MS-91 Ignou Assignmet 2011

Q4. How are principles of corporate social responsibility being followed by Amway?
Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests
of society by taking responsibility for the impact of their activities on customers, employees,
shareholders, communities and the environment in all aspects of their operations. This obligation
is seen to extend beyond the statutory obligation to comply with legislation and sees
organizations voluntarily taking further steps to improve the quality of life for employees and
their families as well as for the local community and society at large.
AMWAYS DELIVERS CORPORATE SOCIAL RESPONSIBILITY.

IBOs play a key part in helping Amway to deliver its Global Cause Programme.In order to give many
of the world’s children a chance to live a better life, Amway launched the global One by One campaign
for children in 2003. The One by One programme:
• helps Amway to bring its vision to life

• declares what the company stands for
• builds trust and respect in Amway brands
• establishes Corporate Social Responsibility at a high level.
Amway encourages staff and IBOs to support its One by One campaign for children. Since 2001,
Amway Europe has been an official partner of UNICEF and has been able to contribute over €2 million
(about £1.4 million). The focus is on supporting the worldwide ‘Immunisation Plus’ programme. This
involves, for example, providing measles vaccines to children across the globe. The ‘Plus’ is about
using the vehicle of immunisation to deliver other life-saving services for children. It is about making
health systems stronger and promoting activities that help communities and families to improve child-
care practices. For example the ‘Plus’ could include providing vitamin A supplements in countries
where there is vitamin A deficiency. Since 2001, Amway and its IBOs across Europe have been
supporting UNICEF’s child survival programme
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Q5.What do you understand by strategy? How does Amway develop and implement its strategy?
"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage
for the organisation through its configuration of resources within a challenging environment, to meet
the needs of markets and to fulfil stakeholder expectations".
In other words, strategy is about:
* Where is the business trying to get to in the long-term (direction)
* Which markets should a business compete in and what kind of activities are involved in such
markets? (markets; scope)
* How can the business perform better than the competition in those markets? (advantage)?
* What resources (skills, assets, finance, relationships, technical competence, facilities) are required in
order to be able to compete? (resources)?
* What external, environmental factors affect the businesses' ability to compete? (environment)?
* What are the values and expectations of those who have power in and around the business?
(stakeholders)
Strategy at Different Levels of a Business
Strategies exist at several levels in any organisation - ranging from the overall business (or group of
businesses) through to individuals working in it.
Corporate Strategy - is concerned with the overall purpose and scope of the business to meet
stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the
business and acts to guide strategic decision-making throughout the business. Corporate strategy is
often stated explicitly in a "mission statement".
Business Unit Strategy - is concerned more with how a business competes successfully in a particular
market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining
advantage over competitors, exploiting or creating new opportunities etc.
Operational Strategy - is concerned with how each part of the business is organised to deliver the
corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues
of resources, processes, people etc.
How Strategy is Managed - Strategic Management
In its broadest sense, strategic management is about taking "strategic decisions" - decisions that
answer the questions above.
THE COMPANY USES THE RATIONAL APPROACH.

in Decision Making
1. Define the problem
This is often where people struggle. They react to what they think the problem is. Instead, seek to
understand more about why you think there's a problem.
Defining the problem: (with input from yourself and others)
Ask yourself and others, the following questions:
a. What can you see that causes you to think there's a problem?
b. Where is it happening?
c. How is it happening?
d. When is it happening?
e. With whom is it happening? (HINT: Don't jump to "Who is causing the problem?" When we're
stressed, blaming is often one of our first reactions. To be an effective manager, you need to address
issues more than people.)
f. Why is it happening?
g. Write down a five-sentence description of the problem in terms of "The following should be
happening, but isn't ..." or "The following is happening and should be: ..." As much as possible, be
specific in your description, including what is happening, where, how, with whom and why. (It may be
helpful at this point to use a variety of research methods.
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Defining complex problems:
a. If the problem still seems overwhelming, break it down by repeating steps a-f until you have
descriptions of several related problems.
Verifying your understanding of the problems:
a. It helps a great deal to verify your problem analysis for conferring with a peer or someone else.
Prioritize the problems:
a. If you discover that you are looking at several related problems, then prioritize which ones you
should address first.
b. Note the difference between "important" and "urgent" problems. Often, what we consider to be
important problems to consider are really just urgent problems. Important problems deserve more
attention. For example, if you're continually answering "urgent" phone calls, then you've probably got
a more "important" problem and that's to design a system that screens and prioritizes your phone
calls.
Understand your role in the problem:
a. Your role in the problem can greatly influence how you perceive the role of others. For example, if
you're very stressed out, it'll probably look like others are, too, or, you may resort too quickly to
blaming and reprimanding others. Or, you are feel very guilty about your role in the problem, you may
ignore the accountabilities of others.
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2. Look at potential causes for the problem
a. It's amazing how much you don't know about what you don't know. Therefore, in this phase, it's
critical to get input from other people who notice the problem and who are effected by it.
b. It's often useful to collect input from other individuals one at a time (at least at first). Otherwise,
people tend to be inhibited about offering their impressions of the real causes of problems.
c. Write down what your opinions and what you've heard from others.
d. Regarding what you think might be performance problems associated with an employee, it's often
useful to seek advice from a peer or your supervisor in order to verify your impression of the problem.
e.Write down a description of the cause of the problem and in terms of what is happening, where,
when, how, with whom and why.
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3.Define the Goal or Objective
In a sense, every problem is a situation that prevents us from achieving previously determined goals.
If a personal goal is to lead a pleasant and meaningful life, then any situation that would prevent it is
viewed as a problem. Similarly, in a business situation, if a company objective is to operate profitably,
then problems are those occurrences which prevent the company from achieving its previously defined
profit objective. But an objective need not be a grand, overall goal of a business or an individual. It
may be quite narrow and specific. "I want to pay off the loan on my car by May," or "The plant must
produce 300 golf carts in the next two weeks," are more limited objectives. Thus, defining the
objective is the act of exactly describing the task or goal.
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4. Identify alternatives for approaches to resolve the problem
a. At this point, it's useful to keep others involved (unless you're facing a personal and/or employee
performance problem). Brainstorm for solutions to the problem. Very simply put, brainstorming is
collecting as many ideas as possible, then screening them to find the best idea. It's critical when
collecting the ideas to not pass any judgment on the ideas -- just write them down as you hear them.
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5. Select an approach to resolve the problem
When selecting the best approach, consider:
a. Which approach is the most likely to solve the problem for the long term?
b. Which approach is the most realistic to accomplish for now? Do you have the resources? Are they
affordable? Do you have enough time to implement the approach?
c. What is the extent of risk associated with each alternative?
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6. Plan the implementation of the best alternative (this is your action plan)
a. Carefully consider "What will the situation look like when the problem is solved?"
b. What steps should be taken to implement the best alternative to solving the problem? What
systems or processes should be changed in your organization, for example, a new policy or procedure?
Don't resort to solutions where someone is "just going to try harder".
c. How will you know if the steps are being followed or not? (these are your indicators of the success
of your plan)
d. What resources will you need in terms of people, money and facilities?
e. How much time will you need to implement the solution? Write a schedule that includes the start
and stop times, and when you expect to see certain indicators of success.
f. Who will primarily be responsible for ensuring implementation of the plan?
g. Write down the answers to the above questions and consider this as your action plan.
h. Communicate the plan to those who will involved in implementing it and, at least, to your
immediate supervisor.
(An important aspect of this step in the problem-solving process is continually observation and
feedback.)
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7. Monitor implementation of the plan
Monitor the indicators of success:
a. Are you seeing what you would expect from the indicators?
b. Will the plan be done according to schedule?
c. If the plan is not being followed as expected, then consider: Was the plan realistic? Are there
sufficient resources to accomplish the plan on schedule? Should more priority be placed on various
aspects of the plan? Should the plan be changed?
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8. Verify if the problem has been resolved or not
One of the best ways to verify if a problem has been solved or not is to resume normal operations in
the organization. Still, you should consider:
a. What changes should be made to avoid this type of problem in the future? Consider changes to
policies and procedures, training, etc.
b. Lastly, consider "What did you learn from this problem solving?" Consider new knowledge,
understanding and/or skills.
c. Consider writing a brief memo that highlights the success of the problem solving effort, and what
you learned as a result. Share it with your supervisor, peers and subordinates
=======================================================
FOR STRATEGIC DECISIONS, THE APPROACH IS AS FOLLOWS:
THE COMPANY ANALYSES THE FOLLOWING DATABASE

AND APPLYS THE PROBELM SOLVING/ DECISION
MAKING APPROACH / FINALIZES THE PLAN.
-apply the pestel analysis with respect TO ITS BUSINESS
1.Political (incl. Legal)
-Environmental regulations and protection

[what are the government regualtions/ protection laws that must be observed ]
-Tax policies
what tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions

[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection

[does the government enforce on consumer protection ]
-Employment laws]
[ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude

[ does the government have a very positive attitude towards this industry]
-Competition regulation
[ are there regulation for limiting competition]
-Political Stability
[ politically , does the government have a very stable government ]
-Safety regulations
[ has the government adopted some of the modern safety regulations]
===============================================================
==
2.Economic
-Economic growth
[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies

[ are the interest rates under control / is there a sound monetary policies]
-Government spending
[is government spending is significant and is it under control ]
-Unemployment policy
[what is the employment / unemployment policies of the government ]
-Taxation
[ has the taxation encouraged the industry ]
-Exchange rates
[ is there well managed exchange controls and is it helping the industry]
-Inflation rates
[ is the inflation well under control ]
-Stage of the business cycle

[ is your industry is on the growth pattern]
-Consumer confidence
[ is the consumer confidence is high/ strong and if not, why ]
==================================================
3.Social
-Income distribution
[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution

[ what is population growth and why ]
-Labor / social mobility

[ what are the labor policies and is there labor mobility]
-Lifestyle changes
[ are there significant lifestyle changes taking place--more modernization/ why ]
-Work/career and leisure attitudes

[ are the population career minded and are seeking better lifestyle]
-Education
[ what are the education policies / is it successful ]
-Fashion, hypes
[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety

[ are the people becoming health consciousness]
-Living conditions
[ is the living conditions improving fast and spreading rapidly]
=========================================================
4.Technological
Government research spending

[is the government spending on research and development]
Industry focus on technological effort

[are the industries focused on using improved technology]
New inventions and development

[ are new inventions being encouraged for developments]
Rate of technology transfer

[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology

[ is the information technology rapidly moving and is there government support]
(Changes in) Internet

[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology

[is the Mobile technology rapidly developing and is there government support]
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5.External Assessment---
Areas for opportunities and threats
* Markets [ what is the market situation, which is forcing the change requirements
*Customers [ how can service the customer -internal / external -better .
* Industry [ is the industry trend ]
* Competition [ is it the competitive situation
*Factors of business [ causing the change]
* Technology [ is it technology change ]
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STEP 6
CONDUCT A ''SWOT'' ANALYSIS OF THE COMPANY'S RESOURCES.

Internal Assessment
Areas for strengths, weaknesses, and barriers to success
ORGANIZATION DIMENSIONS
*Culture [ is the working culture change ]
* Organization [ is the organization demanding change ]
* Systems [ is it the systems change ]
* Management practices [ change in managemement process]
OTHER KEY DIMENSIONS
*Cost efficiency[ is it for cost efficiency ]

* Financial performance [ is it for financial performance improvement ]
* Quality [ is it for quality performance improvement
*Service [ is it for service performance improvement
*Technology[ is it for technology performance improvement
* Market segments [ is it for sales performance improvement
* Innovation[ is it for performance improvement
*new products[ is it for new product performance improvement
*Asset condition[ is it for financial performance improvement
*productivity[ is it for financial performance improvement
=====================================================
STEP 7
NOW THE CO. KNOWS WHERE IT STANDS.

PRIORITY ISSUES
FROM THE ABOVE , DETERMINE THE CORE ISSUES

WHICH NEEDS TO SOLVED WITH YOUR INVESTMENT.
STRATEGIC PROGRAMS
FROM THE ABOVE CORE ISSUES , DETERMINE YOUR

STRATEGIC PROGRAMS.
==================================
CORE ISSUES WERE
1.-change the organization structure to a matrix format,

to enable the product managers to concentrate on
product development/ planning/ product marketing.
-change the distribution systems to introduce

more channels to widen the market coverage.
========================================
Mission STATEMENT
[ to stay close to the customers and provide extended service]
Your CORE PURPOSE
[ to bring maximum satisfaction to the customers]
Your CORE OBJECTIVES

[to extend the market coverage and gain sales ]
Your Core markets;

[defence -major customers like mines-medium industries]
Your CORE strategic thrusts.

[ productline extension - extended market coverage-channel exploitation]
BUSINESS DEFINITION:
The arena of products, services, customers, technologies, distribution methods, and geography in
which you'll compete to get results.
-===================================================
STEP 8
WHERE DOES THE CO. WANTS TO GO

¬
THE COMPANY ARRIVES AT THE FOLLOWING
DECISIONS AT THE END OF THE SESSIONS:
1.REVENUE BUDGET.
[280 million dollars--maintain a growth rate of 20% over 3 successive years.]
2.GROSS PROFIT BUDGET.

[ aim for 35% of sales]
3.NET PROFIT BUDGET.

[aim for 10% of sales ]
4.SALES TOTAL FORECAST.

5.SALES BY PRODUCTS.
6.OPERATIONAL EXPENSES BUDGET.

[22% constant for next 3 years ]
7.FIXED EXPENSES BUDGET.

[13 % constant for next 3 years]
8.PRODUCTIVITY IMPROVEMENT
[over the next 3 years---3% annually]
9.PROFITABILITY INCREMENT
[over the next 3 years -----5%]
10. RETURN ON INVESTMENT.

[constant 6% over the next 3 years]
===========================================
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Q1. Identify the features of Corporate Philosophy and examine it with reference to an organisation
(Name and describe the organisation you are referring to).
corporate philosophy consists of the following four pillars:

• Roles to be assumed for society, customers, etc. (mission)
• Means of implementing the mission (business domain)
• Independent management style (management goals)
• Standards guiding employees in conducting business activities (action guidelines)
NTT DOCOMO is Japan's premier provider of leading-edge mobile voice, data and multimedia services.
With more than 57 million customers in Japan, the company is one of the world's largest mobile
communications operators.
DOCOMO also is an influential force in the continuing advancement of mobile technologies and
standards. In 1999, DOCOMO launched i-mode™, the world's most popular platform for mobile
Internet services including e-mail, browsing, downloading and more. Over 48 million DOCOMO
subscribers now use i-mode.
In 2001, DOCOMO introduced FOMA™, the world's first 3G commercial mobile service based on W-
CDMA, which has transformed the mobile landscape in Japan while bringing the DOCOMO brand global
recognition.
The role of mobile phones as "lifestyle tools" was cemented when DOCOMO launched Osaifu-Keitai™,
a mobile wallet platform enabling quick, contactless transactions for cash, credit, ID, and more. More
than 37 million phones equipped for Osaifu-Keitai services are now in use.
Building on a solid foundation of research and development, and guided by its customer-first
philosophy, the company leverages the power of mobile communications to enable customers to
enrich their lives.
DOCOMO is expanding its global reach through offices and subsidiaries in Asia, Europe and North
America, as well as strategic alliances with mobile and multimedia service providers in markets
worldwide.
Quick Facts
Established: August 1991
President and CEO: Ryuji Yamada
Headquarters: 2-11-1 Nagata-cho, Chiyoda-ku, Tokyo, Japan 100-6150
Capital: 949.68 billion yen
Employees: 23,409 (NTT DOCOMO Group)
CORE FOUNDATION
-corporate philosophy
-brand slogan
-corporate vision
-mid range strategy
Corporate Philosophy
With the aim of creating a new world of communications culture, we NTT DOCOMO will devote all the
skills, know-how and energy towards the establishment of more "personal communication" with our
customers that contributes to their heartfelt satisfaction.
A New World of Communications Culture
More personal communication
• Reliable access
• Real-time access
One-to-one “personal • Ecommunication
This gives birth to a new world of communications culture
• Freedom to enjoy communications anytime, anywhere with anyone
• Birth of customs and etiquette corresponding to the “personal access Eparadigm
• Opening of endless lifestyle horizons
To achieve this...
In order to create a world of more innovative and enriched communications, we will improve service
quality, aggressively move forward with the development of various services. We will also research
and develop a more advanced user-friendly communications interface, and at the same time we will
provide these services and technologies to an ever expanding area.
Customer Satisfaction
• Communications that are always ready when needed.
• Capability to contact whomever, from wherever and whenever the customer desires.
• Happiness that comes from heart-to-heart communications.
• Bringing customers another step closer to realizing their dreams.
• Responding to every customer with consideration, courtesy and thoroughness.
• Providing products that give customers easy and convenient access to cutting-edge functionality.
To achieve this...
First and foremost, we will fulfill expectations of customers by fulfilling our response to their needs
through improved service quality, building original networks, enriching functionality and expanding the
service area. In addition, by providing an expanding and ever-improving selection of services at
inexpensive rates, we will deliver satisfaction to a growing diversity of customers.
Making the most of the talents of each individual in our company
• Respect for the individuality and sense of values that are unique to each person.
• Enable internal corporate communication to flow free from vertical and horizontal organizational
barriers.
• Make the most of the ideas of each individual.
• Foster a corporate culture that is not restricted by conventional thinking and systems.
• Create a creative office environment that supports the fulfillment of the individual.
• Fostering an "open" corporate culture that welcomes the ideas and views of the individual.
• Evaluate personnel based on their merits.
• Build a company that overflows with a challenging spirit.
To achieve this...
By improving our system and programs for the enhancement of human resources and unifying our
human resource development, we will empower each individual to exert their skills to the utmost of
their capabilities and discover new potential. At the same time, we will strive to create a workplace
that motivates individuals through measures such as improvement of the working environment and
labor conditions and enhancement of health and welfare benefits.
Corporate vision
NTT DOCOMO, INC. introduced a new corporate vision in 2010, named “Pursuing Smart Innovation:
HEART,” under which the company will achieve new growth by delivering new value to customers and
ever-changing society.
In the first decade of the 21st century, DOCOMO implemented its former corporate vision,
“Challenging the Mobile Frontier: MAGIC,” to successfully create new communications culture by
delivering diverse services and enhanced value. Under its new vision, DOCOMO will leverage its
considerable powers of innovation to align its future growth with the challenges and opportunities of
the next 10 years, including accelerating globalization, environmental protection and the increasing
spread of broadband.
DOCOMO’s innovations will address the needs of society during a time when the use of mobile
technologies continues to diversify and the quality of communication continues to evolve, particularly
in the approaching era when mobile phones are owned by virtually everyone and are thoroughly
integrated with daily life.
Through its new corporate vision, DOCOMO intends to enhance the uniquely joyful and inspirational
qualities of mobile communication, as well as pioneer innovative new solutions for pressing social
issues. The company expects to partner with a broad range of companies to drive such innovation,
and thereby connect people and society in smart, innovative ways for enhanced quality of life.
Harmonize: Social contribution beyond borders, across generations
During this decade DOCOMO will continue to enhance and add values to industries and to our daily
lives through further evolution of mobile technologies. A society where the hearts of people resonate
and they can feel the richness of life – DOCOMO will contribute toward the realization of this vision.
Evolve: Evolution of service and network
Leveraging the vast array of technologies and knowhow we have accumulated in the mobile sector,
DOCOMO will continue to bring evolution to the high-speed, high-capacity broadband network, provide
easy-to-use services, and deliver seamless comfort where you are not even aware of devices or
connections.
Advance: Advance industries through convergence of services
A vast range of devices will be connected to the network in diverse ways in the coming years, bringing
ever-increasing convenience. DOCOMO will continue to help connect industries and services in the
network, and contribute toward smart innovation and advancement of industries and infrastructure
through convergence of services.
Relate: Creating joy through connections
People, materials and information connected freely and flexibly beyond time and space — through this
visionary world, DOCOMO will help people each day to express, enjoy and create knowledge and fun
that fit individual lifestyles, anywhere, anytime.
Trust: Support for safe, secure and comfortable living
Environment, healthcare, and education will continue to attract more attention in future society.
DOCOMO will connect expert knowledge and knowhow from diverse specialized fields to provide timely
assistance and support for greater safety, security and comfort in a broad range of daily activities.
SMART INNOVATIONS
Continuous change (innovation) for realization of a society where everyone can live a safe, secure,
and comfortable life, filled with richness, beyond borders, and across generations.
Corporate committments
With more than 100 million users in Japan, the market for mobile phones has entered a mature phase.
During the high-growth era, market demand was driven by early adopters, who want to be the first to
have all the latest features. Now that the spectrum of users is broader than ever, needs are much
more diverse.
In reflection of these changing market conditions, a new paradigm has been established: "the mobile
phone business has changed from being carrier-driven to user-driven." But diversification of customer
needs is not the only change facing the industry. We have also come to understand that product
differentiation is no longer a question of mere technology; in addition to appealing to users through
the latest technologies and features, growing importance is being placed on the ability to meet the
precise needs of each individual customer in terms of design, network quality, rates, and customer
service at the point of sale, among others.
In very simple terms, we conceive of DOCOMO as being a "relations service company" - a company
that helps strengthen ties between people, or between individuals and their lifestyles. Because mobile
communications has become so closely integrated into our daily lives, we have chosen to use the word
"relations" to express this concept of deeper personal relationships with other people and one's
environment. Positioning ourselves as a "relations service company" is also an expression of our
dedication to providing flexible, customer-focused service.
Creating relationships and connections that meet the needs of each individual customer represents a
new form of brand value for DOCOMO. To express this corporate vision more clearly, we have created
the following "New DOCOMO Commitments".
New DOCOMO Commitments
(1) We will revamp our brand and strengthen ties with our customers.
(2) We will actively seek out the voices and opinions of our customers so that we can continue to
exceed their expectations.
(3) We will continue to drive innovation so that we can earn the respect and admiration of people
worldwide.
(4) We will become an organization whose energetic staff is capable of overcoming all challenges in
pursuit of our corporate vision.
We will take specific steps to implement each of these four visions for change.
First, we will redefine our concept of the DOCOMO brand and its image, developing a brand statement
and corporate logo to embody this new vision. Among the concepts to be promoted through our
business activities is "Loyalty".
Next, we will solicit and implement feedback from customers so that we can continue to be a company
that both understands customer needs and exceeds their expectations. For this purpose, we will
reinforce all points of contact with customers; will reflect the opinions of front-line staff in our business
activities; and will create deep relationships with users of our services.
We are also driven to remain a company valued for its contributions around the globe. We will achieve
this by creating an environment that delivers convenience to customers worldwide; that fosters both
technological and operational innovation; and that reinforces our environment-related initiatives, such
as reduction of CO2 emissions.
Finally, we will continue to recruit a diversity of talent so that together we can effectively respond to
the increasingly more diversified needs of customers while adapting to changes in market conditions
and trends. We will also simplify our organizational structure, becoming a more nimble operation able
to respond flexibly to customer and market demands. Furthermore, we will energize our organization
so that all employees can work in unison toward a shared vision; to achieve this goal, we will
strengthen communication at all levels.
Looking ahead, we would like DOCOMO to continue to evolve as a company that consistently earns the
trust and loyalty of its customers
Corporate strategy
DOCOMO's future business direction is based on a new action plan, "DOCOMO's Change and Challenge
to Achieve New Growth," which covers initiatives to be implemented between the current fiscal year
2008 ending March 31, 2009 and fiscal year 2012 ending March 31, 2013. Under the plan, DOCOMO
aims to contribute to society's sustainable development and a safer, more secure environment for
people to lead enriched, convenient lives.
1.Basic philosophy
After a period of rapid expansion, the Japanese mobile communications market has entered a mature
phase. Now that total subscriptions exceed 100 million, it is difficult to expect further growth on a
significant level unless breakthroughs are made. In addition, customers' values have diversified and
their demands have become increasingly sophisticated.
Under such market circumstances, DOCOMO has implemented a thoroughly hands-on approach to
serving its customers, working to deliver the best possible service, safety and security to each user. At
the same time, the company has strived to exceed customer expectations by delivering on the pledges
made in its New DOCOMO Commitments proclamation.
DOCOMO believes that the market has potential for significant growth if services that take advantage
of unique mobile properties—such as real-time immediacy, personal authentication and locating
capabilities—can be developed in conjunction with the evolution of networks and handsets. The
increasing adoption of open-platform handsets and entry of new global players will produce new
services that transcend conventional boundaries and thereby propel further advancements and
diversification in the market. Perceiving this as an opportunity, DOCOMO intends to drive innovation in
collaboration with a wide range of partners on a global scale, committing the company to taking on
the challenge of creating new value by leveraging the virtually unlimited potential of mobile phones.
An overview of DOCOMO's future actions follows.
2.DOCOMO's Change
• (1) New DOCOMO Commitments and review of operational structure
• After DOCOMO's introduction of its New DOCOMO Commitments, the company, as first steps
towards implementing the "Change and Challenge" action plan, changed its corporate branding and
integrated its regional subsidiaries following a comprehensive review of operational structure.
• (2) Promotion of customer-focused marketing
• From the perspective of customer-focused marketing, the entire DOCOMO Group will join forces in
all aspects of business based on a hands-on approach to serving customers. The aim will be to earn
long-term customer loyalty by delivering the best possible service, safety and security to each
customer.
• (3) Steadfast implementation of actions for improved customer satisfaction
• DOCOMO will perform a comprehensive review of all operations—from customer relations to
handset and network development—to enhance customer satisfaction, aiming at being ranked No. 1 in
customer satisfaction by FY2010.
3.DOCOMO's Challenge
As mobile services and networks evolve, mobile phones will assume the role of assisting customers'
individual behavior, in addition to providing the means for communication, information access and
support for daily activities. DOCOMO will take on the challenge of advancing each of these roles.
DOCOMO will also contribute to the sustainable development of society by providing solutions to
pressing issues.
• (1) Personalization of services
• DOCOMO will deliver personalized services and functions that cater to the varying lifestyles and
needs of individual customers, and further enrich their lives.
• (2) Development of social-support services
• DOCOMO will launch new businesses in fields such as environment, ecology, safety, security and
health management for the sustainable growth ofsociety and the creation of value in these new
domains.
• (3) Provision of converged services
• DOCOMO will link mobile phones with various devices to provide convenient services tailored to
specific usage scenarios.
• (4) Evolution of video services
• Through collaboration with content providers, DOCOMO will support customers' lives and individual
behavior with value-added video services available uniquely on mobile phones.
• (5) Deployment of mobile broadband using LTE*1
• To facilitate a widening array of advanced mobile broadband services, DOCOMO will construct a
high-speed, low-latency, large-capacity network by implementing LTE from 2010.
• (6) Handset evolution
• DOCOMO will provide handsets and devices that better fit customers' specific needs. This will be
achieved through the adoption of open platforms, the enhancement of hardware and software
functions, and the diversification of designs and user interfaces.
• (7) Collaboration of handsets and networks
• DOCOMO will provide advanced services by optimizing the allocation of functions between handsets
and networks, in particular to leverage the high-speed, low-latency, large-capacity properties of its
LTE network.
• (8) Basic research aimed at new value creation
• DOCOMO will conduct research aimed at creating infrastructure that contributes to the
development of society and its economy, ultimately to realize a more affluent society that fully
leverages the advantageous characteristics of mobile communications.
• (9) Expansion of international businesses
• DOCOMO will expand its revenue streams from international business and achieve sustained
growth by strengthening its international service offerings and pursuing investments and alliances
mainly in the Asia-Pacific region.
• (10) New domestic investments and alliances
• DOCOMO will grow revenues and achieve sustained growth by creating new businesses and
reinforcing core businesses through the pursuit of investments and alliances in Japan.
4.Actions to strengthen core businesses
As the market matures in line with the increasing rate of mobile-phone penetration, DOCOMO will
strengthen ties with existing customers, cultivate new markets and continue to provide convenient,
attractive services with the aim of reinforcing its core businesses.
5.Improvement of cost efficiency
Under the plan, DOCOMO expects to achieve a 10% reduction in costs and expenses to solidify the
company's financial standing for sustained growth. Initiatives include the nationwide optimization of
operations and reduction of costs related to networks and sales.
6.Corporate Social Responsibility (CSR) Activities
DOCOMO will also contribute to society through initiatives to help protect the environment, promote
universal design products and services, and realize a safer, more secure mobile society.
7.Operating income and return to shareholders
Under the plan, DOCOMO expects to achieve over ¥900 billion in annual operating income in FY2012.
The company will also endeavor to maintain the highest level of payout ratio in Japan and stable
dividends.
*1 Abbreviation for Long Term Evolution. Also known as "Super3G" as proposed by DOCOMO or
"3.9G" mobile communications system.
Special Note Regarding Forward-Looking Statements
This Press Release contains forward-looking statements such as forecasts of results of operations,
management strategies, objectives and plans, forecasts of operational data such as expected number
of subscribers, and expected dividend payments. All forward-looking statements that are not historical
facts are based on management's current plans, expectations, assumptions and estimates based on
the information currently available. Some of the projected numbers in this report were derived using
certain assumptions that are indispensable for making such projections in addition to historical facts.
These forward-looking statements are subject to various known and unknown risks, uncertainties and
other factors that could cause our actual results to differ materially from those contained in or
suggested by any forward-looking statement. Potential risks and uncertainties include, without
limitation, the following:
1. As competition in the market becomes more fierce due to changes in the business environment
caused by Mobile Number Portability, new market entrants, competition from other cellular service
providers or other technologies, and other factors could limit our acquisition of new subscribers,
retention of existing subscribers, or may lead to diminishing ARPU or an increase in our costs and
expenses.
2. Current and new services, usage patterns, and sales schemes introduced by our corporate group
may not develop as planned, which could affect our financial condition and limit our growth.
3. The introduction or change of various laws or regulations or the application of such laws and
regulations to our corporate group could restrict our business operations, which may adversely affect
our financial condition and results of operations.
4. Limitations in the amount of frequency spectrum or facilities made available to us could negatively
affect our ability to maintain and improve our service quality and level of customer satisfaction.
5. The W-CDMA technology that we use for our 3G system and/or mobile multimedia services may
not be introduced by other overseas operators, which could limit our ability to offer international
services to our subscribers.
6. Our domestic and international investments, alliances and collaborations may not produce the
returns or provide the opportunities we expect.
7. As electronic payment capability and many other new features are built into our cellular phones,
and services of parties other than those belonging to our corporate group are provided through our
cellular handsets, potential problems resulting from malfunctions, defects or loss of handsets, or
imperfection of services provided by such other parties may arise, which could have an adverse effect
on our financial condition and results of operations.
8. Social problems that could be caused by misuse or misunderstanding of our products and services
may adversely affect our credibility or corporate image.
9. Inadequate handling of confidential business information including personal information by our
corporate group, contractors and other factors may adversely affect our credibility or corporate image.
10. Owners of intellectual property rights that are essential for our business execution may not grant
us the right to license or otherwise use such intellectual property rights on acceptable terms or at all,
which may limit our ability to offer certain technologies, products and/or services, and we may also be
held liable for damage compensation if we infringe the intellectual property rights of others.
11. Earthquakes, power shortages, malfunctioning of equipment, software bugs, computer viruses,
cyber attacks, hacking, unauthorized access and other problems could cause systems failures in the
networks required for the provision of service, disrupting our ability to offer services to our
subscribers, and may adversely affect our credibility or corporate image.
12. Concerns about wireless telecommunications health risks may adversely affect our financial
condition and results of operations.
13. Our parent company, Nippon Telegraph and Telephone Corporation (NTT), could exercise
influence that may not be in the interests of our other shareholders.
CSR INITIATIVES
-environmental protection
-safety and security
-consistent quality
-serving customers
ENRICHMENT, CONVENIENCE , SUSTAINABILITY.
TOWARD A CONNECTED FUTURE
What can NTT DOCOMO do to help move society towards sustainability?
It can develop and offer services based on the mobile phone, and by making connections, it can
continue finding ways to contribute to society.
Mobile phones have spread rapidly around the world in the past ten or more years.
Having both positive and negative aspects, these devices are continually creating change in our lives,
even as they themselves evolve.
The future of mobile phones is not for us to envision alone.
We would like to create the vision together with our stakeholders.
DOCOMO reaches out to join with its stakeholders and create a new culture of communication that
connects us with our goal of a sustainable society.
QUESTION 1 : EXPLAIN THE CONCEPT OF CORPORATE GOVERNANCE. WHY HAS IT BECOME
NECESSARY FOR BSUINESS HOUSE TO HAVE GOOD CORPORATE GOVERNANCE.
ANSWER : In recent years, corporate governance has received increased attention because
of high-profile scandals involving abuse of corporate power and, in some cases, alleged
criminal activity by corporate officers. An integral part of an effective corporate governance
regime includes provisions for civil or criminal prosecution of individuals who conduct
unethical or illegal acts in the name of the enterprise.
Corporate governance is a term that refers broadly to the rules, processes, or laws by which
businesses are operated, regulated, and controlled. The term can refer to internal factors
defined by the officers, stockholders or constitution of a corporation, as well as to external
forces such as consumer groups, clients, and government regulations.
Governance has proved an issue since people began to organize themselves for a common
purpose. How to ensure the power of organization is harnessed for the agreed purpose,
rather than diverted to some other purpose, is a constant theme. The institutions of
governance provide a framework within which the social and economic life of countries is
conducted. Corporate governance concerns the exercise of power in corporate entities. The
OECD provides the most authoritative functional definition of corporate governance:
A well-defined and enforced corporate governance provides a structure that, at least in
theory, works for the benefit of everyone concerned by ensuring that the enterprise adheres
to accepted ethical standards and best practices as well as to formal laws. To that end,
organizations have been formed at the regional, national, and global levels.
"Corporate governance is the system by which business corporations are directed and
controlled. The corporate governance structure specifies the distribution of rights and
responsibilities among different participants in the corporation, such as the board,
managers, shareholders and other stakeholders, and spells out the rules and procedures for
making decisions on corporate affairs. By doing this, it also provides the structure through
which the company objectives are set, and the means of attaining those objectives and
monitoring performance."
DEFINITION: HISTORICAL PERSPECTIVE :-

The concept of Corporate Governance has a long history. In the ancient times, when humans
roamed on this earth in tribes, there were tribal communes in existence. The activities of the
tribe as well as individual members were supervised by the tribal communes to ensure
adherence to tribal norms. Over a period of time, the tribal form gave rise to agrarian
communities where the concept of family took hold. The family had a structure based on age
and experience and the activities of the family members were viewed by the family councils.
In the Roman Empire, specific corporate bodies, such a municipal bodies were developed to
manage public affairs with transparency for common good. In the Middle East, the nomadic
tribes had their councils to ensure fair play and justice. The evolution of Christianity and
Islam in the Middle East placed the responsibility of governance on religions. The Church and
the Mullahs were the torchbearers of the concept and practice of governance.
In ancient India, the ruling emperors decided the concept and practice of governance. The
treatise on economic administration, Arthashastra, written roughly 315 years before Christ
developed a complete structure of governance in a kingdom with clear demarcation of
authority, responsibility and accountability. In the Far East, Japan and China also placed the
governance in the hands of their kings.
In the post Christ period, with improved navigation and availability of vessels, the traders
from Europe, especially the Portuguese and the Dutch explored the known expanse of the
earth and gave rise to global trading entities. These entities reported to the kings. This was
the beginning of corporate governance. As we approach the 16th century, the most powerful
trading nation, England, formed a variety of regulations and regulatory authorities such as
joint stock companies and Bank of England to govern all trading activities on a platform of
accountability, efficiency, effectiveness and stakeholders satisfaction. The concept of
corporate governance was the basic platform for these regulations and regulatory
authorities and over a period of time the concept and its practice took a firm root for all
activities.
The term Corporate Governance is not easy to define. The term governance relates to a
process of decision making and implementing the decisions in the interest of all
stakeholders. It basically relates to enhancement of corporate performance and ensures
proper accountability for management in the interest of all stakeholders. The Cadbury
Report of 1991 on Corporate Governance considers it as a system through which corporates
are guided and directed. On the basis of this definition, the Core Objectives of Corporate
Governance can be defined as under: • Strategic Focus • Predictability • Transparency •
Participation • Accountability • Efficiency & Effectiveness • Stakeholder Satisfaction The
Strategy Focus defines the direction the organization should take to meet its goals and to
ensure Stakeholder Satisfaction. The Strategic Focus should be based on Predictability as
the evolution of strategies have to consider the dynamic environment within which it has to
operate and hence the challenges from the environment need to be anticipated. A well-
designed process to evolve and deploy strategy has to have Transparency for all
stakeholders so that there is a commitment and an understanding of the result expected
from the operations. For proper execution of any processes aimed at achieving the desired
end result, Participation of all stakeholders is important and actually necessary. The
participation should have a clear goal of Efficiency and Effectiveness of the organization as a
whole and this where Accountability is the key. All stakeholders have to have a clear
understanding of their accountability for the most effective operations of any organization.
IMPLICATIONS OF CORPORATE GOVERNANCE :-
The purpose of Corporate Governance system is to assure that the managers of a
corporation maintain healthy and sustainable corporate performance over the long term,
thereby, resulting in a superior performance. Any organization having its CG practices in
place is a futuristic organization, laying the roadmap for its development. The present paper
looks into the framework of corporate governance and presents a case study on an Indian
Cooperative Sector which by following the norms of good governance has emerged to be No.
1. in the world.
However corporate governance has wider implications and is critical to economic and social
well being, firstly in providing the incentives and performance measures to achieve business
success, and secondly in providing the accountability and transparency to ensure the
equitable distribution of the resulting wealth. The significance of corporate governance for
the stability and equity of society is captured in the broader definition of the concept offered
by Sir Adrian Cadbury (2002): "Corporate governance is concerned with holding the balance
between economic and social goals and between individual and communal goals. The
governance framework is there to encourage the efficient use of resources and equally to
require accountability for the stewardship of those resources. The aim is to align as nearly
as possible the interests of individuals, corporations and society."
The current wave of reform of corporate governance commenced with the Cadbury Code of
Practice published by the London Stock Exchange in 1992; proceeded with an OECD inquiry
in 1997-99, and the publication of OECD guidelines on corporate governance which have
been adopted in national codes by all of the industrial countries, and with the assistance of
the World Bank and Asian development bank, by many developing countries. The urgency of
this endeavour was increased by the Asian financial crisis of 1997-98 that revealed the
danger of systemic corporate governance failure. These codes have been reinforced by the
influence of the market through investment institutions, and national regulators. Even with
the efforts towards comprehensive reform serious weaknesses in corporate governance still
occur as with the HIH Insurance and One-Tel collapse in Australia, and the failure of a series
of major corporations in the United States in 2001/2002 commencing with Enron and
WorldCom. It is likely interest in creating more robust institutions of corporate governance
will remain an important social and economic priority for some time to come.
EXCELLENCE IN CORPORATE GOVERNANCE :

For excellence in Corporate Governance, the most important processes one has to
concentrate on are: • Strategy Process, which provides: - A link between Strategy &
Operations, - Sets up a mechanism for Strategy Review • People Process, which provides: - A
link between People & Operations • Operations Process, which provides: - A link between
Strategy & People The link between Core Objectives of Corporate Governance and the
important processes is the structure of the corporate & the systems through which the
activities are organized and executed.
In the corporate sector, Corporate Governance is guided by a set of regulations. However,
for Non Governmental Organizations, (NGOs), there are no specific rules or regulations and
hence there is an urgent need to provide guidelines for Corporate Governance for their
effectiveness based on achievement of core objectives of Corporate Governance.
NON-GOVERNMENTAL ORGANISATIONS:
Non Governmental Organizations or NGOs have been defined by the World Bank as “private,
not for profit organizations that pursue activities to relieve suffering, promote the interests
of poor, protect the environment or undertake community development”. NGOs have also
been defined as “non profit making organizations outside of direct state Control”. The
definitions of NGOs identify the characteristics of these organizations as: • Independent of
any direct control of the government • It will not be constituted by any political party • It will
not have profit making as a goal • It will not conduct any illegal activities • It will be devoted
to managing resources & implementing projects with the objective of addressing social
problems
The NGOs have stakeholders such as individuals, trusts and corporates from where they
generate funding for their operations, the people for whose benefit the NGOs operate the
society at large and the employees of the organizations. The need for NGOs to be effective
and efficient is of the highest order and this is the area where Corporate Governance will be
the crucial differentiating factor between the success and failure of the NGO.
NGOs AND CORPORATE GOVERNANCE:
NGOs are managed by people who are genuinely interested in the objectives of their
organizations. They are compassionate, passionate, competent and dedicated to the cause.
However, in terms of results these organizations have some key differences as compared to
the organizations or corporates, which need to have efficiency & effectiveness for
profitability. The key differences are: • Lack of result orientation • Lack of uniform
accounting & financial practices • Lack of accountability
This is the precise area where Corporate Governance will lead the way. Corporate
Governance will help NGOs in: • Enhancing credibility through transparency • Ensuring that
all activities are aimed at achieving the vision & the mission of the organization • Ensuring
proper allocation of resources for essential activities • Setting up a good managerial process
that decentralizes authority and ensures decision making at the appropriate levels and at
the right time • Designing a system of rules and regulations for operations • Designing and
implementing a review mechanism for ensuring that the operations of the organization are
focused on the objectives of the NGO.
The challenges for NGOs today are increasing as the expectations from them are on the rise,
talent & passion is not freely available to them and increasing interference and demand for
interaction by governmental authorities. More often that not, NGOs also suffer from
conflicting goals. NGOs are often caught in issues such as expanding services to increase
coverage versus the desire to keep the operations in “manageable” proportions. Fund
raising without any strings attached from donors is another touchy area NGOs have to
address. This issue also casts a shadow on the sustainability and hence the very existence
of the NGO is threatened. Good Corporate Governance practices will certainly help NGOs in
addressing these challenges in near future.
For good corporate governance, each organization must identify its responsibility to each of
its stakeholders. In the case of an NGO in the healthcare segment, identification of
responsibility should be on the following basis:
To the Recipients:
• To ensure high quality medical care at affordable & fair prices or free • To ensure an
advisory service to educate the recipients about the medical issue and for post treatment
care • To ensure good service, ethical conduct and courtesy to the recipients • To ensure
continuous liaison between the recipients and the NGO
To the Society:
• To ensure contribution to the Society in most deserving areas • To ensure fairness in all
dealings through careful assessment and scrutiny and professional service • To ensure
maintenance as well as continuous improvement in the health amenities essential to the
society • To promote and participate in health related programmes for educating the society
and for improvement in the general well being
To the Employees:
• To provide all employees opportunity for meaningful work and adequate facilities for
development of their abilities and potential through proper training • To ensure
acknowledgement and appreciation for good work • To encourage and facilitate increased
association of the employees in decisions related to their work spheres • To provide best
possible conditions of employment through fair wages & working environment
To the Governing Body:
• To provide thorough and adequate information regarding the operations of the
organization • To ensure economic viability of the operations through sound financial
policies • To ensure continuation and growth of the operations through investing funds in
essential tools, facilities & infrastructure for the operations • To ensure proper dissemination
of information, research, innovation for expanding the operations in needy areas.
EXAMPLE :-
Now a days, there are numerous well-organized and well-run NGOs, information about the
corporate governance practices is not available nor is it forthcoming from such
organizations. On the other hand, information from the corporate sector on the practices of
corporate governance, which is generally referred to as Corporate Social Responsibility, is
amply available. The House of Tatas, the prominent business house in India, has developed
a framework for Corporate Social Responsibility for all their companies under the title: Tata
Code of Conduct. The clause 10 of the Tata Code of Conduct brings out the corporate
governance philosophy of the Tata Group brilliantly. The clause 10 states:
“ A Tata Company shall be committed to be a good corporate citizen not only in Compliance
with all relevant laws & regulations but also by actively assisting in the improvement of the
quality of life of the people in the communities in which it operates with the objective of
making them self-reliant. Such social responsibility would comprise of initiating & supporting
community initiatives in the fields of community health, family welfare, water management,
literacy, education and vocational training and encourage application of modern scientific
and material techniques & expertise. “ This will be reviewed periodically in consonance with
national and regional priorities. The company will not treat these activities as optional ones
but would strive to incorporate them as integral part of its Business Plan. “ The company will
also encourage volunteering amongst its employees & help them work in the communities.
All Tata companies are encouraged to develop social accounting systems and carry out
social audit of their operations.”
This clause sums up the objective and the direction of the Tata Group companies and also
makes such activities as a part of their key activities. In addition, it also provides guidelines
for monitoring & evaluation of the activities through a “ social audit”.
Corporate Governance in India : Post- Satyam the way ahead: What needs to be done ?
TITLE : Corporate Governance in India : Post – Satyam the way ahead : What needs to
be done?
Abstract
Corporate governance has been a topic of hot debate in developed countries like
U.K. & U.S.A. for the last two decades. With the opening up of economies, it has also been a
concern for developing country like India. This is because opening up of economies has changed
the scenario of Indian market i.e. on one hand, it has made the world market accessible to the
Indian corporates & on the other hand, it has increased competition in the domestic market with
the advent of the multinational companies. In this changed scenario, the quality of governance
has been an important factor not only for survival of the companies but also for influencing the
company’s ability to raise money from capital market. Again corporate governance is
important in Indian context because of the scams that occurred since liberalisation from 1991, for
e.g. the UTI scam, Ketan Parekh scam , Harshad Mehta scam, & the latest Satyam Fraud case.
In this paper, we will look into the historical background of corporate governance in
India, recent developments in corporate governance in India till date, issues related with respect
to corporate governance in India . We will also look into the latest & the biggest scam that had
occurred with respect to corporate governance i.e. The Satyam Fraud Case & will try to suggest
some solutions so that such frauds does not occur in the near future.
Keywords : Corporate governance, Satyam Fraud case.
1.0 INTRODUCTION :
The term ‘Corporate Governance’ has become a buzzword worldwide. According to
Vittal, N., this is because of two reasons. First is ,that after the collapse of Soviet Union & the
end of cold war in 1990 the concept of government controlling the commanding heights of the
economy has gone, instead the concept that market dynamics must prevail in the economic
matters has been the conventional wisdom that is accepted worldwide. Second reason is the
setting up of World Trade Organisation (WTO) as a means of promoting globalisation.
Globalisation involves the movement of four economic parameters namely financial capital in
terms of money invested in the capital markets, physical capital in terms of plant & machinery,
financial capital in terms of money invested in the Foreign Direct Investment (FDI) & labour
moving across national borders. According to Vittal, N., the pace of movement of the financial
capital has grown because of the world becoming a global village .
2.0 CORPORATE GOVERNANCE IN INDIA : A BRIEF HISTORY [PRE-

LIBERALIZATION i.e. PRE-1991] :
The historical development of Indian corporate laws are marked with many interesting
contrasts. For example at independence, India inherited one of the world’s poorest economies but
it had a factory sector which accounted for a tenth of the national product. India also had four
functioning stock markets and a banking system which had well-developed lending norms &
recovery procedure.[ Goswami, O. (2002) ]
Corporate development in India was marked by the managing agency system, which
contributed to the birth of dispersed equity ownership & also gave rise to the practice of
management enjoying controlling rights disproportionately greater than their stock ownership.
[ Goswami, O. (2002) ]
The enactment of 1951 Industries (Development & Regulation) Act & the 1956
Industrial Policy Resolution marked the beginning of a regime & culture of protection, licensing
& red tape that encouraged corruption & stilted the growth of the Indian corporate sector. Soon,
corruption, nepotism & inefficiency became the hallmark of Indian corporate sector.
[Chakrabarty, R., Megginson, W. & Yadav, P. (2007)]
The corporate bankruptcy & reorganisation system was also not free from
problems. In this regard, we should consider the SICA or the Sick Industrial Companies Act
1985 & the Board for Industrial & Financial Reconstruction (BIFR) . According to SICA, a
company is declared ‘sick’ only when its entire net worth has been eroded & it has been referred
to BIFR. The BIFR usually took over 2 years on average just to reach a decision with respect to
the companies. Only a few companies emerged successfully from the BIFR & the legal process
on average took more than 10 years by which the assets of the company were virtually worthless.
Thus, protection of the creditors’ rights existed only in paper & the bankruptcy process was
featured among the worst in the World Bank survey on business climate. [ Goswami, O.
(2002) ]
Again, although the Companies Act provided clear instruction for maintaining &
updating share registers but in reality minority shareholders often suffered from irregularities in
share transfers & registrations .For example, there were cases where the rights of the minority
shareholders were compromised by the management’s private deals in case of corporate
takeovers. [Chakrabarty, R., Megginson, W. & Yadav, P. (2007) ]
Thus it can be concluded that for most of the pre-liberalization era the Indian equity
markets were not sophisticated enough to exert effective control over the companies. Listing
requirements of exchanges provided some transparency but non-compliance was not rare & was
also not punished.
2.1 RECENT DEVLOPMENTS IN CORPORATE GOVERNANCE IN INDIA TILL

DATE [POST- LIBERALIZATION i.e. POST- 1991]:
Liberalization of the Indian economy began in 1991. Since then, there has been major
changes in both laws & regulations & in the corporate governance landscape.
(a) The most important development in the field of corporate governance & investor
protection has been the establishment of the Securities & Exchange Board of India (SEBI) in
1992. It has played a crucial role in establishing the basic minimum ground rules of corporate
conduct in India. [Chakrabarty, R., Megginson, W. & Yadav, P. (2007) ]
(b) The next significant event was the Confederation of Indian Industry (CII) Code for
Desirable Corporate Governance developed by a committee chaired by Rahul Bajaj . The
committee was formed in1996 & it submitted it’s recommendation on April 1998. [Chakrabarty,
R., Megginson, W. & Yadav, P. (2007)]
(c) Later two more committees were constituted by SEBI, one chaired by Kumar Mangalam
Birla & the other by Narayana Murthy. The Birla committee submitted its report on early 2000 &
the second committee submitted its report on 2003.The recommendation of these two
committees had been instrumental in bringing major changes in the corporate governance
through the formulation of Clause 49 of the Listing Agreement. [ Chakrabarty, R., Megginson,
W. & Yadav, P. (2007)]
(d) Along with SEBI, the Department of Company Affairs & The Ministry of Finance ,
Government of India, also took some initiatives for improving corporate governance in India.
For example, the establishment of a study group to operationalize the Birla Committee
recommendations in 2000, the Naresh Chandra Committee on Corporate Audit &
Governance in 2002 & the Expert Committee on Corporate Law (J.J. Irani Committee) in late
2004. [ Goswami, O. (2002) ]
(e) SEBI implemented the recommendations of the Birla Committee through the enactment of
Clause 49 of the Listing agreement. Clause 49, can be referred to as a milestone with respect to
the changes in corporate governance in India. It is similar to Sarbanes – Oxley Act (SOX) in U.S.
[Chakrabarty, R., Megginson, W. & Yadav, P. (2007)]
Clause 49 looks into the following matters :
(i) Composition of the board of the directors.

(ii) Composition & Functioning of the Audit Committee.
(iii) Governance & disclosures regarding subsidiary
companies.
(iv) Disclosures by the company.
(v) CEO/CFO certification of the financial results.
(vi) Reporting on corporate governance as part of the
annual report.
(vii) Certification of compliance of a company with the
provisions of Clause 49.
(f) The National Foundation for Corporate Governance (NFCG) was formed by the Ministry
of Corporate Affairs, Govt. of India, in partnership with Confederation of Indian Industry (CII),
Institute of Chartered Accountants of India (ICAI) & Institute of Company Secretaries of India
(ICSI) with the goal of promoting better corporate governance practices in India.
[http://www.nfcgindia.org/home.html]
3.0 ISSUES IN CORPORATE GOVERNANCE IN INDIA:
Corporate governance has been a topic of hot debate in developed countries like U.K. &
U.S.A. for the last two decades. With the opening up of economies ,it has also been a concern
for developing country like India. This is because, opening up of economies has changed the
scenario of Indian market i.e. on one hand, it has made the world market accessible to the Indian
corporates & on the other hand, it has increased competition in the domestic market with the
advent of the multinational companies. In this changed scenario, the quality of governance has
been an important factor not only for survival of the companies but also for influencing the
company’s ability to raise money from capital market.
Corporate governance is also important in Indian context because of the scams that
occurred since liberalisation from 1991, for e.g. the UTI scam, Ketan Parekh scam , Harshad
Mehta scam & the latest & the biggest of them all the Satyam Fraud scam .
Another reason, is that in emerging market like India when investments take place
investors want to verify that not only are the capital markets or the companies on which they
have invested run competently but they also have good corporate governance.
Another reason, is that it is believed that poor transparency & corporate governance
norms were one of the main reasons for the Asian crisis in 1997. And also because such crisis
have huge impact on the economy which can set a country several years back in its path to
development. [Vittal, N.]
Another reason, is that the legal & administrative environment in India provide
excellent scope for corrupt practices in business. [Vittal, N.]
According to Goswami, (2000), the research on corporate governance has remained in

its infancy in India because of opaque disclosure practices followed by Indian corporate sector.
However it should be noted that the corporate governance problems in India is

different from that in U.S. or U.K. The governance issue in U.S. or U.K. is that of disciplining
the management while the problem in the Indian corporate sector is that of disciplining the
dominant shareholder & protecting the minority shareholders .[Varma, J. (1997)]
4.0 THE SATYAM FRAUD CASE :
In one of the biggest frauds in India’s corporate history, B. Ramalinga Raju, founder &
CEO of Satyam Computers, India’s fourth largest IT services firm announced on January 7th,
2009 that his company has been falsifying accounts for years, overstating revenues & inflating
profits by $ 1 billion. The Satyam scam had been referred to as ‘India’s Enron’ by the experts.
[http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4344]
The admission of committing fraud & resignation by Raju showed that the company
had been feeding investors, shareholders, clients & employees a steady diet of untruth with
respect to its financial performance. Raju said in a letter addressed to the board, the stock
exchanges & SEBI that Satyam’s profit was inflated over several years to unmanageable
proportions & that it was forced to carry more assets & resources than its real operations.
According to Raju, ‘It was like riding a tiger not knowing how to get off without being eaten’
Raju’s departure was followed by resignation of the company’s CFO & appointment of
an interim CEO. Meanwhile, a team of auditors from SEBI began investigation into the fraud.
Also, since Satyam’s stocks were registered on the New York Stock Exchange along with the
Bombay Stock Exchange international regulators swung into action. Two US law firms filed
class- action law suits against Satyam. Satyam’s share price fell to Rs.11.50 on January 2009
compared to a high of Rs. 554 in 2008. In New York Stock Exchange also Satyam’s shares were
trading at .80 in March 2009 as compared to .10 in 2008.
Satyam fraud case had laid bare the complete lack of accountability in the company &
prompted questions about corporate governance practices of the company.
(A) ROLE OF THE BOARD:
Among the many shortcomings of the Satyam episode, the most significant one has
been the role of the independent directors who were supposed to safeguard the interest of all
stakeholders. While the three committees had explicitly mentioned the role, independence,
remuneration & responsibilities of independent directors the same did not translate into action
but was only on paper.
. [http://www.rediff.com/money/2009/jan/19satyam-what-india-must-do.htm. ]
According to Andrew Holland , CEO, equities Ambit capital, independent directors

should also be held accountable for board decisions & audit-related compliance practices.
[http://www.rediff.com/money/2009/jan/19satyam-what-india-must-do.htm].
(B) ROLE OF THE AUDITORS :
Although maximum focus in the Satyam episode was on the role of the independent
directors, experts believe the role of the auditors in this case Pricewaterhouse Coopers should
also be taken into account.
According to a fund manager, there should be a system similar to one adopted in case
of Public Sector Unit (PSU) banks where auditors are changed every three years.
[http://www.rediff.com/money/2009/jan/19satyam-what-india-must-do.htm.]
A major reason for the fallout of the Satyam case was the issue related to the delay in
implementation of Indian corporate laws. According to N.K. Jain , secretary & CEO of the
Institute of Company Secretaries of India, the need of the hour is to enforce corporate laws in
transparent, swift & uniform fashion.
[http://www.rediff.com/money/2009/jan/19satyam-what-india-must-do.htm]
(C) MINORITY SHAREHOLDERS :
According to experts, institutional investors have the tools, bandwidth & clout to
extract information & play an activist role in ensuring that management don’t go off track. If
institutional investors act collectively they can demand the required change in the companies
they have invested.
According to Anup Bagchi, executive director, Industrial Credit & Investment

Corporation of India (ICICI) Securities, although independent directors play an important role in
ensuring better risk management, it is the demand for good governance by institutional
shareholders which is the best driver towards higher governance standards.
(D) IMPACT ON BRAND INDIA :
The Satyam Fraud Scam had raised concerns about the potential damage to India’s
appeal to foreign investors & the IT services industry in particular.
According to Michael Useem, Wharton management Professor, one or two more

accounting scandals similar to Satyam will make the foreign investors wary about investing in
India.
On the other hand, corporate India had tried to control the damage. For example,
Rajeev Chandrasekhar , president of the Federation of Indian Chambers of Commerce &
Industry (FICCI), called upon regulators to move quickly to demonstrate that the Satyam was an
exceptional case among corporations & investors need not worry about Indian corporate
governance & accounting standards.
[http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4344 ]
Even though, Raju was widely blamed for unleashing India’s Enron, a major
difference between Enron & Satyam is that in Enron the CEO stonewalled, while whistleblowers
came out with the truth but in Satyam there were no whistle-blowers the CEO blew the whistle
on himself.
5.0 RECOMMENDATIONS :
1. SEBI should develop adequate expertise for analysing financial statements so that it is
able to detect fraud in the financial statements in the future.
2. The Institute of Chartered Accountants of India ( ICAI )or the Government should
encourage the development of a whistle-blowing committee so that anybody who finds anything
doubtful or fishy about a company should report against the same immediately to the
committee .
3. SEBI should reconsider its financial disclosure norms. A few years back SEBI suspended
sending of printed copy of audited balance sheets to the shareholders as a cost cutting measure.
In today’s world , it can be done easily by uploading the same in the internet.
Also Bankers & Rating Agencies can also then analyse the financial statements for
detecting fraud.
4. The ICAI should implement a rule, indicating that audit firms should be allowed to work
as auditors of large companies for a period of two years on a rotation basis in order to avoid
undue influence committed by the audit forms.
5. The SICA Act & BIFR should be banned with immediate effect . In India, SICA has
become so convenient for unscrupulous activities that industries become sick but not the owners.
[Vittal, N.]
6. The entire banking system & the Banking Secretary Act should be reviewed. In India, if
one borrows one lakh rupees one is afraid of the bank while on the other hand if one had
borrowed tweleve crore rupees the bank is afraid of the person. The Narasimham committee
recommendation about putting some conditions at the time of issuing new loans addresses these
problems to some extent. [Vittal, N.]
7. The Benami Transaction Prevention Act & The Prevention of Money Laundering Act,
should be encouraged in order to prevent fraudulent activities & also to ensure that corrupt
practices are effectively punished .[Vittal, N.]
6.0 CONCLUSION :
Thus, in this paper we have tried to see the historical background of corporate
governance in India, the developments in this field till date, the issues of corporate governance in
India, the Satyam Fraud case & also provided recommendations so that similar fraud does not
happen in the near future.
Thus , it can be concluded that while corporate governance framework in the

country is seen at par with the developed countries the same has to be implemented in letter as
well as spirit.
Also, shareholders should ensure that the composition of the board of directors is
a balanced mix of independent directors & management appointees as this would help to keep a
check on the internal process of a company.
Also, we should approach corporate governance issues in India not merely from
the point of view of the Companies Act or the guidelines issued by Birla committee, Murthy
Committee, but look at the entire network of various rules & regulations impinging on business
so that an integrated wholistic system is created to ensure that transparency & good corporate
governance prevail.
OR…………..ABSTRACT
In the wake of recent financial scandals and in the context of the global financial crisis, corporate
governance is especially significant. We examine the effect of corporate governance practices on
the performance of 106 mid-sized firms in India, between 2005 and 2007. Our results confirm a
significant relationship between CEO duality and firm performance. We also find that a small
board is more effective and enhances the value of the firm. However, in the Indian context, we
find that non-executive independent directors are failing in their monitoring role.
Keywords: corporate governance, non-executive directors, CEO duality, audit committees, board
size, Tobin's q
INTRODUCTION
Clich�d though it may sound, financial scandals the world over highlight the ever-growing
importance of corporate governance. Future scandals will continue to assure a focus on
governance issues - especially transparency and disclosure, control and accountability - and on
the most appropriate form of board structure that may be capable of preventing such scandals
occurring in future.
The relationship between corporate governance reforms and recession is cyclical, with waves of
reform and increased regulation occurring during periods of recession, corporate collapse and
reexamination of the viability of regulatory systems (Clarke, 2004). During long periods of
expansion, both companies and shareholders are concerned with the generation of wealth rather
than in ensuring governance mechanisms are working purposefully for the retention of wealth.
This leads to diminishment of active interest in governance.
The recent global financial crisis proves beyond a doubt that we are living in a global age and
has brought to the fore the relevance of a sound corporate governance system as an essential
element of effective risk-management. Though not the only cause, governance failings are
significant where boards fail to understand and manage risk, and tolerate perverse incentives.
The recent crisis highlights the need to develop more effective approaches to corporate
governance and risk management, as well as the importance of social responsibility in the
financial sector; the role that corporate governance can and should play is in restoring trust
(International Corporate Governance Network, 2008).
To some extent, shareholders may be criticized for not holding companies accountable, and it is
true that shareholders have encouraged companies to ramp up short-term returns through
leverage. However, regulators have often not responded decisively on realizing that markets
were mispric- ing risk, allowing bank boards to operate with too little capital, excessive leverage,
too much liquidity risk and poor mortgage lending practices.
There is an increasing perception that contagion and spill-over effects from the global financial
turmoil could undermine the economic achievements of any country. As a result, there has to be
an increased interaction between corporate governance and the stability and soundness of the
financial system.
Hence, corporate governance practice needs strengthening, in particular by increasing board
competence and responsibility. Board members need to have up-to-date knowledge on financial
issues and risk-management to fulfill their functions and training should it be required when
necessary. Boards should conduct annual evaluations of their performance and report to
shareholders. Risk management frameworks, processes, and implementation practices require
reform in order to redress the shortcomings revealed by the turmoil. It is vital that regulatory
reform augments corporate governance solutions without aggravating existing weaknesses.
We explore issues surrounding corporate governance in the context of the rapidly emerging
economy of India.
CORPORATE GOVERNANCE IN INDIA
The concept of corporate governance has attracted public attention for quite some time in India.
In 1996, the Confederation of Indian Industry (CII) initiated the first institutional evaluation of
corporate governance in Indian industry. The objective was to develop a code for corporate
governance to be adopted and followed by Indian firms, financial institutions and public
organizations. The 1999 Kumar Mangalam Birla Committee on Corporate Governance made
recommendations that define the responsibilities and obligations of boards and management in
instituting systems for good governance and emphasizes the rights of shareholders. The 2000
Task Force on Corporate Excellence through Governance recommended the phased
implementation of essential measures, depending upon the size and the capabilities of the
companies and market requirements. The Advisory Group on Corporate Governance: Standing
Committee on International Financial Standards and Codes 2001, laid emphasis on audit
committees and the appointment of truly independent directors to raise the quality of board
deliberations and performance. In 2002, the Reserve Bank set up the Consultative Group of
Directors of banks and financial institutions to review the supervisory role of boards of banks
and financial institutions, and to obtain feedback on the functioning of boards with respect to
compliance, transparency, disclosures, and audit committees. They also made recommendations
for making the role of the Board of Directors more effective with a view to minimizing risks and
overexposure. The Naresh Chandra Committee on Corporate Audit and Governance Committee
in 2002 recommended changes in areas such as the statutory auditor-company relationship, the
procedure for appointment of auditors and determination of audit fees, independence of auditing
functions and measures required to ensure that the management and companies actually present a
'true and fair' statement of the financial affairs of the company. The SEBI Committee on
Corporate Governance in 2003 discussed issues related to audit committees, audit reports,
independent directors, related parties, risk management, directorships and director compensation,
codes of conduct and financial disclosures. Finally, the Naresh Chandra Committee II on
Regulation of Private Companies and Partnerships was constituted to suggest a scientific and
rational regulatory environment, the hallmark of which is quality rather than quantity, of
regulation with particular reference to the Companies Act 1956 and the Indian Partnership Act
1932.
Developing a strategy
A strategy is an organisational plan. Implementing a strategy involves putting that plan into
action. In other words a strategy shows how a business will achieve its goals. The strategy thus
enables an organisation to turn its values into action. Values are what a company stands for. An
important value for Amway is being a caring company. Amway believes in demonstrating this
caring approach and this is why it has partnered with UNICEF.
All Directors design strategies for the whole of an organisation. Effective strategies involve
discussion and communication with others. The views of IBOs are influential in creating
strategies for Amway. Amway's strategies for corporate social responsibility are cascaded
through the organisation as shown below.
Amway's Global Cause strategy involves creating responsible plans that make a difference.
However, the strategy is flexible. In shaping the strategy, research was carried out to find out
which global causes IBOs support. The results showed that many favoured a cause that helped
children. There was a clear fit between Amway's aims to help children and UNICEF's
'Immunisation Plus' programme for children.
Objectives
From the outset, Amway set out some clear objectives for its strategy. These were to:
• build loyalty and pride among IBOs and employees
• enhance Amway's reputation as a caring organisation
• make a real difference to human lives.
Child mortality is particularly high in developing countries because of infectious diseases. Many
children could still be alive if they had been vaccinated.
For under £12 a child can be vaccinated against these diseases and has a fighting chance to reach
adulthood. UNICEF's world child 'Immunisation Plus' programme is a fitting focus for the
activities of Amway UK and its IBOs.
The UK initiative is part of a European-wide fundraising campaign for children. It recognises the
importance of building good working relationships with UNICEF in each market in order to
launch fundraising programmes through Amway's IBOs and their customers. The objective is to
raise €500,000 (about £350,000) every year until 2010 across Amway Europe.
In 2005 Amway UK's partnership was deepened through becoming an official Corporate Partner
of UNICEF UK. The Corporate Partnership is a closer longer-term relationship which benefits
both partners. Working together the two parties raise money for UNICEF.
Read more: http://www.thetimes100.co.uk/case-study--corporate-social-

responsibility--11-247-3.php#ixzz1Fk0lVkCP
Developing a strategy
A strategy is an organisational plan. Implementing a strategy involves putting that plan into
action. In other words a strategy shows how a business will achieve its goals. The strategy thus
enables an organisation to turn its values into action. Values are what a company stands for. An
important value for Amway is being a caring company. Amway believes in demonstrating this
caring approach and this is why it has partnered with UNICEF.
All Directors design strategies for the whole of an organisation. Effective strategies involve
discussion and communication with others. The views of IBOs are influential in creating
strategies for Amway. Amway’s strategies for corporate social responsibility are cascaded
through the organisation as shown below.
Amway’s Global Cause strategy involves creating responsible plans that make a difference.
However, the strategy is flexible. In shaping the strategy, research was carried out to find out
which global causes IBOs support. The results showed that many favoured a cause that helped
children. There was a clear fit between Amway’s aims to help children and UNICEF’s
‘Immunisation Plus’ programme for children.
Objectives
From the outset, Amway set out some clear objectives for its strategy. These were to:
• build loyalty and pride among IBOs and employees
• enhance Amway’s reputation as a caring organisation
• make a real difference to human lives.
Child mortality is particularly high in developing countries because of infectious diseases. Many
children could still be alive if they had been vaccinated.
For under £12 a child can be vaccinated against these diseases and has a fighting chance to reach
adulthood. UNICEF’s world child ‘Immunisation Plus’ programme is a fitting focus for the
activities of Amway UK and its IBOs.
The UK initiative is part of a European-wide fundraising campaign for children. It recognises the
importance of building good working relationships with UNICEF in each market in order to
launch fundraising programmes through Amway’s IBOs and their customers. The objective is to
raise €500,000 (about £350,000) every year until 2010 across Amway Europe.
In 2005 Amway UK’s partnership was deepened through becoming an official Corporate Partner
of UNICEF UK. The Corporate Partnership is a closer longer-term relationship which benefits
both partners. Working together the two parties raise money for UNICEF.
Identifying stakeholders
Amway’s Corporate Social Responsibility strategy has been developed with the interests of the
following stakeholders in mind:
Identifying stakeholders
Read more: http://www.thetimes100.co.uk/case-study--corporate-social-

responsibility--11-247-4.php#ixzz1Fk2WDfEb
Communicating the strategy

Good, clear communication is essential in making sure that the CSR strategy relates directly to
the company business objectives. Communication also helps in putting the strategy into practice.
A number of communications media are used:
1. Face-to-face communication: Regular meetings take place between UNICEF, Amway and its
IBOs. Through meetings with UNICEF staff, Amway is able to discuss the vision and objectives.
It then passes the message on by meeting with IBOs. In 2005 the two organisations arranged a
joint briefing day for IBO Leaders. They were able to hear firsthand experiences from UNICEF
staff about their roles and UNICEF’s work as well as where the money goes.
2. Printed material: Amway produces a monthly magazine for all IBOs called Amagram.
3. Public relations materials are also important, particularly at launch events for the initiative
(e.g. in Milton Keynes in 2006).
4. Email communication: Email is very important in the company – it plays a significant part in
keeping IBOs up-to-date.
5. Online activities: There is a micro-site dedicated to the Amway UK/UNICEF partnership on
the UNICEF UK website.
Fundraising
Amway Europe provides support for fundraising to the extent of €500,000 (about £350,000) per
year through selling items such as:
• greetings cards
• multi-cultural gifts and cards
• stationery and wrapping paper
• toys for children.
However, Amway UK’s support goes well beyond these activities. In addition, it involves staff
fundraising events and raffles organised by the IBOs. UNICEF attends IBO major events
(usually supported by 1,000 or more IBOs) where requested. A UNICEF stand outlines the work
with speakers, literature and merchandise.
Conclusion
Amway is a family business with family values. Its IBOs are people who want to make a
difference to the communities in which they operate and to the wider world community. This is
Corporate Social Responsibility (CSR) in action.
The clue to Amway’s success is the careful planning of its strategy and its involvement with
many stakeholders in getting the strategy right. Of course, it is early days in the latest chapter of
a strong relationship between Amway and UNICEF. Evaluation is taking place to measure the
success of the initiative in terms of meeting fundraising goals. Customer research is carried out
to test customers‘ views on the relationship and to find out how aware the general public is about
what Amway is doing in the field of CSR.
Based on Promise's founding spirit of "challenge to the limit the pursuit of ideal financing for the
general public", Promise has established "existential philosophy", "management philosophy" and
"action philosophy" as the three pillars of our corporate philosophy defining how a corporation should
conduct itself.
• Existential Philosophy
To work to become a trusted corporate citizen that supports people's affluent

lifestyles
• Management Philosophy
To work to generate appropriate level of profits through efficient management and

achieve sustainable growth
• Action Philosophy
To work to be appreciated by customers and cooperate with society to realize mutual

harmony and benefit together with employees
Declaration of Action
In view of the dramatic changes underway in the consumer finance industry due to implementation of
the Money Lending Business Law and other developments, we at Promise decided to renew our efforts
in practicing our corporate philosophy, toward the goal of sustainable development, and established
our Declaration of Action in January 2010.
• We hereby declare our promise to offer trust, satisfaction and innovation to our
customers and all of our stakeholders; our commitment to action is aimed at
becoming a company esteemed by its stakeholders.
Code of Ethics
Promise respects all stakeholders. To maintain social order as a corporate citizen, Promise has
established the 'Promise Code of Ethics', which makes the following promises to customers, business
partners, shareholders and investors, society, the environment and employees.
1.Our promise to our customers
Our customers are the most important element in our business activities. By ascertaining the
diversifying needs of our customers and proposing proactive solutions in response, we will work to
create new markets and provide high-quality services that our customers can use with complete
confidence and security. Furthermore, we will work to build relationships of mutual trust with our
customers, based on fair and honest business practices and a deep appreciation of their needs.
2.Our promise to our business partners
Our business activities are built upon the cooperation and assistance of our business partners in a
wide range of fields, including the procurement of funds necessary to provide service to our
customers. We work to build relationships of mutual trust with our business partners through fair and
proper business transactions.
3.Our promise to our investors
Our business activities are also based on funds received from shareholders and other investors. With
respect to our investors, we promise to conduct our business in a fair, equitable and efficient manner,
to work for corporate growth and to explain the contents of our business activities clearly and
honestly.
4.Our promise to society
Through our business activities and each and every one of our management executives and
employees, we maintain a deep relationship with society. In this sense, the society we live in provides
the foundation for our very existence. In order to contribute to sound social development as a good
corporate citizen, we will proactively take the initiative in social action programs, cultural programs
and activities designed to assist these agendas.
5.Our promise to the environment
We feel that one of our most important responsibilities as a good corporate citizen and neighbor is to
make society a better place to live by protecting our natural environment. As such, we will work to
implement environmentally friendly practices in all our business activities.
6.Our promise to our employees
At Promise, we respect the character and individuality of every single management officer and
employee. Through the implementation of a working environment, training agenda and human
resources system designed to let them realize their potential and display their talents to the fullest, we
will work to develop a corporate culture that is not only challenging, but satisfying and meaningful.
Code of Conduct
Everyone at Promise, including executives and employees, understand the importance of paying
attention to the smallest actions in order to maintain Promise's reputation as a company with high
ethical standards. With this in mind, we have established this code of conduct for everyone at Promise
as one element of the commitment to code of ethics.
Code of conduct for executives and employees
We will always conduct business activities in conformity with laws, regulations and the highest
standards of corporate ethics. We are dedicated to performing our jobs based on the sound judgment
that is expected of people who work at Promise. Through this approach, we will do our best to earn
recognition as a trustworthy corporate citizen and a company that cooperate with society to realize
mutual harmony and benefit.
 We will deepen our understanding of laws and regulations in Japan and other countries that
are associated with our business activities. Furthermore, we will establish internal regulations
in order to better ensure compliance with these laws and regulations. We will also use training
programs and other educational activities to be certain that everyone at Promise understands
the importance of compliance activities.
 With regard to confidential business information and customer credit information, we will
conduct a rigorous management program for the storage of this information as well as to
prevent leaks and the improper use of this information. Furthermore, we will never engage in
any actions that could be viewed as insider trading, such as buying and selling stock based on
internal information that has not been made public.
 We will treat information gained through business operations as an asset of the Company. The
confidentiality of this information will be maintained either during or after the term of
employment.
 We will never have any associations with corporate racketeer, members of organized crime
syndicate and other anti-social groups that represent threats to society and public safety.
 We will not allow any actions, such as illegal copying, that are detrimental with regard to
external confidential information and the rights of intellectual property holders. We will always
use legal methods to obtain and use this information and intellectual property.
 We will never take actions that exceed the authority that comes with his or her job when
performing tasks involving the acquisition, use and disposal of the Company's assets.
 Except when acting as private citizens, we will seek prior approval from the Company before
participating in political or ideological activities as executives or employees of Promise.
 To eliminate improper behavior and maintain a fair workplace environment, we will not permit
the receipt of monetary gifts within the Company other than gifts of reasonable amounts
associated with ceremonial functions.
The Principles We Stand On
- For people, society and the Earth -
As a diversified materials company, Mitsubishi Materials has contributed

to the creation of an affluent society through the supply of basic
materials indispensable for the world.
Today, our activities cover a wide range, from the manufacture of basic materials to
fabricated products and new materials with high-performance features, and further
to the provision of systems and engineering services.
To respond to the various needs of society, we are constantly tackling research and
development on new technologies and products and endeavor to provide ever more
superior products, systems and services to the world.
We will continue to address the requirements of the world in a new era, such as
technical innovation, development of information technology, globalization and a
heightened awareness of the environmental protection.
At the same time, we will carefully and efficiently use natural resources and raw
materials that are the gift of the Earth, and will support building social systems
based upon resource recycling.
It is thus our principles to serve people, society and the Earth through our varied
business activities.
• The 10 Articles of Our Code of Conduct

• CSR Declaration
• Environmental Policy
The 10 Articles of Our Code of Conduct

Article We will seek to create a Mitsubishi Materials Group receptive
1 to diverse personalities and value perceptions by
encouraging each member of the Group to be self-committed
and self-improving.
Article We will engage in efficient business management and pursue

2 sustainable corporate development.
Article We will respect the basic human rights of all people and
3 create a spirited, safe and comfortable work environment.
Article We will conduct fair and equitable business transactions by

4 providing safe, high-quality products, systems and services at
reasonable prices.
Article We will endeavor to secure the understanding and trust of

5 society, and will maintain a harmonious coexistence with
society.
Article We will comply with laws and regulations and conduct fair
6 business activities with common sense.
Article We will carry out our duties with integrity, in line with the
7 rules and standards established by the Company.
Article We will endeavor to protect the environment, and will apply

8 every measure for effective uses and recycling of natural
resources.
Article We will carry out proactive corporate communications and

9 respect the values and inherent rights of information.
Article We, as members of the international community, will

10 contribute to the development of each region where we
maintain a presence.
CSR Declaration
Building Trust in the Mitsubishi Materials Group
Since its foundation, the Mitsubishi Materials Group has worked tirelessly to enrich
society, by supplying basic materials indispensable to society as well as helping
reduce environmental impact and fostering recycling-based social systems.
In order to execute our business operations in a more active and uniformed manner,
the Management implemented "The Principles We Stand On" as the corporate
philosophy and "The 10 Articles of Our Code of Conduct" for the realization of this
philosophy.
Needless to say, the purpose of our corporate philosophy--"The Principles We
Stand On"--is to clearly convey the sincere intentions of our Group companies and
employees with regard to their contributions to society. I thus believe that the
practice of this corporate philosophy in our daily operations is the foundation of our
corporate social responsibility efforts. This will lead to not only sustaining our
corporate development but also achieving a mutually beneficial coexistence with
society.
In essence, we are returning to our roots, focusing on areas of improvement in order
to earn the long-term trust of our shareholders, employees, customers, suppliers,
communities and many other stakeholders.
The Management and every employee will draw on the Group's mission to
communicate more openly and effectively with stakeholders in its efforts to meet its
social responsibilities and enhance enterprise value.
At the same time, we will disclose information in an appropriate and timely manner
to fully demonstrate that the Mitsubishi Materials Group is an open and transparent
organization.
I hereby declare that the Mitsubishi Materials Group will make every concerted
effort to uphold its corporate social responsibility so that it can continue to help
make the world a better place through its operations.
April 2005
Akihiko Ide
President
Mitsubishi Materials Corporation
Environmental Policy
At Mitsubishi Materials we are committed to tackling the major issues such as
conserving and improving the environment. We are dedicated to developing an
advanced resource recycling society, aimed at sustainable development through the
supply and recycling of materials essential for our daily lives.
As a comprehensive materials manufacturer, Mitsubishi Materials supplys a variety
of key materials essential for industrial society. Our expertise covers the
manufacturing and processing of key materials such as cement, aluminum, copper,
and powder metallurgy products and tools, and the supply of cutting-edge products,
energy sources, high-performance materials, precious metals, and silicon.
These products and materials are indispensable in many areas of our daily lives.
Although in the materials business we produce a higher environmentalimpact
during the manufacturing process, at the same time we cancontribute to recycling
resources at the waste disposal stage.
We are committed to creating an environment-friendly recycling-orientedsociety
through our efforts for environmental conservation and theefficient use of resources
in our business activities.
To this end, centered around our green productivity management (GPM)activities,
we are committed to the following activities.
Specific measures:
1. Environment-conscious production and reduced environmental

impact:
Energy and resource conservation, reduced amounts of waste and

toxic substances
2. Recycling and recirculation of resources:
Waste recovery, and expansion of the waste treatment business
3. Development of eco-friendly products
4. Promotion of green procurement
5. Fostering of environmental management systems
(1) Complying with environment-related laws and regulations and

efforts to prevent pollution
(2) Periodically reviewing matters to be dealt with and targets for

constant improvement
(3) Improving communications with communities on

environmental issues
(4) Making our policy known to all our employees and introducing
environmental programs
Vision
Our vision is to continue to advance with vitality through imagination and

embracing a world view over the next decade. We endeavor to become a timeless
“One and Only” company, a pioneering institution free of limitations, capable of
conducting business in an innovate, unique, and industry-leading manner.
Our devotion is to allow people to enjoy the “Dream” created by leading edge
electronic technology.
Even if the electronics industry continually advances and develops, people would not
enjoy technology unless it can be felt by the five senses. We continue to offer electronic
products that make bridges between people and the ever-advancing electronic
technologies.
For this purpose, we strive to further develop the technology that we have cultivated
since our formation by procuring and maximizing the use of the finest resources at the
best locations to meet the needs of our times.
Management Principles
To realize our mission, we set forth the following seven items as a basic principle of
business management and activities.
1. We produce and sell electronic parts used by people throughout the world while
quality, efficiency in delivery and cost competitiveness are always recognized
world-wide.
2. Our directors and employees respect one another and prioritize the building of
strong relationships of mutual trust with our stakeholders.
3. We operate our company with the most suitable locations and employees.
4. We adopt the principle of ability first and do not discriminate based on ethnicity,
race, gender, age, belief, religion and/or physical disability.
5. We respect the manners, customs and laws of local regions in all our business
activities.
6. As global citizens, we positively participate in environmental conservation.
7. We strive through innovation to develop new products while our management
always envisions future generations of technology. We continually challenge
ourselves to grow and strive for the better.
Commitment
We promise to our stakeholders the following commitments under our “ Management

Principles”:
1. Customers
 We consider customer satisfaction perspectives at all times, and endeavor to

provide products and services of high quality with speed at appropriate prices.
 We never forget the presence of our customers, and respond to their requests
and questions with sincerity.
 We set “improvement of customer satisfaction” as the underlying objective to all
our activities, and judge all internally proposed policies and plans by its level of
contribution to this effort.
 We establish long-term and prosperous relationships with our clients, while
always taking a customer satisfaction perspective.
2. Shareholders
 We fulfill our responsibilities to our shareholders by increasing corporate value

through business activities, as well as by executing our dividend policy.
 We disclose our business activities and performance to our shareholders
speedily and accurately.
 We respect each shareholder’s ownership and ensure to maintain fairness
among them.
3. Employees
 We regard our employees as our most important resource, and strive to fully
appreciate each person’s individual value.
 We aim to be a borderless, transnational corporation in a true sense; we
guarantee fair treatment for our employees at all work locations, and promote
teamwork among them.
 We ensure prohibition of discrimination by ethnicity, race, gender, age, belief,
religion and/or physical disability.
 We assign appropriate and challenging work to employees according to their
ability and evaluate and reward them properly.
 We provide employees with safe, comfortable and productive working conditions
so that they can employ their abilities to the full.
 We continuously develop our human resources, encourage employees to
exercise their full potential and create relationships where both the corporation
and individual can grow together.
 Sumida will assist each employee in fulfilling his/her social responsibilities as a
citizen.
4. Suppliers
 We aims to establish stable and friendly long-term relationships with our

suppliers on the basis of mutual trust and prosperity.
 We procure optimum parts, materials, equipment, etc. based on our open door
policy and on a fair and free competition basis.
 We always try to have at least one second source for the sake of risk
management.
 We aim to proactively procure parts, materials, equipment, etc. from companies
that have well consideration to the environment.
 Procurement is carried out in compliance with applicable laws and regulations,
and under the terms and conditions set out in Purchasing Contracts.
5. Community
 We aim to grow in harmony with society through its business activities, and
contribute to its development and the overall economy.
 We firmly recognize the value of corporate citizenship, and aim to become a
corporation that is trusted by local communities and society by proactively
addressing the local issues around us.
 We continually support the future generations in which we place our hopes
through the Sumida & Ichiro Yawata Foundation.
 We uphold “Glocalization” (concurrently both global and local), and respect the
practices and cultures of the communities where we conduct business.
6. Other Stakeholders
（1）Local Government/Government Institutions
 We faithfully comply with the rules and regulations of the countries and regions
where we conduct business.
 We strive to establish and maintain good relations with local governments and
the public sector.
（2）Industry Relations
 We maintain a good and disciplined relationship with other companies in the

industry as well as industry organizations.
Code of Conduct
Sumida’s Code of Conduct is a document that illustrates our commitments to all

stakeholders as a set of formal written requirements. It embodies our Management
Principles and Commitment as defined that govern our corporate activities, formalizes
the standards of behavior expected and requested by Sumida and sets the guidelines
on how to handle various situations of business dealings.
It reminds us that Sumida is committed to acting with integrity and at the base of our
integrity is a set of ethical principles that includes honesty, trust, fairness and respect for
others. All of the decisions to be made and actions to be taken on behalf of Sumida
must adhere to such standards of integrity and ethical behavior and must comply with
all applicable laws, regulations and internal policies. The Code applies to all directors,
officers and employees of SUMIDA CORPORATION, its wholly owned subsidiaries, and
joint ventures in which Sumida holds a controlling interest.
1. General Standard
1.1 Respect for People and Human Rights
Sumida values its employees as the most important resource and is committed to
maintaining an environment of respect for people and human rights in all business
activities. We will not tolerate any discrimination on the basis of ethnicity, race, gender,
age, belief, religion and/or physical disability.
1.2 Ethics and Business Integrity
Sumida is committed to conducting all business with integrity, in accordance with its
business ethics. In our activities, we have our own business principles, that is, pursuit of
customer satisfaction, respect for safety, proper environmental management and
contribution to the social and economic development of the regions in which we do
business, so that we can always ensure trust from all people and societies.
1.3 Compliance with Legal Requirements and Company Policies
Sumida conducts its business activities in a global and diverse environment. We strive
to understand and respect diversity and difference of cultures and customs, and comply
with all applicable laws and regulations of each country and region in which we operate.
All directors, officers and employees of Sumida are requested to comply with all
applicable laws and regulations as well as internal company rules and policies with
regard to their business activities. All parties are responsible to understand the
necessary requirements as applied to one’s job. In performing these duties, the
Compliance Officer, Legal Department, Internal Auditor and Risk Management Officer
are available to provide advice and support to all.
1.4 Commitment to Sincere and Responsible Behavior
All directors, officials and employees are requested to be sincere, reliable and prompt in
performing their duties, to contrive to improve operations for rationalization and higher
efficiency, and to work with optimum use of physical and intellectual ability in
cooperation with others.
2. Employment
2.1 Equal Employment Opportunities
Sumida is committed to providing equal opportunity to all employees and applicants in

hiring, training and development without regard to ethnicity, race, gender, age, belief,
religion and/or physical disability.
2.2 No Forced Labor/Child Labor
Sumida uses neither form of forced, involuntary, nor child labor (the term ‘child’ is
defined in accordance with the laws of each country or region which stipulate the
youngest acceptable age for labor).
2.3 Sound Labor and Employment Practices
Sumida is a transnational company and so we guarantee fair treatment to our

employees without regard to their location of work. Teamwork is highly promoted among
all employees. We strive to create and maintain a sound, safe and productive
environment which is free from discriminative conduct that may result in a hostile
atmosphere, so that employees can exert their ability to its full degree. All directors,
officers and employees will make an utmost effort to create a fair and sound working
environment as well as comply with all applicable laws, regulations, internal rules and
policies.
3. Business Integrity
3.1 Prompt Response and Obligation to Notify
In addition to its commitment to daily business activities, Sumida is also committed to

responding sincerely, promptly and appropriately to those business and work related
emergencies, accidents, irregularities and unexpected events that could be damaging or
unbeneficial to our customers or Sumida. All directors, officers and employees are
requested to adhere to their obligation to ensure that appropriate action is taken to
prevent insincere conduct, inaccurate records, false reporting, etc.
3.2 Gifts and Entertainment
Sumida is committed to conducting business with integrity and fairness and avoiding all
unfair and improper dealings. While bribery is a serious criminal offence in many
countries, even under circumstances where it is not explicitly prohibited by local law, it is
our policy to prohibit any director, officer or employee from making gifts of cash value to
our customers, business partners, relevant government officials or other concerned
individuals concerned for the purpose of influencing any business activity. The
acceptance of cash, gifts or entertainment that may have undue influence to our
business decisions is also prohibited. All directors, officers and employees accordingly
are committed to abiding by all applicable laws and regulations in each country and
region, as well as the internal company rules and policies with regard to their individual
business activities.
3.3 Free Competition and Fair Commercial Transaction
Sumida is committed to compliance with all applicable antitrust, competition and fair
trade laws, policies and treaties of each country and region in all its business activities
and it is prohibited from any conduct restricting competition or unfair business dealing.
All directors, officers and employees must know, understand and comply with these
laws and are requested to consult with the Compliance Officer or legal council if they
are not certain in connection with the legitimacy of business arrangements.
3.4 The Protection of Intellectual Property Rights and Confidential/Personal

Information
3.4.1 Compliance of Laws and Regulations & Internal Rules of Each Sumida
Company
1. （1）All directors, officers and employees are expected and directed to comply
with the Law on Protection of Personal Information, and all other applicable laws
and regulations with regard to Information Security Management in each country
as well as the internal rules of Sumida.
2. （2）All directors, officers and employees should recognize the importance of
patent right, trademark right, copyright or other intellectual property rights, and
are prohibited from infringing such rights.
3. （3）All directors, officers and employees should recognize that when they
cause any damages to a third party by unauthorized leakage of business
information, not only will Sumida suffer the cost of such damages but the
responsible person may undertake further obligation to compensate such
damage to the company.
3.4.2 Secure Management of Customer Information
1. （1）All directors, officers and employees are prohibited from misusing or

making illegal copies of particular customer information or any information
entrusted by a customer (“Customer Information”) without permission.
2. （2）All directors, officers and employees are expected and limited to disclosing
Customer Information only to those who are permitted to use such information.
3. （3）All directors, officers and employees are expected and directed to manage
and treat Customer Information appropriately complying with the “Trade Secret
Management Policy” which sets out information management procedures.
3.4.3 Protection of Personal Information
1. （1）All directors, officers and employees should respect the private information
of individuals such as customers, employees of material suppliers, business
partners and themselves; and are requested to appropriately protect such
information.
All directors, officers and employees are expected and directed to manage and
treat personal information strictly complying with the “Personal Information
Management Policy” which sets out information management procedures.
3.5 Recording and Reporting of Accurate Information
All directors, officers and employees are requested to create and maintain all company
documents or records such as financial statements to reflect the business activities
accurately and fairly. They are also requested to cooperate fully with our internal and
external audits or investigations which are conducted in respect of the compliance
status and to make accurate reports based on facts.
4. Ethical Personal Conduct
4.1 Insider Transactions
Insider transactions (insider trading, insider dealing and stock tipping) are criminal
offenses in most countries where Sumida does business. Insider trading or dealing
means personally buying or selling stocks or other securities of any company while in
possession of material or price-sensitive non-public information (inside information)
about a company through their work. Stock tipping means disclosing inside information
about a company to another person such as a relative, colleague or friend that enables
that person to buy or sell stock or other securities of the company for a profit on the
basis of such information.
Sumida has established standards of conduct for our employees and others who obtain
inside information through their work for Sumida. All directors, officers and employees
are required to strictly comply with applicable laws as well as the “Rules for Regulation
of Insider Trading and Control of Inside Information” which sets out internal policies and
procedures for information management and proper dealings that request them to
refrain from trading Sumida stock at certain times and under certain conditions.
Nonetheless, these policies and procedures are not meant to restrict the freedom of
employees to make appropriate personal investments, or each company's right to
legitimately use and disclose inside information in the ordinary conduct of its business.
4.2 Conflict of Interest
All directors, officers and employees should avoid any situation which may lead to an
actual or perceived conflict of interest with Sumida. All business activities must be
conducted in accordance to the objectives of Sumida, and all business decisions must
be made ensuring that any situation which may impair or appear to impair the
independence of our judgment is avoided. When such a situation arises, they are
required to disclose the relevant information to their supervisors and the Compliance
Officer in writing in accordance to the applicable internal policies, and obtain prior
authorization before engaging in any further business activities.

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Q4. How are principles of corporate social responsibility being followed by Amway?

AMWAYS DELIVERS CORPORATE SOCIAL RESPONSIBILITY.

• helps Amway to bring its vision to life

THE COMPANY USES THE RATIONAL APPROACH.

THE COMPANY ANALYSES THE FOLLOWING DATABASE

1.Political (incl. Legal)

-Environmental regulations and protection

-International trade regulations and restrictions

-Contract enforcement law/Consumer protection

-Government organization / attitude

-Interest rates & monetary policies

-Stage of the business cycle

-Demographics, Population growth rates, Age distribution

-Labor / social mobility

-Work/career and leisure attitudes

-Health consciousness & welfare, feelings on safety

Government research spending

Industry focus on technological effort

New inventions and development

Rate of technology transfer

(Changes in) Information Technology

(Changes in) Internet

(Changes in) Mobile Technology

Areas for opportunities and threats

CONDUCT A ''SWOT'' ANALYSIS OF THE COMPANY'S RESOURCES.

Areas for strengths, weaknesses, and barriers to success

OTHER KEY DIMENSIONS

*Cost efficiency[ is it for cost efficiency ]

NOW THE CO. KNOWS WHERE IT STANDS.

FROM THE ABOVE , DETERMINE THE CORE ISSUES

FROM THE ABOVE CORE ISSUES , DETERMINE YOUR

1.-change the organization structure to a matrix format,

-change the distribution systems to introduce

Your CORE OBJECTIVES

Your Core markets;

Your CORE strategic thrusts.

WHERE DOES THE CO. WANTS TO GO

2.GROSS PROFIT BUDGET.

3.NET PROFIT BUDGET.

4.SALES TOTAL FORECAST.

6.OPERATIONAL EXPENSES BUDGET.

7.FIXED EXPENSES BUDGET.

10. RETURN ON INVESTMENT.

corporate philosophy consists of the following four pillars:

DEFINITION: HISTORICAL PERSPECTIVE :-

EXCELLENCE IN CORPORATE GOVERNANCE :

Keywords : Corporate governance, Satyam Fraud case.

2.0 CORPORATE GOVERNANCE IN INDIA : A BRIEF HISTORY [PRE-

2.1 RECENT DEVLOPMENTS IN CORPORATE GOVERNANCE IN INDIA TILL

Clause 49 looks into the following matters :

(i) Composition of the board of the directors.

(iii) Governance & disclosures regarding subsidiary

(iv) Disclosures by the company.

(v) CEO/CFO certification of the financial results.

(vi) Reporting on corporate governance as part of the

(vii) Certification of compliance of a company with the

provisions of Clause 49.

3.0 ISSUES IN CORPORATE GOVERNANCE IN INDIA:

According to Goswami, (2000), the research on corporate governance has remained in

However it should be noted that the corporate governance problems in India is

4.0 THE SATYAM FRAUD CASE :

(A) ROLE OF THE BOARD:

According to Andrew Holland , CEO, equities Ambit capital, independent directors