Examining a Business Failure Enron

Topics: Management, Corporation, Enron Pages: 4 (1116 words) Published: January 18, 2013
Examining a Business Failure
The ability of a business to grow, produce good stakeholder value and maintain high ethical standards are challenging but paramount to successful and enduring businesses. Thus, business leaders must strive to establish good organizational and ethical standards within the company. The focus of this paper will be the failures of business leaders in a company called Enron. About Enron

Enron was a one of the most successful US-based energy companies in the 1980’s until its bankruptcy in 2001. Enron was a publicly traded company, registered with the New York Stock Exchange under the symbol of ENE. Enron’s stock price ranged from a high of $90 to a low of $.02 (Gilardi.Com, 2012). In its better days, Enron was praised by Fortune Magazine as one of the most innovative companies in the world (High Beam Research, 2002). Enron is now a defunct company after filing for bankruptcy protection in 2001. Its failure has become one of the most publicized and studied ethical, auditing and corporate governance malfunctions in recent times in US history. Enron’s Leadership Failure

Enron was a leading energy company; however, the excessive management dysfunction and lack of ethical behavior lead to it ultimate downfall. Enron, through its management’s decision failed on several accounts. First, it engaged in risky business practices. This includes risky commodity-based trading and other investments which fall outside Enron’s main business functions. Second, it coordinated efforts to hide its losses by creating special purpose vehicles and other “unrelated” entities that are outside the US. Enron created new entities that are not affiliated with its corporate structure. These entities were structured so that all the losses and write downs of the company were hid in another balance sheet separate from Enron. This enabled Enron to only take the gains and profits in its books and offset the losses in another entity, away from the public view. Third,...

References: High Beam Research (2002), Enron Near Top Fortune 500, Retrieved from:
Robbins, S. P., & Judge, T. A. (2007). Organizational behavior (14th ed.). Upper Saddle
Seabury, C. (2011), Enron: The Fall of a Wall Street Darling, Retrieved from:
Yukl, G. A. (2006). Leadership in organizations (7th ed.). Upper Saddle River, NJ:
Pearson/Prentice Hall.
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