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TATA Power

Case analysis

by group AO2

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Problem Statement:

How can CSR department be re-formed to derive its structure and composition with respect to expansion plans of TPC?

External Analysis

Factors Implications on the problemEnvironmentalEnvironmental Pollution: as given in the case that generating power causes huge amount of pollution

A long term strategy was needed for sustainable development

Expansion in power sector requires permissions from government and land acquisitions

Now major chunk of the land to be acquired belonged to local communities and tribals and therefore full cooperation from their side was needed

SocialNGOs and their influence over local communities

This factor has significant implications when power projects are setup and therefore a CSR strategy which will take of NGOs concern was required

EconomicCSR expenditure

Expansion on business

This is generally carried out from net profits so it reduces the amount that can be distributed to share holdersGiven the growth pattern of TPC and TATA group, an increase in CSR activities is evident

LegalGovernmental regulation and stringent policies on environmental issues

Obtaining permissions from government

The hazardous waste should be countered by CSR initiatives

Time delay might occur in set up as well as cost of power plants could be high

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SWOT

Strength Col. Tewari was quite experienced and has

successfully handled conservation projects No monetary motivation When NGOs are involved there is a well-

defined 3 step process 3 Cs process Ensures the organizational goal that CSR is

everyone’s responsibility in TPC CSR activity is well understood by each and

every TATA companies

Weakness Direct dependence on NGOs for baseline

data Individual accountability was low Impact of CSR activities couldn’t be

measured Identification of ‘key community’ Understanding of local public needs was

required Decision making was slow

Opportunity Inculcating participation from

volunteering Collaboration with NGOs Increase in goodwill of TPC as well as

TATA group

Threat The whole idea of CSR is secondary to

organizational goals and these activities could interfere with core work

Factors and Critical Factors

Factors Critical factors in order of their priority for developing options

Cost to company Increased production capacity Speed of execution Views of various stakeholders Participation of NGO/PBO Implement ability Employee motivation and volunteering for

CSR Governmental regulations

Stakeholder’s perception Cost to company Governmental regulations Participation of NGO/PBO Employee motivation in volunteering

Analysis of Critical Factors

Stakeholder’s View and perception

The primary stakeholders should be perceive CSR in alignment of vision and mission of the company

Cost

The structural changes proposed will be of a significant impact as the capital required for these activities will come from net profit, thereby reducing the shareholder’s share of profits

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Governmental Regulations

This factor will reflect upon the strategies for CSR initiatives and its alignment to firm’s objective of value generation for stakeholders. Any change in governmental regulations significantly impacts the functioning of company and its CSR strategies

Participation of NGO/PBO

NGOs and PBOs were those specialized groups which worked social activities and had an ability to build instant rapport with locals. This was due to their nonprofit motto. The question was finding a unique nonprofit organization which would fit in implementation and assessment phase of projects. The primary threat from them was that they could intervene and bargain for more power.

Constraints

None applicable here

Options

Option 1: Separate CSR department

Pros Cons Speedy decision making Image improvement as it gives more visibility Independent functioning More accountable personnel for any activities

This could diverge goal of department to monetary based

This department doesn’t generate income and therefore could prove costly

Option 2: NGO collaborations but with current system

Pros Cons Ability of NGOs to build rapport with locals

could be leveraged well here Expertise of NGOs could be used well

NGOs could begin dictating power Lower speed of decision making Lack of clear accountability

We propose option 1 simply because

Reason 1: This option gives explicit accountability thereby making CSR activities easy to implement from organizational perspective

Reason 2: As the department is separate, a dedicated team of expert personnel should be included in the department

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Action Plan:

Include employees from within the organization whoa are familiar with organizational culture to create a new CSR department. After that we need to define TPC’s CSR goals and allocation of appropriate budget for core activities.

Periodic assessment of CSR activities could be carried out by department to improvise itself to wards social benefitting and fulfilling its primary objective adding economic value, environmental causes like afforestation and some social activities like education and health.

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