• Good reputation and image. The reputation of a business is essential to its operation. Satyam used to be a good company with great reputation and receive trust and confidence of its consumers. The company also got many awards during these years, such as “Golden Peacock”, Asian MAKE Award, and Investment India Award for corporate social responsibility. Satyam can better build its brand through strengthen its recognition.
• Market share. Based on the good reputation and the awards Satyam had, we can assume that this company must have a large market share in the industry.
• Knowledgeable Board of Directors. According to the information provided by the article, Satyam’s management all well-educated and a lot of them had education …show more content…
As a result of the powerful CEO, top management intentionally kept the company’s system of management and internal controls very weak. These Satyam executives can forged Board resolutions and obtained unauthorized loans without Board’s agreement. From this, it can be seen that the control in the company was very weak.
• Focus on short-term performance goals. Satyam’s COB was focused on double digit revenue growth and present good financial performance. With the weak internal control system and the strong ambition to grow to the size of the Fortune 500 companies, Satyam may lie in its financial statements under the pressure to perform better each year.
• Weak or non-existent code of ethics. Satyam didn’t develop a strong code of ethics for its employees. The company tried to bribe World Bank’s bank staff and hack into the bank’s system for data theft.
• Questionable business strategies with opaque disclosures. Satyam didn’t make any disclosure of the sister company financing to the shareholders. In addition, it announced to acquire its sister companies without providing reasonable explanations. Although the investors were questioning its action, the company continues to propose more …show more content…
Threats
• As company listed on the NYSE, Satyam had to accept higher standards of corporate governance as required by the NYSE. In addition, as a public traded company in the United States, Satyam had to comply with strict regulations of SEC.
• In January 2009, several class action lawsuits were filed against Satyam by its ADR investors in the United States which will damage the image and reputation of the company. Besides, Satyam may lose the lawsuits and pay a lot of money for these.
• Economic impact. Satyam’s performance is depending on the economy performance in the society. When there is an economic recession, the demand of its products will decrease. Thus, Satyam may have a little or negative net income.
• Political impact. There is a possibility that the new regulation introduced by the Indian Government will not benefit Satyam’s operation.
• Competitor. The IT industry is a competitive industry, Satyam will need more innovative products and technologies to attract the customers and maintain a competitive edge. The cost of R&D will increase and the profit margin will