Socially Responsible Procedures Hyundai Motors And Tata Motors Advertising Essay
Tata Motors and Hyundai Motors own a lot in common. They both are a part of large, family-owned business conglomerates, and from economies that have seen tremendous progress to emerge to maintain the top 20 largest on the globe . Both companies set up themselves and grew combined with the growth of the particular nationwide economies of India and South Korea. The TATA group is much older however, being established in 1868 by Jamshedji Tata (TATA.com), the Hyundai Group was established in 1947 by Chung Ju-yung (HyundaiGroup.com). The Hyundai Group was aided to a sizable extent by government guidelines that supported some go for chaebol organizations (Jeong, S.My spouse and i., 2004, p.44-45). Hyundai Motor company was established in 1967 and used the government policies to promote local automobile industry to their advantages, and braved the East Asian Crisis of 1997 and the existing market meltdown of 2008 so as to emerge as the most significant automobile supplier in South Korea, (Jeong, S.I actually., 2004, p.94-95) and 4th on the planet with regards to unit product sales. (The Chosun Iibo, 2009). Tata Motors was set up in 1945, and is India’s largest automobile firm (Tatamotors.com).
Though they participate in the same industry, the two companies differ somewhat in their CSR methods, which are effected to a large extent by the cultural, public, economical backgrounds and national business and governing devices (Matten and Moon, 2008, p. 407-409). In this report, Section 1 identifies the many stakeholders that both these businesses have to consider while growing their CSR policies. Section 2, will look at the similarities and distinctions in their approach towards execution of CSR practices, and move onto critically examining the same in through opposing viewpoints in Section 3.
Section I: Indentifying the Stakeholder
CSR has arrive to mean in different ways to different persons and is interpreted differently by different organizations. With the growing interest directed at this topic and a big number of content articles, journals and books dedicated to the same, it is an aspect of business that organisations can no longer ignore. With the impression of the financial meltdown and the growing problems for environmental welfare, CSR is being regarded as a model for proactive supervision of business practices and its impact on world. (Smith and Lenssen, 2009,p.3). Public judgment is becoming increasingly less tolerant of corporate irresponsibility, which is rendering it imperative for businesses to adopt corporate citizenship so that you can maintain their impression and survive on the market. (Blowfield and Murray, 2008,p.11). In order for the Social Responsibility management strategy to work, it is vital to identify the stakeholder and establish their importance for the business and to understand the level of impact the company’s actions have on them. According to Mitchell, Agle and Real wood, stakeholders could be classified based on their possessing the following attributes: “power to effect, legitimacy of their state and urgency of their promise” (csrquest.net).
Tata Motors and Hyundai Motors will be operating in very similar markets and have virtually identical backgrounds; coupled with the actual fact that they both participate in the Global automobile market, functioning under comparable constraints with respect to global standards, needs and requirements, their set of Stakeholders is identical.
Referring to the style in Shape 1 below, we are able to classify the stakeholder as:
Dormant Stakeholders: Both Hyundai and TATA Motors have already been faring better than most other car manufacturers in the current credit crunch. So, their shareholders, who may normally have capacity to influence activities, don’t have any want or cause to create any demands. Consequently, they are Dormant Stakeholders
Discretionary Stakeholders: The Indian and Southern Korean Societies have the best claim to ensure that the companies run responsibly in the culture. However, they do not have any capacity to change their operating behaviours, nor perform they feel any good sense of urgency towards it (Mallin, 2009, p. 142-144).
Demanding Stakeholders: Environmentalists and Global Governing bodies (Mitchell et. al, 1997, p. 867) do not have any electricity, nor are they straight influenced by the companies’ actions, and hence no real legitimacy. On the other hand, being that they are formed with the aim of making businesses even more accountable, they do have a feeling of urgency to ensure that companies are undertaking and reporting CSR activities.
Dominant Stakeholders: The governments across the world are becoming more conscious of the carbon emissions within their countries and hence are likely to penalize large carbon-emitting cars, and non-environmentally friendly methods. Hence, they have the power and legitimacy to make sure that automobile manufacturers abide by certain norms and requirements.
Developed from Mitchell et. al, 1997, Hyundai Motors Sustainability Record 2009 and TATA Motors Sustainability Report 2007-08
Dependent Stakeholders: The suppliers and personnel are dependent on the business and methods of the manufacturers. Because they are mixed up in day-t0-day actions of the firms, there exists a sense of urgency on the part for the manufacturers to account for better employee management and welfare procedures and for increased support to the suppliers. (Hyundai Motor Organization 2009 Sustainability Report)
Definitive Stakeholders: These own all three attributes; electricity, urgency and legitimacy. In this instance, the owners/ chairman of Hyundai Motors and TATA Motors (Mong-Koo Chung and Ratan Tata respectively) will be the Definitive stakeholders.
Section 2: The CSR Approach
According to their CSR record, TATA Motors identifies their way as following the Triple Bottomline of Gains, People and World (Blowfield and Murray,2008, p. 101). Though Hyundai Motors’ report does not use the same terminology, the procedure, as explained by them, is essentially the same.
Developed from Blowfield and Murray, 2008, p. 101, Hyundai Motors Sustainability Survey 2009 and TATA Motors Social Responsibility Annual Statement 2008-09
The “Trust based control” refers to focus on improving labour management ties, cooperation with suppliers and the spread of ethical and transparent management practices, which would therefore translate to profits.
However, while college application essays Hyundai Motor’s CSR initiatives will be impacted by the high-economic state of South Korea, as well as their open economic policies, which is fairly a contrast from the relatively more closed overall economy of India that affects the CSR of TATA Motors (Christie P.M.J, et al, 2003). So, TATA Motors and Hyundai Motors employ a different approach to CSR. Regarding to Kramer and Kania, corporations adopt possibly the ‘Defensive’ or ‘Offensive’ approach. Defensive approach relates to engaging in CSR to safeguard image while the Offensive methodology involves actively participating in CSR and ‘being a part of the solution even if you were not a part of the issue’. (Blowfield and Murray, 2008, p. 102-103)
Defensive Approach: Hyundai Motors’ approach could be classified as Defensive. Southern Korean businesses in general, especially the Chaebol, engaged in CSR following the East Asian economical crisis in 1997, when the detrimental ramifications of ‘business for profits just’ was recognized. The main goal of employing CSR in Korea possesses been to repair the destroyed reputations of these businesses. Hyundai has made attempted to wash off their ruined reputation due to corporate scandals by producing generous philanthropic donations of cash (Cho and Hong, 2008). Actually, the photograph built by the sociable contributions of past chairman Chung Ju-Yung , happen to be being employed by his son Chung Mong-koo who is facing corruption fees. (The Economist, 2007)
Offensive Approach: “No achievements or achievement in material terms can be worthwhile unless it will serve the necessities or interests of the country and is people and is achieved by fair and genuine means”. This quotation by J.R.D Tata encompasses the eyesight for CSR of the shaped group chairman. This has been the prevalent thought ever since J.N. Tata founded the group in the 19th century. TATA Motors, following TATA Group legacy of philanthropy, has got been actively involved in adding to social welfare ever since the inception of the company as discussed previously. The TATA Group has been known for participating in corporate “philanthropy” since the establishment of the J.N. Tata Endowment scheme in 1892 (Kazmi, 2008).
Section 3: Classifying the CSR Activities
The below tables provide a cross-section of the CSR actions undertaken by the firms regarding two parameters:
The “standard” CSR activities undertaken by automobile industry as a whole (Blowfield and Murray, 2008,p.124)
The 6 means of engaging in CSR that have evolved and are used presently (Kotler and Lee, 2005).
Cause promotion: Creating consciousness about certain issues
Cause-related marketing: Companies invest in adding to certain causes on the basis of sales.
Corporate Social Marketing: Refer to activities directed at causing a transformation of behaviour ‘to improve public health, safety, the environment, or community well-being’.
Corporate philanthropy: Immediate contributions to a charity or cause, most often with regards to monetary support.
6. Socially responsible organization practices
The below tables will help get to know the approach and frame of mind of the businesses towards CSR, and will encompass the CSR actions they have undertaken. Evaluating the tables, it is obvious that while TATA has
concentrated a large part of their actions in Corporate Philanthropy and preserved a basic degree of CSR within the realm of business requirements though involvement in Socially Responsible Organization Practices. However, Hyundai Motors seems to possess a more balanced pass on across all spheres, though it isn’t as involved in Corporate Philanthropy. Both companies usually do not indulge in too much of Cause-Related Advertising CSR initiatives, which could be due to it being a mere marketing gimmick.
The subsequent section analyses the reasons behind this process and the effectiveness of the same.
Table 1: Hyundai Motors CSR Initiatives
Table 1: Hyundai Motors CSR Initiatives continued
Developed from Blowfield and Murray, 2008, p. 124, Kotler and Lee, 2005 and Hyundai Motors Sustainability Survey 2009
Table 2: Tata Motors CSR Initiatives
Developed from Blowfield and Murray, 2008, p. 124, Kotler and Lee, 2005, Tata Motors Community Responsibility Annual Report 2008-09
Section 4: Analysis of the Approach
In order to critique the strategy towards CSR of the two companies, we are able to view their activities through two contrasting viewpoints towards Corporate Social Responsibility.
Milton Friedman’s Shareholder Theory: Believes that “the interpersonal responsibility of business is to increase its income” (Solomon and Hanson, 1983).
According to Edward Freeman’s Stakeholder Theory, “now there are myriad groups who have a stake in the company” and business needs to address their wants and incorporate it within business management methods. (Freeman and McVea, 2001)
The above contrasting viewpoints could be applied to the Virtue Matrix Unit (Martin, 2002) to greatly help classify and analyze the many CSR actions undertaken by the 2 2 corporations. The Virtue Matrix Version, as given in Figure 3 below, has 2 degrees of CSR.
Figure 3: Virtue Matrix
Source: Martin, 2002
The base of most CSR activities is formed by ‘Instrumental CSR’ or The Civil Basis, which encompasses those activities an organization undertakes to comply with the norms, guidelines and customs that govern the culture in which they can be found. This view complies with Friedman’s shareholder theory, since it talks about only engaging in activities that are necessary to create profits. The Civil Foundation further has 2 aspects to it
Compliance: A business either has to follow the laws and regulations set by the world or industry.
Both Tata Motors and Hyundai Motors have to comply with the automobile emission targets arranged by various nations where they operate. Hence the R&D for vehicles with lower emissions and cars using alternate fuel resources is a necessity of the business. If they’re unable to meet these standards, they will lose business. Also, “green vehicles” have created their private niche on the market, with consumers actively seeking to buy more fuel-efficient automobiles; building fuel-efficient automobiles is thus about gaining market share. (The Economist, 2007)
Choice: A business chooses to check out the customs and specifications set by the society or industry.
Both the companies possess voluntarily participated in the UNGC and GRI. Basis the GRI Record (Appendix 1), Hyundai Motors started reporting in 2004, while Tata Motors started only in 2008. In the adherence and 3rd party checks, as well, Hyundai has been even more pro-active (Globalreporting.org). Even so, it can again be argued that doing so enhances their impression as a far more “socially responsible” corporation, and therefore is good for business.
Both the companies engage in study into making end-of-life car more recyclable and therefore environment-friendly, since that is a norm followed by all automobile manufacturers, because they need to portray a more environmentally-sensible stance. (Blowfield and Murray, 2008, p. 124)
The higher level of CSR contains those ‘Intrinsic’ activities that contact form The Frontier. This view complies with Freeman’s Stakeholder theory, since it involves activities an organization undertakes so that you can help the society where they operate, or because they look it’s the “right move to make”. However, these activities might not add any worth to the shareholders. The 2 2 areas of The Frontier are:
Strategic: This kind of activity benefits the society, while adding worth to the shareholders simultaneously.
The Traffic Safety marketing campaign and Owner Repair Classes carried out by Hyundai Motors in various regions where they operate can be an apt exemplory case of this kind of activity. This helps create recognition and imparts useful know-how, but at the same time, acts as a powerful marketing tool, because the brand name is re-iterated thorough the process.
Structural: This includes activities that are purely good for the society, while not adding any benefit at all or maybe even retracting value for the shareholder.
Tata Motors, though its CSR actions and donations, has involved in pursuits like providing for free education, training, healthcare facilities and different support for entrepreneurial activities. They have also made attempts to bettering the quality of life for the many those who have least support in the Indian culture- the farmers and the women.
Tata Motors may include activities that form the ‘Civil Foundation’ which may be the basic requirements nonetheless they do not take part in too many ‘Strategic’ activities, but instead give attention to “philanthropic” CSR and lean extra towards Freeman’s Stakeholder Theory, as seen in the Body 4 below. The below chart gives a clearer photo of how Tata Motors seems to falls in to the realm of Corporate “philanthropy”.
Figure 4: Mapping Income vs Social Benefits
Critics of philanthropic ‘donations’ say that just involves offering large sums of money as a way to catch the eye of the media narrative essay and appear “goody goody” to the public, while not actively participating in social welfare projects; this tends to inhibit more sustainable CSR procedures. (Mallin, 2009, p. 129-131). However, the reason behind such engagement is due to spiritual and cultural beliefs. As mentioned in The Economist, “India has a long traditions of paternalistic philanthropy. Big family-owned businesses such as for example Tata are particularly lively in providing basic products and services [â€¦]. For the rich, who’ve prospered as the market has boomed in recent years, generous philanthropy is also a way of going a backlash against organization.” (The Economist, 2008). 2005, p. 429-431).
Hyundai Motors, on the other hand, lean a little towards Freidman’s Shareholder Theory, as their activities are usually in the “high earnings” realm in Figure 4. Hyundai Motors started engaging in CSR much later, but has a more balanced approach. The reason for the difference in the approaches is definitely rooted in the backgrounds of the two 2 home nations. Relating to Inglehart and Baker, organizations in low-income economies tend to focus extra on the economic contribution of organization, as the growth of business itself would cause a better life-style for the people. Consequently in Korea before the economic development, people did not hold companies in charge of contributing to CSR activities, but following the country started to be a high-income economy, needs for network involvement grew (Mallin, 2009, p. 129-131; Chapple and Moon, 2005, p. 429-431), the brand new government enforced plans and laws to make sure adoption of proper job practices and CSR activities by the businesses. In this era of re-structuring of the chaebols, CSR also had become incorporated as part of the companies’ goals (Mallin, 2009, p. 127-130) and so the later inclusion of lively CSR from Hyundai Motors. However, in India, since indigenous businesses own establish in the 19th century, they have been involved with corporate philanthropy, which may be attributed to spiritual traditions, internationalization of organization, colonization, and imperialism (Chapple and Moon, 2005)
The Automobile industry calls for a certain level of CSR which is in lieu of environmentally friendly destruction being due to the industry. On the other hand, ‘[g]reening of industry has been taken seriously extra as a business opportunity that will reap rich dividends in the foreseeable future rather than minimizing it to tokenism representing corporate social responsibility.’ (THE CHANGING TIMES Of India, 2009)
There is no placed formula in regards to what encompasses CSR, neither will there be a way to say what’s “good” or “bad”, or what should encompass CSR. If the organization is working in an underdeveloped region, it could need to help uplift the region to be able to even operate there. For example, Tata Motors had involved in social actions in Singur in West Bengal, India, where the plant for their small-car task, Tata Nano was to come up. It was the principal reason behind the Chief Minister, Budhadev Bhattacharjee, seeking Tata Motors to create the plant in that area, as it would help develop the spot. (The Economist, 2008).
With the Period of Globalisation, MNCs need to be on their toes to ensure they are maintaining very best business practices across almost all their operating areas. With less complicated and faster communication systems, the beliefs and ideologies pertaining to CSR in a single place may effect the operations and sales in a contemporary society at the different end of the environment. Thus, as a way to maintain brand impression and equity, it might be seen best to engage in Offensive CSR than be produced to engage in Defensive.