The Rise and Fall of Energy Giant, Enron

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The Rise and fall of energy giant ‘ENRON’

Introduction:

The main aim of this essay is to analyse business ethics in the context of the Enron scandal. Enron scandal became notorious for violating ethical standards.
There are several business motives involved in the rise and fall of Enron. In today’s world, adopting ethical standards is a must for a company to protect shareholder’s interest. Even though the rules of playing business are obvious, still several companies adopt short cut mechanisms which work way against ethical standards. With that being said, let us take a look at the backdrop of Enron’s bankruptcy.
Birth and stardom of Enron
‘Enron’ was an American energy company formed by the merger of two pipeline companies namely, Intermonth and Houston Natural Gas (HNG) in 1985. Post-merger, Ken lay, 42 year old chairman of HNG became the CEO of Enron. Each division of the company later operated autonomously. The employees were given the freedom to determine their own bonus and salary plans. Immediately after becoming CEO, Lay hired Mckinsey and co to create an innovative financial product. By 1992, Enron became the North America’s largest seller of natural gas. Moreover, its gas contracts had an EBIT of $122 million, which was the second most contributors to the company's net income. In November 1999, Enron created Enron Online, a trading website to handle its trading business in a better way.
Post that, Enron diversified its business in variety of fields. The company owned and operated a variety of assets including gas pipelines, electricity plants, pulp and paper plants, water plants, and broadband services across the globe. Moreover, they made additional revenue by trading contracts for the same initial product portfoli...

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...evant.

It is also necessary to make sure that the employees who agreed to support those codes are continuing to do that. All of the written codes in the world will not make a difference if the management fails to use in practice the things mentioned in them. They must remain sensitive to other employees' racial and cultural differences, and assure employees that there are policies in place to prevent unethical behaviour.

Companies should learn how do adopt business practices that will encourage a healthy, rather than unhealthy competition, both internally and externally. The most successful global companies in current marketplace are already learning that truthfulness and honesty in all business transactions gives a very positive result. This is a lesson that Enron executives learned in a hard way. Luckily businesses following and will have much to improve upon.

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