In any business, leadership management’s responsibility is to provide a safe and comfortable working environment, using appropriate communication skills, operating with the highest possible ethical standards, being fair, provide compensation to the employees increasing motivation for the employees to work at his or her fullest potential. This paper will discuss Enron, and the business failure that occurred. At one time, Enron was one of the largest energy providers in America, based out of Houston, Texas. This paper will explain how specific organizational behavior theories could have predicted Enron’s failure. Also provide a comparison and contrast how leadership management and organizational structures contributed to the failure. Enron History
Enron was founded in 1985 by Kenneth Lay. Enron was formed by Mr. Lay” merging together his company, Houston Natural Gas, with Omaha, Nebraska’s InterNorth” (Reeher, 2013). Enron, with Mr. Lay as CEO, became highly profitable through further diversifying and expanding its assets such as electricity plants, paper and pulp plants, gas pipelines, and other services. During the 1990’s, Enron enjoyed a solid reputation for “old economy stability. Enron entered into the Internet. At its peak, Enron was worth about $70 billion and its shares were trading for about $90 each. Later the company stated that they had misstated its income, it was a couple of billion dollars less than what the balance sheet stated. Enron Scandal
During 2001, a series of revelations involving irregular accounting procedures bordering on fraud became public knowledge. Enron and its accounting company, Arthur Anderson, became center of a scandal. Due to a lack of revenue, Enron was forced to access a line of credit for $3 billion, downgrading the company’s debt rating. Due to this, Enron’s creditors feared that payment would not be made, decided to increase Enron’s payment schedules. On December 2, 2001, Enron was...
References: Reeher, J. (2013). The History of Enron. Retrieved from http://www.ehow.com/about_5401264_history-enron.html
Sarbanes-Oxley Act of 2002. (2013). Retrieved from http://www.investopedia.com/terms/sarbanesoxleyact
USA Today. (January 23, 2006). The Enron Trials: An Enron Chronology. Retrieved from http://usatoday30,ustoday.com/money/industries/energy-2006-1-23-enron-chronology_x.html
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