University of Phoenix
Sep 28, 2010
Some organizational theories could explain the Enron’s failure. Looking at the organizational structure and management of Enron, The structures were flat before the bureaucratic structure developed, then the bureaucratic structures developed in order to increase control. There were vertical structures where there was high level of control and according to theories the organizational circle is moving back to flat structure. In Enron Corporation, internally it had such a highly decentralized financial control and decision making structure that made it impossible to get a clear view on the corporations' operations and activities. Along with a "decentralized" structure came a lack of corporate culture, lack of clear accountability, and lack of transparency.
When considering another theory, the management theory, the company survival depends on its capability to position operational resources to meet the expectations of its management as well as bankers and outside investors seeking profits. However, in c Enron’s case it had an operations management which positioned all it’s capacities to hide looses and show profits and stock prices increase. What was chocking that so many banks, accounting and low firms were plating along to maximize Enron’s profits such as the case of Nigerian power plants this 'operations management could not last.
Analyzing Enron failure. The relevant Leadership Theory to Enron was the "The Man with the Great idea” or the ‘Great Man’ Theory. Kenneth Lay then Jeffery Skilling both had the capacity for leadership, it was inherent. They were born leaders and they thought they would out smart everyone, or so called ‘the smartest guys in the room’. The stockholders believed that, they were leading the company to the top. Instead, they lied and deceived and this cost 30,000 people their jobs as well as billions of invested money. People at Enron...
References: Organizational Behavior: Managing People and Organizations
Ricky W. Griffin, Gregory Moorhead
The book The Smartest guys in the room
Cengage Learning, 2009
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