Case Study Analysis

Submitted To:
Mr. Shanker Bhattarai
Prepared By:
Pramod Shah

Case I:
1. Enron Case:
Case summary:

Enron, the 7th largest company of the USA, was involved in one of the
biggest scams back in 2001 when it filed for bankruptcy. The companys
chairman Kenneth Lay, the CFO Andrew Fastow and Enrons chief auditor
Arthur Anderson had not only destroyed company documents but also lied
about profits and concealed debts from failed deals and projects and
projects. This massive cover-up had the effect of taking away jobs and
pension savings from thousands of workers and resulting in losses of millions
of individual investors.
2. Satyam Case:
Case summary:
Satyam, an outsourcing company from India which served more than
one-third of the Fortune 500 companies, is now referred to as Indias version
of Enron because it had significantly inflated its earnings and assets for years
and manipulated the Indian stock markets and throwing the industry into
turmoil. The culprits behind the biggest corporate fraud in India were
Ramalinga Raju (Chairman) and his younger brother Rama Raju (Managing
Director) along with their auditing firm, PWC, who had maligned their
financial statements for years. This scandal had the effect of hurting the
interests of thousands of employees and investors and also shamed and
shocked the Indian industry.

3. Stanford Group Case:

Case summary:
Robert Allen Stanford and his company, the Stanford Group was forced
to shut down from a massive financial fraud which had stretched from the
Caribbean to Texas and around the world. As far as the charges filed by the
US Securities and Exchange Commission (SEC), the Stanford Financial Group
and Stanford Capital Management had defrauded investors worldwide which

resulted in losses in billions of dollars. The SEC had charged the wealthy
Texas financier and his allies in an $8 billion fraud and alleged that he had
lured investors with the promises of giving high returns on their investment
but had transferred the investors money into a black-box of hard-to-trade
assets.
Theoretical context:
Ethical dilemma:
An ethical dilemma is a situation wherein moral precepts or ethical
obligations conflict in such a way that any possible resolution to the dilemma
is morally intolerable. In other words, an ethical dilemma is any situation in
which guiding moral principles cannot determine which course of action is
right or wrong.
Organizational culture:
Organizational culture is the behavior of humans who are part of an
organization and the meanings that the people attach to their actions.
Culture includes the organization values, visions, norms, working language,
systems, symbols, beliefs and habits. Organizational culture affects the way
people and groups interact with each other, with clients, and with
stakeholders.

Conflict of interest:
A conflict of interest is anything that impedes or might be perceived to
impede an individual's or firm's ability to act impartially and in the best
interest of a client. A conflict of interest can cast doubt on your integrity; it
can also have a damaging effect on your firm and the profession as a whole.
Corporate governance:
The system of rules, practices and processes by which a company is directed
and controlled. Corporate governance essentially involves balancing the
interests of the many stakeholders in a company - these include its

shareholders, management, customers, suppliers, financiers, government

and the community.
Corporate fraud:
Activities undertaken by an individual or company that are done in a dishonest or illegal
manner, and are designed to give an advantage to the perpetrating individual or company.

Integrity capacity:
Integrity capacity is the individual and collective capability for the repeated
process alignment of moral awareness, deliberation, character, and conduct
that

demonstrates

balanced

judgment,

enhances

ongoing

moral

development, and promotes supportive systems for moral decision making.

Ethical issues on Enron case:
The organizational culture had contributed greatly towards the ethical
scandal at Enron. Enron was a harsh and condescending company that
emphasized competition and financial goals. Firstly, Enrons competitive
environment and rigorous performance evaluation standards caused a
culture of deception. Employees started ignoring ethical standards and only
focused on achieving their goal. Once one employee started to cheat on their
jobs, this had a ripple effect where all employees started cheating on their
jobs. Furthermore, this competitive environment contributed to the covering
of errors because employees tended to be uncooperative and seldom
communicated with one another. Additionally, Enron culture put more
emphasis on financial goals. All of the executives and employees were only
focused on making good financial numbers and not on raising the economic
value of the company. Enron was also less concerned regarding the needs,
values, desires and the well-being of its employees.

Nobody at Enron

followed ethical standards as it was only for show to the external audience.
Also, the conflict of interest policy was waived off to let the officers of Enron
practice off-the-book entities of the firm.
Among the various causes of Enron collapse, one is the conflict of
interest between the two roles played by Arthur Andersen, as both an auditor
and also as consultant to Enron. The lack of attention on the part of the

Board of Directors to the manipulation of its financial statements and the

lack of truthfulness by the management regarding the health of the company
and its business operations contributed to the downfall at Enron. However,
the primary cause of the collapse can be attributed the organization culture
at Enron filled with deception and concealment of the real financial situation
of the business.
The Enron collapse is an example to all on the consequences of
disregard to ethical standards and principles and its short-term and longterm damage to all the stakeholders of the company. In order to avoid such
collapses, a key aspect can be the proper application of corporate
governance in a company so that issues such as corporate fraud would never
come into existence. The short-term rewards of resorting to unethical
behavior ultimately negate the long-term impact it has on the degradation of
the company and in extreme cases to liquidation and bankruptcy.
Ethical issues on Satyam case:
Ethics in a business is greatly influenced by the culture of the company.
Therefore, taking the right course of action often means rejecting short-term
profits. In regard to the Satyam case, the business faced intense competition
from other businesses and this had the effect of reducing the gap between
Satyam and other businesses by resorting to unethical behavior. The main
ethical issue at Satyam is not adhering to the corporate governance norms.
Due to the increasing competition, Satyam business felt they had to reduce
the gap by maintain their company growth by adopting any means possible
with disregard to its consequences. If they had followed the norms of
corporate governance, the downfall of Satyam would never have occurred.
The second issue at Satyam is the tampering of its financial data and
inflating its earning over the years. The main culprits here were Ramalinga
Raju (Promoter), Rama Raju (Chairman) and their auditing firm, PWC, who
had manipulated the companys books for several years. The third ethical
issue at Satyam was misleading the shareholders fund. This means that the

three aforementioned culprits mislead the shareholders through exaggerated

profits through the manipulation of financial statements which meant that
shareholders were falsified into thinking that their returns on their
investment were increasing. Lastly, the promoter, chairman and the auditing
firm had put their self-interest at the expense of shareholders interests. So,
conflicts of interest were also evident at Satyam which eventually led to its
downfall.
The Satyam case highlights that corrective measures should be taken
at the earliest to stem the extent of the damage and stringent laws should
be put in place to avoid such tragedies in the future.
Ethical issues on Stanford Group:
The Stanford Group scandal also demonstrates the role of played by
corporate culture and the impact it has on moral decision making, moral
awareness, moral intent and moral action which are the four crucial factors
which influence ethical conduct in an organization. People may vary in their
capacity for moral judgment and moral behavior. People like Allen Stanford in
leadership positions tend to have a high degree of confidence in their own
judgment that can readily lead to arrogance, over-optimism and an
escalation of commitment to choices that turn out to be wrong factually or
morally. As a result, people may ignore or suppress dissent, overestimate
their ability to rectify adverse consequences, and cover up mistakes by
denying, withholding, or even destroying information.

A persons ethical reasoning is also affected by the organization

structure and norms. Employees perceptions of unfairness in reward
systems, as well as leaders apparent lack of commitment to ethical
standards, increase the likelihood of unethical behavior. Another influence to
ethical conduct is the ethical climate i.e. the moral meanings that employees
give to workplace policies and practices. People tend to work better when
they believe that the workplace is treating them with dignity and rewarding
ethical conduct.
So, companies should consider the corporate culture because a
companys culture will impact the decisions of both employers and
employees when they face ethical dilemmas. Also, companies need to build
a robust ethics infrastructure and follow it on a daily basis. Lastly, companies
need to learn business ethics theories and models because these models
give out good ways of balancing the interests of related parties when faced
with an ethical dilemma.
Hence, to avoid another Stanford failure, companies should consider
whether they have a healthy business culture, whether they have a wellwritten code of ethics and also follow the code, and whether the employers
and employees have enough knowledge about business ethics.

Case II: HR Practice at BPO

Case Summary:
The case is basically about HR practices occurring at BPO and focuses
on the various relationships between the BPOs employees, HR Head, HR
Manager,

Operations

Manager

and

the

Supervisor.

The

main

issue

highlighted in the case revolves around six disgruntled shift-workers who

have a grievance that they are underpaid in comparison to other employees
who have joined the BPO after them. They give a day to the HR Manager to
sort this matter out but two days go by and the HR Manager does not attend
to their problem and they walk out a do not report to work. Somehow, the
operations manager patches things up and even gets them working longer
hours and also on weekends. As further time passes, the employees feel that
things have not changed from before and neither is the management
materializing their demand to hike their salaries and they have no idea
regarding the volume of work and also its period of time. The employees
want to quit the BPO but the management cannot afford to lose them. This is
at the crux of the case and what the response should be from the
management is the vital question that needs to be answered.
Theoretical context:
Employment Issues:
Employment issues pertain to various HR processes such as hiring, firing,
recruitment and compensation and benefits. The major dilemma facing HR
managers is regarding employee hiring and its basis. Also, cash and
compensation packages can also be problematic for HR managers in the
sense that employees should be paid fair wages.

Employers and employees rights and duties:

Employers and employees have responsibilities to each other and they
should also expect their rights to be upheld. These rights and responsibilities

relate to areas such as Health and Safety, the provision of Terms and
Conditions of Employment, Equal Opportunities and the right to be paid a
minimum wage.
Cash and Compensation Plans:
There are ethical issues pertaining to the salaries, executive perquisites and
the annual incentive plans etc. The HR manager is often under pressure to
raise the band of base salaries. There is increased pressure upon the HR
function to pay out more incentives to the top management and the
justification for the same is put as the need to retain the latter.
Employees health and safety responsibilities:
Employers have legal obligations to ensure a safe and healthy workplace. As
an employee, you have rights, and you have responsibilities for your own
wellbeing and that of your colleagues. An employee has the right to work in a
safe and healthy environment which are given to you by law, and generally
can't be changed or removed by the employer.
Labor unions:
An organization intended to represent the collective interests of workers in
negotiations with employers over wages, hours and working conditions.
Labor unions are often industry-specific and tend to be more common in
manufacturing, mining, construction, transportation and the public sector.
Ethical issues of HR Practice at BPO:
The heart of the case reflects the various rights, duties and obligations
employees and employers have to one another and the company. Employees
have the duty to perform their work in accordance with the employment
contract and must abide this contract at all times. Employees also have the
right to convey their feelings, thoughts and grievances to the management
and expect a positive response from the management in this regard.
Employees also have the right to a safe and conducive working environment.
With reference to the case, the disgruntled workers grievance is that they are
underpaid with respect to their juniors in the company. These employees do
have the right to fair wages and it is the responsibility of the HR manager,

HR head and Supervisor to ensure that employees have access to

appropriate wages. From the case, it is clear that the HR manager makes no
effort in reality to address the employees problems and turns a blind eye to
their

grievances.

However,

the

operations

manager

intervenes

and

convinces them to return to work and also manages to get them working
longer hours. But as time progresses, the employees remuneration show no
sign of increasing and they again threaten to quit. But the main culprit in this
case is the Supervisor who knows the problems of the youth and yet reserves
his judgment on the issue.
Employees discrimination is another aspect of the case though it is not
explicitly stated in the case. Employees should not be discriminated on the
basis of age, gender, religion, nationality etc. They should have access to fair
wages.
Another issue in the case refers to the formation of a labor union at the
BPO to ensure employees rights and duties and act as a messenger of
conveying employees grievances to the management. Unions in BPO are
very less common and as such, there is only one such labor union in West
Bengal. Formation of a labor union may not be in the interests of the
employees because they function under the law and they also monitor work
memos, attendance register, warnings etc given by the employer which may
be detrimental to the employees efforts of increase in remuneration.
Hence, the case is guided by the various roles, duties and rights that
both employers and employees have towards one another and the firm and
there are various insights as to whether the management or the employees
are performing in an ethical manner which can be matter for further
discussion.

Case III: The Privacy Dilemma

Case summary:
The case touches on the issue of privacy in different societies
throughout the world. The London-based Privacy International is an
organization dedicated to protect and promote the privacy of people, be it in
organizations or in societies. It ranks countries for the surveillance of their
respective societies. Developed countries seem to be the worst violators of
privacy in comparison to less developed countries. Surveillance is usually
carried out in public places like roads, airports, shopping centers and
supermarkets in the name of security. The excessive surveillance is practiced
to ensure safety and security and if surveillance not done, then danger is
imminent. Furthermore, economic development has the effect of increase in
surveillance of their employees to protect the interests of the company and
company endures losses when surveillance is not practiced. As the
necessities in the modern world increase, surveillance also increases and
privacy decreases.
The findings of Privacy International show that the trend in surveillance
is worsening and privacy protection safeguards are violated. Immigration in
developed countries have increased background checks in detail like use of
their identities, finger prints etc. Countries have started storing vast amount
of data of people entering the country and technology has made it easier for
instant collection of data, pictures and finger prints. The trend is that as
countries

develop

economically,

surveillance

practices

increase

and

surveillance is a very lucrative industry coming at the expense of peoples

privacy.
Theoretical context:
Privacy:
Privacy refers to an individuals right to be free from intrusion or interference
by others. It is a fundamental right in a free and democratic society.
Individuals have privacy interests in relation to their bodies, personal

information, expressed thoughts and opinions, personal communications with

others, and spaces they occupy.
Confidentiality:
The ethical duty of confidentiality refers to the obligation of an individual or
organization to safeguard entrusted information. The ethical duty of
confidentiality includes obligations to protect information from unauthorized
access, use, disclosure, modification, loss or theft.
Security:
Security refers to measures used to protect information. It includes physical,
administrative and technical safeguards. An individual or organization fulfils
its confidentiality duties, in part, by adopting and enforcing appropriate
security measures.
Types of Information:
Researchers may seek to collect, use, share and access different types of
information about participants. Such information may include personal
characteristics or other information about which an individual has a
reasonable

expectation

of

privacy

(e.g.,

age,

ethnicity,

educational

background, employment history, health history, life experience, religion,

social status).
Ethical issues of The Privacy Dilemma:
There is widespread agreement regarding the interests of people and
the protection of their privacy and the duties of countries and companies to
treat personal information in a confidential manner. The respect of peoples
privacy is an internationally accepted norm and ethical standard. The case
highlights the increased role of surveillance in economically developed
countries in the name of providing safety and security to its citizens.
Surveillance is necessary in countries but should not intrude the privacy of
the individuals by keeping personal information which should be kept
confidential. Also, companies increase surveillance of their employees in the
interest of the company but surveillance should be done in a balanced
manner so as not to interfere with the privacy of individuals and confidential

information like personal data. Furthermore, the advancement in technology

means it has become easier to store bulk amount of data than before with
the use of internet and other sources.
The question also arises regarding privacy as an ethical issue.
Excessive surveillance in the name of increased safety and security does
interfere with the privacy of individuals and is an ethical consideration.
Surveillance as such is not a bad thing as long as it undertaken in an
appropriate manner by not invading peoples privacy and not disclosing
confidential information of citizens, employees or individuals in general.
Hence, the depth of surveillance should be monitored so as to ensure
peoples safety and security keeping into consideration their right to privacy
and preventing confidential information from being disclosed.