‘Satyam †the Enron of India’

INTRODUCTION The case orbit Satyam the Enron of India looks at Satyam ready reckoner Services Limited and its involvement in collective fraud make passing to one of Indias largest white-collar crimes. The Satyam scandal marks as one of Indias biggest corporate scandals where its stakeholders were continually fed direct pecuniary information from its late chairman Ramalinga Raju. This once promising, global IT go with provided its services for some of the largest companies in Australia and the united States, such as Telstra, Suncorp and Qantas, to mention a few.The celebrateing case study analysis looks at the also-ran of Satyam Computer Services Limited due to fierce competition and the need to impress stakeholders, along with incorrect, misleading accounting statements, wrong behaviour and poor leadership. office 1 Management issues in the Satyam case study From reviewing the case, the vigilance issues in the case study are unethical behaviour and poor leadership. As there was no approval needed form shareholders it gave Raju and his brother the ability to make all managerial lasts.The inadequacy of leadership and abuse of power let independent directors and audit committee feel intimidated passable to trust in the managerial decisions without top dog. The need for power and money led to negligence of fiduciary duties and inaccurate deceptive accounting on Rajus behalf. Rajus total disregard for managerial ethics simply to make short term figures to impress Satyams stakeholders resulted in a complete wish of corporate social responsibility.Rajus greed led to the manipulation of financial records to show increased earnings, payment of salaries to ghost staff, diversion of funds to purchase property in family member names and fabricated benefit. It is believed PricewaterhouseCooper failed to perform its role correctly and therefore this failure to follow fiduciary responsibilities lead to Rajus manipulation of the businesses statements a nd cash flow was go undetected. PART 2 Why the issues are problematic? In the archetypal instance we examine the unethical behaviour and the conflict of interest with family members in high attach to roles.Since the company was founded and owned by Raju himself, the chairman, and his brother occupying the role of managing director, which gave them and overwhelming majority and a psychological advantage into the decision making of the company. This advantage is how the company books were able to be cooked and exalted profits by selling inflated stakes for went undetected for so long. Without the approval of from the shareholder the directors were able to use company funds to be diverted into family real estate investments.Rajus expectations for power and ambitious corporate growth also contributed to the fraud. short whist there is no right or wrong way to behave due to Rajus lack of moral leadership Satyams stakeholders, clients and employees were also greatly affected by the dem ise. Rationalisation and justification lead to negative emotions which could have caused Raju to act emotionally and unethically without any regard for his stakeholders. The damage to the credibility of the company forced the cancellation of projects which in turn lead to the employees loss of wages, jobs and self esteem.The mistrust would have had clients question accountability and would have sought business with Satyums competitors. Shareholders would have lost money in the form of investments. cheapjack reporting practices and complete lack of transparency in the finances damaged the companys approaching credibility. As PricewaterhouseCooper failed to detect the discrepancies I believe they also hold some accountability in the decline of the company. As the falsifying of Satyams books would lower its stock values, which inturn would lead lower profits and less investors.However to result the auditor out of the equation would be a mistake. As a result of negligence with both PricewaterhouseCooper and Raju, the outsourcing company suffered a massive blow in trust and leave further investment in the company questionable. However whilst the scandal put pres sure on the Indian government and other Indian outsourcing, this type of scandal wouldnt be limited to just India as a culture, as It comes land having a good global manager that exercises good ethical behaviour.As all mangers are human its the ability of mangers to be self disciplined and handle pressure to provide total quality management. PART 3 Recommendations. In Satyams case the need to merge or sell the company would be the first step to restore some faith in the company. What happened with Satyam served as a reminder that a universal, quality corporate governance mechanism is needed to ensure future companies dont follow in Rajus footsteps. Complete transparencies in finances would also avoid any temptation for unethical behaviour along with more deterring punishments for frauds of this scale.T his would ensure higher loyalty and trust from stakeholders. Henri Fayols contribution to management thinking would be a great concept to start with, his five principles I. Planning Establishing objectives and goals. Recognising obstacles, these can be internal or external, and how to control them. Forming, implementing and following up of plans. II. Organising Identification, classification, coordination III. Commanding The delegation of duties to correct workers, successful leadership. IV.Coordinating net decisions and ensure all information is shared and to monitor the works involved. V. Controlling Monitoring and making sure all things are running according to plan. Employee performance reviews Whilst policing manager personality traits would be a ameliorate solution the reality of policing this is near impossible therefore management accountability and responsibility would be a good start. Having a universal Code of Ethical Conduct and setting out universal teachings or courses in global ethics may also provide a solution.By obtaining a better intelligence of cultural diversity, understanding the abilities, vales and personality types of different cultures ultimately it is up to the manager to be fully accountable. quotation LIST Schermerhorn, Davidson, Poole, Simon, Woods, Chau, 2011, Management Foundations and Applications http//www. mahindrasatyam. com/investors/documents/Annual-Repor-for-the-year-2011-12. pdf http//www. vrl-financial-news. com/accounting/intl-accounting-bulletin/issues/iab-2009/iab441/satyam-scandal-where-to-from. aspx http//www. telegraph. co. uk/finance/4161198/Satyam-accounting-scandal-could-be-Indias-Enron. html