decided to leave Singur in West Bengal, the decision is
reported to have been made by the Tata management and the Bengal government
had been informed. On 3 October it became official that TATA will leave Singur (WB)
when Ratan Tata announced it in a press conference in Kolkata.
While the ruling party has gone all out[4] for acquisition of 997 acres (4.03 km2)[2] of
multi-crop land required for the car factory, questions have been raised about the
party forcible acquisition which was made under the colonial Land Acquisition Act of
1894.[2] Others say the provisions of this act were allegedly not been met.[5]
The law has provisions for state taking over privately held land for public purposes
but not for developing private businesses. The illegality of the acquisition has been
substantially conceded by the Kolkata High Court.
The Tata Motors site is the most fertile one in the whole of the Singur, and the
Singur block, in turn, is among the most highly fertile in West Bengal. Consequently,
almost the entire local population depends on agriculture with approximately 15000
making their livelihood directly from it.[6] With the number of direct jobs to be
created no more than about 1,000, many of which are expected to go to outsiders,
the local populace felt threatened for their livelihood.[7] Environmental degradation is
also feared.
The state government imposed the prohibitory Section 144 of the Indian Penal Code
for initially a month and then extended it indefinitely. The imposition has been
declared illegal by the Kolkata High Court
“
Source --- https://en.wikipedia.org/wiki/Singur_Tata_Nano_controversy

Tata motors acquired the land of 997 acres (4.03 km2) of multi-crop land required
for the car factory of farmers and this instigated a great political and social unrest
in Singur. Tata was accused that they didn’t make proper compensation to the
farmers. “”...The Tata Motors site was the most fertile one in the whole of the
Singur, and the Singur block, in turn, is among the most highly fertile in West
Bengal. Consequently, almost the entire local population depends on agriculture with
approximately 15000 making their livelihood directly from it. With the number of
direct jobs to be created no more than about 1,000, many of which are expected to
go to outsiders, the local populace felt threatened for their livelihood. Environmental
degradation was also feared....””