Tata Motors and Hyundai Motors possess a lot in keeping. They both are a part of large, family-owned organization conglomerates, and from economies which may have seen tremendous expansion to emerge to be in the top 20 major in the world  . Both companies proven themselves and grew along with the growth of the respective countrywide economies of India and South Korea. The TATA group is a lot older nevertheless, 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 huge extent by government guidelines that supported some go for chaebol  firms (Jeong, S.My spouse and i., 2004, p.44-45). Hyundai Motor company was established in 1967 and used the federal government policies to promote local automobile industry to their benefits, and braved the East Asian Crisis of 1997 and the current market meltdown of 2008 to be able to emerge as the major automobile producer in South Korea, (Jeong, S.I., 2004, p.94-95) and 4th on the globe with regards to unit product sales. (The Chosun Iibo, 2009). Tata Motors was set up in 1945, and is usually India’s largest automobile business (Tatamotors.com).
Though they participate in the same industry, both companies differ to some extent in their CSR practices, which will be effected to a sizable extent by the cultural, public, financial backgrounds and national business and governing devices (Matten and Moon, 2008, p. 407-409). In this report, Section 1 identifies the various stakeholders that both these businesses need to consider while growing their CSR policies. Section 2, will analyze the similarities and dissimilarities 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 come to mean differently to different persons and is interpreted in different ways by different organizations. With the growing attention given to this topic and a big number of content, journals and books dedicated to the same, it is an aspect of business that organisations can no longer ignore. With the impact of the financial meltdown and the growing concerns for environmental welfare, CSR has been seen as a model for proactive supervision of business practices and its own impact on culture. (Smith and Lenssen, 2009,p.3). Public thoughts and opinions is becoming increasingly fewer tolerant of corporate irresponsibility, which is which makes it imperative for businesses to adopt corporate citizenship in order to maintain their photo and survive on the market. (Blowfield and Murray, 2008,p.11). In order for the Social Responsibility administration strategy to work, it is vital to recognize the stakeholder  and establish their importance for the company and to understand the level of impact the company’s activities have on them. According to Mitchell, Agle and Wood, stakeholders can be classified based on their possessing the following attributes: "capacity to impact, legitimacy of their promise and urgency of their lay claim" (csrquest.net).
Tata Motors and Hyundai Motors happen to be operating in very similar markets and have virtually identical backgrounds; coupled with the actual fact that they both belong to the Global automobile sector, functioning under similar constraints with respect to global standards, demands and requirements, their set of Stakeholders is identical.
Referring to the version in Body 1 below, we are able to classify the stakeholder as:
Dormant Stakeholders: Both Hyundai and TATA Motors have been faring better than almost every other car manufacturers in today’s credit crunch. Therefore, their shareholders, who may normally have capacity to influence activities, don’t have any need or cause to make any demands. Consequently, they are Dormant Stakeholders
Discretionary Stakeholders: The Indian and South Korean Societies have a legitimate claim to make certain that the companies work responsibly in the culture. However, they do not have any capacity to switch their operating behaviours, nor do 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) don’t have any vitality, nor are they directly affected by the companies’ actions, and therefore no real legitimacy. Nevertheless, being that they are formed with the aim of making businesses even more accountable, they do include a feeling of urgency to try and ensure that companies are undertaking and reporting CSR actions.
Dominant Stakeholders: The governments across the world are becoming more conscious of the carbon emissions within their countries and hence testmyprep
Developed from Mitchell et. al, 1997, Hyundai Motors Sustainability Survey 2009 and TATA Motors Sustainability Report 2007-08
Dependent Stakeholders: The suppliers and workers are dependent on the business enterprise and methods of the manufacturers. Because they are mixed up in day-t0-day activities of the firms, there is a sense of urgency on the part for the makers to take into account better employee management and welfare methods and for raised support to the suppliers. (Hyundai Motor Business 2009 Sustainability Report)
Definitive Stakeholders: These have all three attributes; vitality, urgency and legitimacy. In this case, 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 with their CSR survey, TATA Motors identifies their procedure as following Triple Bottomline of Profits, People and Planet (Blowfield and Murray,2008, p. 101). Though Hyundai Motors’ report will not utilize the same terminology, the way, as explained by them, is essentially the same.
Developed from Blowfield and Murray, 2008, p. 101, Hyundai Motors Sustainability Report 2009 and TATA Motors Social Responsibility Annual Report 2008-09
The "Trust based operations" refers to focus on boosting labour operations ties, cooperation with suppliers and the spread of ethical and transparent administration practices, which would so translate to profits.
However, while Hyundai Motor’s CSR initiatives background for should college athletes be paid essay would be influenced by the high-economic state of South Korea, and their open monetary policies, which is pretty a contrast from the relatively extra closed overall economy of India that impacts the CSR of TATA Motors (Christie P.M.J, et al, 2003). So, TATA Motors and Hyundai Motors have a very different method of CSR. Regarding to Kramer and Kania, firms adopt either the ‘Defensive’ or ‘Offensive’ approach. Defensive approach pertains to engaging in CSR to safeguard image while the Offensive methodology involves actively participating in CSR and ‘being a part of the solution whether or not 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. South Korean businesses generally, 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 key aim of employing CSR in Korea features been to repair the damaged 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). In fact, the image built by the public contributions of former chairman Chung Ju-Yung  , are being used by his child Chung Mong-koo who is facing corruption expenses. (The Economist, 2007)
Offensive Approach: "No achievement or achievement in materials terms is normally worthwhile unless it serves the needs or interests of the country and is people and is attained by fair and genuine means". This quote by J.R.D Tata encompasses the perspective for CSR of the shaped group chairman. This has been the prevalent idea ever since J.N. Tata founded the group in the 19th century. TATA Motors, following TATA Group legacy of philanthropy, has been actively involved in adding to social welfare ever since the inception of the business as discussed before. The TATA Group provides 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 all together (Blowfield and Murray, 2008,p.124)
The 6 ways of engaging in CSR that have evolved and are being used presently (Kotler and Lee, 2005).
Cause promotion: Creating consciousness about certain issues
Cause-related marketing: Companies commit to adding to certain causes based on sales.
Corporate Social Marketing: Refer to activities directed at bringing about a transformation of behaviour ‘to increase public health, safety, the surroundings, or community well-being’.
Corporate philanthropy: Immediate contributions to a charity or cause, most often regarding monetary support.
6. Socially responsible business practices
The below tables will help understand better the approach and attitude of the organizations towards CSR, and will encompass the CSR activities they have undertaken. Comparing the tables, it really is evident that while TATA has
concentrated a sizable part of their activities in Corporate Philanthropy and managed a basic degree of CSR within the realm of business requirements though involvement in Socially Responsible Organization Practices. On the other hand, Hyundai Motors seems to get a more balanced pass on across all spheres, though it is not as involved with Corporate Philanthropy. Both firms do not indulge in an excessive amount of Cause-Related Advertising CSR initiatives, that could be due to it being truly 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 Record 2009
Table 2: Tata Motors CSR Initiatives
Developed from Blowfield and Murray, 2008, p. 124, Kotler and Lee, 2005, Tata Motors Public Responsibility Annual Report 2008-09
Section 4: Evaluation of the Approach
In buy to critique the approach towards CSR of the two companies, we are able to view their actions through two contrasting viewpoints towards Corporate Public Responsibility.
Milton Friedman’s Shareholder Theory: Believes that "the cultural responsibility of organization is to increase its earnings" (Solomon and Hanson, 1983).
According to Edward Freeman’s Stakeholder Theory, "now there are myriad groups who’ve a stake in the firm" and business must address their demands and incorporate it within business management methods. (Freeman and McVea, 2001)
The above contrasting viewpoints could be applied to the Virtue Matrix Version (Martin, 2002) to help classify and analyze the many CSR activities undertaken by the 2 2 companies. The Virtue Matrix Version, as given in Body 3 below, has 2 levels of CSR.
Figure 3: Virtue Matrix
Source: Martin, 2002
The base of all CSR activities is shaped by ‘Instrumental CSR’ or The Civil Base, which encompasses those activities an organization undertakes to adhere to the norms, rules and customs that govern the society in which they are present. This view complies with Friedman’s shareholder theory, as it talks about only engaging in activities that are necessary to create profits. The Civil Base further has 2 aspects to it
Compliance: An organization either must 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 establish by various nations in which they operate. Consequently the R&D for automobiles with lower emissions and automobiles using alternate fuel resources is a necessity of the business. If they’re struggling to meet these standards, they will lose business. Likewise, "green automobiles" have created their personal niche available in the market, with consumers actively wanting to buy more fuel-efficient vehicles; building fuel-efficient automobiles is thus about gaining market share. (The Economist, 2007)
Choice: A business chooses to check out the customs and criteria set by the culture or industry.
Both the companies possess voluntarily participated in the UNGC and GRI. Basis the GRI Report (Appendix 1), Hyundai Motors started reporting in 2004, while Tata Motors started out only in 2008. In the adherence and third party checks, as well, Hyundai has been more pro-active (Globalreporting.org). However, it can again be argued that doing this enhances their picture as a more "socially responsible" corporation, and therefore is good for business.
Both the companies engage in analysis into making end-of-life vehicle more recyclable and therefore environment-friendly, since this is a norm accompanied by all automobile manufacturers, as they need to portray a far more environmentally-in charge stance. (Blowfield and Murray, 2008, p. 124)
The higher-level of CSR includes those ‘Intrinsic’ activities that web form The Frontier. This check out complies with Freeman’s Stakeholder theory, since it involves activities that an organization undertakes to be able to help the society in which they run, or because they come to feel it is the "right thing to do". However, these activities might not exactly add any worth to the shareholders. The two 2 aspects of The Frontier are:
Strategic: This kind of activity benefits the contemporary society, while adding benefit to the shareholders as well.
The Traffic Safety advertising campaign and Owner Protection Classes  carried out by Hyundai Motors in a variety of regions in which they operate can be an apt example of this sort of activity. This can help create recognition and imparts useful expertise, but simultaneously, acts as an effective marketing tool, since the brand is re-iterated thorough the procedure.
Structural: This includes activities that are purely beneficial to the society, without adding any benefit at all or maybe even retracting value for the shareholder.
Tata Motors, though its CSR activities and donations, has involved in pursuits like providing for free education, training, healthcare facilities and other support for entrepreneurial activities. They have also made attempts to increasing the quality of life for the most those who have least support in the Indian contemporary society- the farmers and the ladies.
Tata Motors may possess activities that form the ‘Civil Foundation’ which may be the basic requirements nevertheless they do not take part in way too many ‘Strategic’ activities, but instead focus on "philanthropic" CSR and lean even more towards Freeman’s Stakeholder Theory, as seen in the Body 4 below. The below chart provides clearer picture of how Tata Motors seems to falls into the realm of Corporate "philanthropy".
Figure 4: Mapping Revenue vs Social Benefits
Critics of philanthropic ‘donations’ say that just involves giving away large sums of money to be able to catch the eye of the media and appearance "goody goody" to the public, while not actively participating in social welfare projects; this tends to inhibit more sustainable CSR methods. (Mallin, 2009, p. 129-131). However, the reason behind such engagement is due to religious and cultural beliefs. As explained in The Economist, "India includes a long tradition of paternalistic philanthropy. Big family-owned organizations such as for example Tata are particularly active in providing basic companies [â€¦]. For the rich, who have prospered as the market has boomed recently, generous philanthropy is also a way of heading off a backlash against business." (The Economist, 2008). 2005, p. 429-431).
Hyundai Motors, on the other hand, lean a little towards Freidman’s Shareholder Theory, as their actions are usually in the "high profit" realm in Figure 4. Hyundai Motors started engaging in CSR much later, but has a more balanced approach. The reason behind the difference in the methods is normally rooted in the backgrounds of the two 2 home nations. Regarding to Inglehart and Baker, firms in low-income economies tend to focus even more on the economical contribution of organization, as the development of business itself would bring about a better life-style for the people. So in Korea prior to the economic development, people didn’t hold companies in charge of adding to CSR activities, but following the country started to be a high-income economy, requirements for network involvement grew (Mallin, 2009, p. 129-131; Chapple and Moon, 2005, p. 429-431), the new government enforced guidelines and laws to ensure adoption of proper job practices and CSR activities by the businesses. In this era of re-structuring of the chaebols, CSR also came to be incorporated within the companies’ goals (Mallin, 2009, p. 127-130) and thus the overdue inclusion of energetic CSR from Hyundai Motors. However, in India, since indigenous businesses have got establish in the 19th century, they have already been involved in corporate philanthropy, that can be attributed to religious traditions, internationalization of organization, colonization, and imperialism (Chapple and Moon, 2005)
The Automobile industry demands a certain degree 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 home based business that may reap rich dividends in the future rather than minimizing it to tokenism representing corporate cultural responsibility.’ (THE CHANGING TIMES Of India, 2009)
There is no placed formula in regards to what encompasses CSR, neither will there be ways to say what is "good" or "bad", or what should encompass CSR. If the organization is working in an underdeveloped region, it could have to help uplift the region as a way to even operate there. For example, Tata Motors had engaged in social activities in Singur in West Bengal, India, where the plant for their small-car task, Tata Nano was to come up. It was the primary reason behind the Chief Minister, Budhadev Bhattacharjee, seeking Tata Motors to set up the plant in that area, since it would help develop the region. (The Economist, 2008).
With the Period of Globalisation, MNCs need to be on their toes to make sure they are maintaining ideal business practices across all their operating areas. With better and faster communication systems, the beliefs and ideologies pertaining to CSR in a single place may influence the operations and sales in a contemporary society at the different end of the globe. Thus, in order to maintain brand photograph and equity, it may be seen best to engage in Offensive CSR than be made to activate in Defensive.