Corporate Social Responsibility

Memo
To:
From:
Date:
Re: Analysis of Corporate Social Responsibility of Tata Motors’ Actions

This memo assesses the extent to which Tata Motors Limited’s action in introducing the Tata Nano is consistent with Friedman’s and Freeman’s views of corporate social responsibility.
Tata Motors Limited, based in Mumbai, India, competes in the automotive manufacturing industry and manufactures commercial and passenger vehicles primarily in India.
The Tata Nano, said to be the least expensive car in production, was launched in January of this year. Priced at approximately $2,500, the Nano is positioned to attract a segment that currently own eco-friendly scooters and motorcycles. The major concern is that the Nano’s extremely low price will lead to mass motorization in India, aggravating the already high levels of pollution and global warming, and significantly increase traffic in over crowded cities. India is 1/3 the size of the U.S and its population is over 1.1 billion.
Edward Freeman’s theory suggests that all the stakeholders, i.e., any group or individual who can affect/are affected by the corporation, must be considered when making decisions. The two most affected stakeholders in this case are the local community and the owners of Tata Motors. The launch of the Tata Nano created higher stakeholder wealth for Tata Motors Limited shareholders. A big part of the local community however, isn’t keen for the car to go one sale as it will cause greater damage to the environment. The Indian Government is also affected as a great amount of money has been put towards public transport in recent years, encouraging people to travel by bus or metro in order to reduce traffic jams. This perspective would conclude that Tata Motors’ actions are inconsistent with corporate social responsibility as seen by Freeman.
Milton Friedman’s theory states that the sole responsibility of a business is to maximize profits for the stockholders as long as it is within the law. Tata...