Business Failure Essay

964 words - 4 pages

The company being analyzed in this paper will be Enron. Enron was involved in electrical, communications, pulp and paper, and natural gas. Regrettably in 2001 the company was on the brink of bankruptcy and even the offer to be purchased by Dynegy could not save the organization. Enron was in financial ruins when their stock dropped from $90.00 dollars per share to less than a dollar per share. As the organization crumpled a scandal was revealed involving the dealing between the accounting firm Arthur Anderson and Enron. While being investigated it was discovered that there were irregular accounting procedures done in the 1990's which included the manipulation of stock prices. Another area that was revealed during the scandal was the management and leadership issues within Enron. In this paper I will identify the failures of the management and leadership of Enron, and how by using correct and positive organizational behavior and leadership within a management team would have effected the now disgraced organization (chron).Within Enron the executive team wanted to establish an organization which would raise funds for their shareholders. However with the discovery of low stock prices the team decided to take aggressive measures towards their accounting methods, to make the shares pleasing. The team counted on a boost of new capital funds and hoped to cover up any risk to new backers. With the new accounting process in place it became necessary to continue the scam year after year. Regardless of the cover up, the executives of the company wanted to move forward (Time).Failure of leadership:During the years leading up to the demise of Enron the authority of the corporation did not implement their responsibilities. The committee over seeing the auditing of the financial records should have been judgmental on the work being done by the auditing staff, however with the continued increase in stock earnings the audit committee did not feel it needed to investigate the accounting practices being used. The board at Enron was also very lenient with supervising their management team and accepted what information was given to them from the executive team at face value with no questions being asked.Failure of Management:The employees unfortunately were also caught up in the downfall that Enron suffered. Enron employed over 100 employees just in their legal and accounting staff. It seems that the majority of these employees were working with the support of the managing team, who in turn was supported by the top executive. As with the leadership team the methods used by the employees were in no doubt used because of the high incentives they were receiving. The employees were receiving large salaries which helped to hide the large corporate debt while also reporting increased earnings. "The employees were behind the company and did not cause any problems regarding the methods that were being used" (CNN).Most states have laws that restrict how the structure of...

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