Introduction "Change is hard because people overestimate the value of what they have and underestimate the value of what they may gain by giving that up" (Belasco & Stayer, 1993). Is the concept of “too big to fail" an accurate term in today’s economy, or does it depend on a company’s ability to undergo change and reinvent itself? More than a decade ago, it seemed almost impossible that the seventh largest company in the Unites States, Enron, would decline so quickly. As change agent, I will analyze the demise of Enron, conceptualize the reasoning behind their failure to undergo the change, and evaluate what changes would have had to take place in order to prevent the company from going bankrupt. Case Synopsis This essay goes over Enron’s background, identifies key issues in its demise, what changes should occur, and an evaluation of effectiveness of change. The background discusses how Enron was formed, employee demographics, organization strengths and weaknesses, the mission statement, and culture. Then I identify what went wrong with Enron at the individual level, group level, and total systems level. There were faults at every angle as Enron’s: mission, strategy, structure, and culture were all going in the wrong direction. After identifying the problematic areas, I suggested that there should be change action, which are revolutionary: at the total systems level, group level, and individual level. I also discuss the best way to implement these changes and the driving forces for and against the desired change. Part of identifying where this change had to be implemented included incorporating a phase model, where change can be implemented in a more structured way. There are various roles and responsibilities associate... ... middle of paper ... ..., R. (1993). Flight of the Buffalo: Soaring to Excellence, Learning to Let Employees Lead. New York: Hachette Book Group, Inc. Biggs, S., & Helms, L. B. (2007). The Practice of American Public Policymaking. New York: M.E. Sharpe, Inc. Bradley, R. L. (2008). Capitalism at Work: Business, Government, and Energy. Salem, MA: M & M Scrivener Press. Burke, W. W. (2014). Organization change: Theory and practice, 4 edition. Thousand Oaks, CA: SAGE Publications. Fox, L. (2003). Enron: The Rise and Fall. New Jersey: John Wiley & Sons, Inc. Garsten, C., & Hernes, T. (2009). Ethical Dilemmas in Management. New York: Taylor & Francis Group. Swartz, M., & Watkins, S. (2003). Power Failure: The Inside Story of The Collapse of Enron. New York: Random House, Inc. Wheelen, T. L., & Hunger, D. L. (2008). Strategic Management and Business Policy: Concepts and Cases. New York: Pearson.
A documentary film released in 2005 called the Smartest Guys in the Room reveals the shocking collapse of Enron. The Smartest Guys, Kenneth Lay, Jeff Skilling, Andrew Fastow, Lou Pai, Clifford Baxtor, and Arthur Anderson, were all involved with America’s ultimate Corporation Scandal. But who do we blame? Enron had over 20,000 employees and was founded by Kenneth Lay, CEO of Enron, in 1985. Lay wanted to push his views of deregulation which pushed him to start the company (SGR). The first event that happened leading up to the downfall was the president, Mr. Borget, and his traders manipulating the company’s earnings and exporting the profits to their personal account. When Lay made the decision to not fire them, it definitely raised the
Enron’s collapse occurred due to the fault of its executives who used their power in a wrong direction. They used information for their own gain and deluded their employees. Employees were obliged to put all their retirement plans into the stocks of Enron and at the moment of falling down of stocks, workers weren’t able to sell them, but heads could sell them any time. Enron’s positive reports were hiding downsides of the company only to hold their stocks at the ceiling level for a reason to get more investors. Enron’s failure caused by the greediness of its executives and the fact that no one stopped them and even favored in such crime. For example, their
Soon after this Enron successfully got electricity in California deregulated. They found loopholes in the rules and exploited them. Enron created power problems in California then blackmailed its residents with high prices. In time the west coast traders made nearly 2 billion dollars for Enron, betting that energy prices would go up and winning. Prices went through the roof, traders are on tape talking about definitely retiring by the time they were thirty. They zeroed in and made the state of California miserable and didn 't look beyond
Enron, which was the seventh largest company not so many years ago, was forced into bankruptcy in 2001 due to the collapse of their once successful organizational structure. Enron was seen and widely recognized as one of the most innovative companies of its time, and its downfall came as a great surprise to many. However, Enron’s consistent rise in profits did raise some eyes. In fact in that turned out that Enron had conducted millions dollars of accounting fraud. What set aside Enron from other companies was its aggressive organizational culture. It was seen as setting forth a “new economic religion” as mentioned in Enron: The Smartest Guys in the Room.
In many Universities today it is mandatory to take an ethics class. This is not to provide students with an ethical behavior but to provide education of companies that have found themselves in ethical predicaments and how they dealt with them. One of the most recent ethical issues that have taken place would be the Enron collapse. The Enron Corporation was founded in 1985 out of Houston, Texas and was one of the world 's major electricity, natural gas, communications, and pulp and paper companies that employed over 20,000 employees. With the help from Arthur Andersen the outside accounting firm and Vinson & Elkins Enron’s law firm, these three companies participated in an unethical practice that is still being dealt with today. This paper will
The Enron Corporation was born in the recession following the oil and energy crises of the 1970’s. Houston Natural Gas Company’s (HNG) CEO Kenneth Lay engineered a merger with Internorth Incorporated (Internorth) (Free, Macintosh, Stein, 2007, page 2), the CEO of Internorth, Samuel Segner, resigning six months following passing the title and responsibilities of CEO to Kenneth Lay. Enteron was born shortly afterwards as the HNG/Internorth merger rebranded first to Enteron then quickly shortening this to Enron in 1986. This newly formed company owned the second largest gas pipeline network in the US employing 15000 workers with $12.1 billion of assets; however alongside this came large amounts of debt with first year loss of $14million.During the initial years the newly formed company struggled as a traditional natural gas supplier within the regulated energy markets. The American governments change in policy regarding energy markets, with market deregulation being driven forward by new policy, opened up new possibilities for the struggling firm and paved the way to its rise to power.
Enron was formed following a merger between two natural gas companies in 1985, Houston Natural Gas and InterNorth.3 When Enron formed, it had accumulated a large sum of debt, roughly 2 billion dollars.4 As a result of deregulation, Enron no longer had the exclusive rights to its pipelines, resulting in the company hemorrhaging money. Kenneth Lay5, the chief executive officer (CEO) of Houston Natural Gas, became Enron’s CEO. Lay knew he had to quickly come up with a new innovation to keep the company afloat. Lay hired McKinsey & Company6 to help in coming up with a business strategy for Enron. McKinsey & Company assigned Jeffrey Skilling7 to Enron’s company as a consultant. Skilling, who had a background in banking, asset and liability management, came up with a solution to Enron’s financial crisis in the gas pipeline business. He said to create a “gas bank”, in which Enron would buy gas from a network of suppliers and sell it to a network of consumers, allowing them to control the supply and price of the gas. Enron’s debt was no more, and Lay was so impressed with Skilling, that he created a new d...
[4] NY Times, “Enron’s collapse: The overview; Enron Auditor Raises Specter of Crime”, Dec 2001.
Task 2. Using points from the discussion at the end of the Week 2 lecture on Enron: The
Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown.
The top executives of Enron were smart, successful individuals as well as the investors from the large financial institutions, corporate lawyers, and accountants from the largest accounting firm at the ...
Wheelen, T. L., & Hunger, J. D. (2012). Strategic Management and Business Policy: Towards Global Sustainability. Upper Saddle River, NJ: Prentice Hall.
Enron, once revered as juggernaut in corporate America, fought its way to top of the industrial world. In 1985, while climbing the ladder of success, Enron began its energy industry merger with two Houston companies (Sims, 2003, p. 243). Following the merger in 1998, the massive empire known as Enron solidified its powerhouse
Flood, M. (2005, April 26). The Fall of Enron. Houston Chronicle. Retrieved September 19, 2005 from
Oppel, Richard A., Jr., and Andrew Ross Sorkin. "Enron's Collapse: The Overview." New York Times 29