Satam Scam Case Study

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In December 2009, India faced its biggest challenge in the domain of corporate governance and ethics in the Satyam fiasco. The Satyam scandal shook the corporate India, and dented its standing with investors, both domestic and foreign. It turned out that founder and CEO B. Ramalinga Raju invented $ 1 billion in cash, which never existed. The Satyam scandal brought to attention the importance of ethics and its significance to corporate culture. The scam committed by the founders of Satyam is a proof to the fact that one’s conduct in a huge organization is influenced to a large extent by human greed, desire, and ambition for power, money, recognition and glory. Scandals like that of Enron to the recent financial crisis have time and again established…show more content…
First: India’s economic growth within the context of the global economy. Second: the rise of Satyam as a top player within the global IT marketplace. Third: the driving force behind Satyam’s decisions, Mr. Ramalinga Raju. In a growing economy where everyone is doing well, every company wants to create a mark of its own. No one wants to be left behind. And if the particular sector in which one’s company exist is performing exceptionally well, then there are more reasons to deliver better results. India as an…show more content…
Even if someone has a weak moral sense, the presence of guidelines, job descriptions, rules and cultural norms will discourage him from unethical behavior. But if the organizational culture and structure is weak, even a saint may become immoral. The culture at Satyam was an unethical one since it was dominated by the board. There was always a great pressure on Mr. Raju to produce extraordinary results in order to survive. Irresponsible greed was the main reason, resulting in unethical and illegal activities. He had enormous pressure to deliver exceptional results. And to do so, Mr. Raju had to overpower his own ethics and values for the overall good of the stakeholders of the company. But did it actually benefit the stakeholders? Due to the lack of transparency in reporting, the stock value came down drastically when the fraud was exposed and the shareholders lost out very badly. Satyam lost many projects due to the scandal due to which the employees lost wages and their interest in the company. In addition, the feeling of being a part of an unethical company will always remain with them although they had no involvement in the scam. It becomes very difficult to gain employment elsewhere. One bad mango spoils the whole basket. This is exactly what happened after the Satyam scam. India as a nation lost its reputation and credibility. The other IT companies also faced a decline in stock

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