Satyam Case Analysis

Topics: Company, Stakeholder Pages: 5 (1138 words) Published: April 19, 2015

 

 

 

 

 

 

 

 
CASE
 ANALYSIS
 REPORT:
 GOVERNANCE
 FAILURE
 AT
 SATYAM
 
Hai
 Giang
 
BUSA
 4980-­‐
 045
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE
 COMPANY
 
Two
 brothers,
 B.
 Rama
 Raju
 and
 B.
 Ramalinga
 Raju,
 founded
 Satyam,
 a
 software
 
and
 IT
 company
 consulting
 firm,
 in
 1987.
 Here
 are
 some
 important
 characteristics
 
about
 Satyam
 that
 helps
 us
 understand
 the
 decisions
 involved
 in
 the
 scandal:
 


They
 were
 an
 industry
 leader
 in
 India,
 the
 4th
 biggest
 technology-­‐consulting
 
firm
 in
 2008.
 
 



They
 won
 numerous
 awards
 for
 not
 only
 following
 corporate
 governance
 but
 
also
 shaping
 rules
 and
 innovations
 regarding
 it.
 
 



They
  had
  multiple
  offices
  all
  over
  the
  world,
  and
  worked
  with
  1/3
  of
  the
 
Fortune
 500
 companies
 in
 the
 U.S.
 
 



They
  topped
  numerous
  consumer
  surveys
  about
  public
  opinions
  on
 
companies;
 this
 should
 be
 a
 testament
 to
 their
 prestige.
 
 



They’re
  a
  public
  company
  with
  9
  executive
  board
  members,
  5
  independent
 
and
  4
  internal
  employees,
  2
  of
  which
  are
  the
  Raju
  brothers.
  This
  was
  in
 
compliance
 with
 Indian
 regulations.
 
o The
 brothers
 only
 owned
 8.65%
 of
 the
 company
 in
 2008.
 



40-­‐50%
  of
  the
  company
  was
  held
  be
  foreign
  investors,
  and
  another
  large
 
portion
 of
 the
 company
 was
 held
 by
 banks
 and
 the
 Indian
 public.
 
 



The
  company
  posted
  very
  healthy
  financial
  reports
  of
  the
  company
  annually,
 
with
 growth
 in
 every
 financial
 category.
 
 

 
THE
 INDUSTRY
 
The
 IT
 and
 software
 consulting
 industry
 is
 a
 large
 one,
 this
 is
 proven
 by
 the
 fact
 that
 
the
 company
 had
 2008
 profits
 of
 $2.7
 billion
 dollars
 and
 were
 still
 only
 ranked
 4th
 in
 
their
 industry.
 


The
  EPS
  grew
  from
  17%
  to
  19%
  from
  the
  previous
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