Case Study analysis of Satyam scandal of 2009

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Management Concepts Case Study Analysis

Introduction:

This paper is a case study analysis about Satyam Computer services. This case study analysis will identify key facts about the case in question and outline the  problems within the case study, it will than conclude with solutions or recommendations to the problems stated backed up by Management theory.

Satyam is a Nasdaq listed company and a major player in the global IT service industry.  The chairman of Satyam is Ramalinga Raju. The Satyam case that broke out in early 2009 made a public scandal. The Satyam case showed a complete disintegration of ethical standards, absence of Corporate Social Responsibility (CSR), criminal activity and negligence of management issues and duties. Raju was also alleged to falsifying 13,000 ‘ghost’ employees, an estimated monthly salary of US$4 million. This cash flow was diverted and eventually used to purchase land. Raju admitted to corporate fraud and was arrested and later charged with fraud, forgery, embezzlement and insider trading. His brother Ramu and the company’s CFO were also arrested and charged.

Management Problem:

The management problem is involved in ‘white-collar crime’. The auditors from PricewaterhouseCoopers (PWS) were unable to identify the fraud. That leads to issues regarding lack of control on the negative outcomes of fraud that further leads to ethical and social responsibility issues. Such issues are creating problems by stopping investors in future investment on Satyam shares.  The following paragraph will justify above issues with the help of literature review.

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The case study is addressing ethical issues because Satyam is misrepresenting 13,000 employees and proving the act of ‘corruption’ (p.121). Through corruption Satyam is enhancing the business interest by engaging itself in illegal practices. Secondly, Raju has an MBA from Ohio University and knows with clarity what is right and what is wrong. The act of wrong doing knowingly is violating ethical standards. Raju also believed that his questionable behaviour will not be found out while manipulating cash flows thus providing basis for rationalisations for unethical behaviour (p.144). Raju’s motivation was to keep in touch with the US$50 billion Indian ...

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