Business Failure Paper

The story of Enron is truly remarkable. As a company it merely controlled the electricity, natural gas and communications sectors of the world. It reported (key word, reported) revenues over one hundred billion US dollars and was presented America’s Most Innovative Company by Fortune magazine for six sequential years. But, with power comes greed and Enron from its inception employed people who set their eyes upon money, prestige, power or a combination of the three. The gluttony took over sectors which the company could not operate proficiently nor successfully.

WorldCom, for example, was facing a downward trend in their industry. The telecommunications company was going south, especially thanks to text messaging and the internet. In addition, the government denied them the ability to merge with Sprint (a $129 billion dollar merger), which quickly halted their growth. WorldCom had built a growth strategy built upon mergers and acquisitions, instead of growing product lines and larger marketing campaigns. So when the federal government denied their ability to grow large enough to discourage competition, they had to look elsewhere to increase shareholder profitability. Another venue of motivation was of course based upon the Fraud Triangle. This diagram or model consists of three things for one to commit fraud: pressure, opportunity, and rationalization. WorldCom had all three things – leading them straight towards disaster. The CFO was facing immense pressure from stakeholders and the executive board to increase profits (and growth), he had the opportunity as he controlled the books, and he either had justification or, more probably, a lack of ethics. Applying this triangle to Enron, all three factors were present. Enron was facing immense pressure to continue their standing as one of the top 10 fortune 500 companies, as well as continuing to be named one of the world’s most

Enron was facing risks, risks from every angle. You can see from the history to the demise of the company everything was based on risk. Even when it came to the personal lives of those in charge, you can find some type of risk. Being a Houston native, I did not quite understand the reaction to Enron. I did not understand why it went so far as to changing the name of a stadium from Enron to Minute Maid Park. I was only a teen at the time, but now I am not. I now hope to explain my opinion on how the past, the executive’s and outliers were red flags prior to the Enron crisis. My thoughts on how they could have handled the matter. Lastly, express what I would have done if I was an executive or general council to such a company.

Enron started as a sound company that had a promising future in the oil and energy business. The companies CEO and CFO were charged on 35 different accounts of fraud, conspiracy, and insider trading that cleared most of its employee’s retirement pensions and billions of dollars for others (Unknown, 2016). It is impossible to account for every transaction that a company will produce, but the revamping of government

Enron was one of the largest energy, commodities, and services company in the world. It was founded in 1985 and based in Huston, Texas. Before its bankruptcy on December 2, 2001, there are more than 20,000 staff and with claimed revenues nearly $101 billion during 2000. Enron was the rank 16 of Fortune 500 in 2000. In 2001 it revealed that Enron’s financial report was planned accounting fraud, known since as the Enron scandal. In the Enron scandal, Enron used fraudulent accounting practices to cover its fraud in reporting Enron’s financial information. Its purpose is to hide the significant liabilities from its financial statement. Enron tried to make its financial report with great revenue to attract more people to invest it. It continued to spread the information that advance its stock price continued to rise. In fact, Enron was with a large amount of liabilities and loss. The key executives of Enron continually spread the fake information of Enron’s financial report and kept encourage the people to buy its stock. They knew the real financial condition of Enron. They knew the outlook of Enron is not good, so they sold their stocks secretly to generate profit before the company bankruptcy. After the people knew that Enron had a large amount of loss, the stock price was drop from 90 dollars per share to just pennies. In addition, the bankrupt of Enron had a great effect in the California energy market. The bankrupt of Enron made California had a shortage of electricity

Now, let’s switch to negative part of the Enron and see what led this company to ethical violations. Because of an increased tough competition Enron started using international investments and diversification in order to keep its position. Some faulty decisions in management

Enron’s code of ethics was supposed to be based on respect, integrity, communication and excellence…most of the upper management failed on one or all of the codes. Lay and Skilling had little or no integrity based on their approval of the shoddy accounting practices. They had their own corporate culture driven by greed and intimidation. The top management was continuously aggressive in getting its employees to meet the sales objectives irrespective of ethical behavior. This aggressive earnings management style forces employee to try to accomplish goals regardless of the moral and ethical cost.

Enron was an energy company based in Houston, Texas that dealt with the energy trade on an international and domestic basis. Enron formed in 1985 when Houston Natural Gas merged with InterNorth. After several years of international and domestic expansion involving complicated deals and contracts, Enron became billions of dollars in debt. All of this debt was concealed from shareholders through partnerships with other companies, fraudulent accounting, and illegal loans. By 1989 Enron diversified into trading energy-related commodities. In a few years, Enron had become the largest merchant of energy in the United States. By 1994 Enron had

If the most troubling aspect of Enron was the way in which its employees were treated losing jobs, stocks, health and retirement benefits in the wake of its dissolution, then it is possible to backtrack from this event to list the many problems provided by the men that ran the company that allowed for such a travesty to happen. The duplicitous, and in some cases outright iniquitous business practices of this

Enron was a Houston based energy, commodities and services company. When people hear the name Enron they automatically associate their name with one of the biggest accounting and ethical scandals known to date. The documentary, “Enron: The Smartest Guys in the Room,” provides an in depth examination of Enron and the Enron scandal. The film does a wonderful job of depicting the downfall of Enron and how the corporate culture and ethics were key to Enron’s fall. As the movie suggests, Enron is “not a story about numbers, it is a story about people.”

Enron failed all governance system practices. They reported improper equity shares; they did not abide by the GAAP. Enron was a victim of profit and revenue at no cost. The Enron executives accounting staff, accounting firm and law firm made erroneous decisions just to keep their revenue incoming. They reported false financial reporting continuously, stockholders had great losses, employee retirement fund was depleted and they did not honor their code of ethics.

Enron was formed in 1985 after the merging two gas companies, Houston Natural Gas and Inner North. Under the supervision of chief executive officer, Kenneth Lay, Enron profited tremendously from the deregulation of the natural gas industry, which gained them substantial credibility on Wall Street (Watkins). In an attempt to achieve further growth, began investing billions of dollars in foreign projects and trading ventures (History.com Staff). Also, a team of executives was hired under the supervision of Jeff Skilling to speculate the market (Watkins). By 2001, Enron had become a conglomerate that both owned and operated gas pipelines, pulp and paper plants, broadband assets, electricity plants, and water plants internationally (Wall Street Club).

We will first consider COA 1. Enron at one time was a great company that hired good people that believed in doing things right, and they were known for being a model corporation. In fact in 1999 Enron was named by Fortune as "America 's Most

Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990’s, Enron was widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business.

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (1). In its 15 years of existence, Enron expanded its operations to provide products and services in the areas of electricity, natural gas as well as communications (9). Through its diversification, Enron would become known as a corporate America darling (9) and Fortune Magazine’s most innovative company for 5 years in a row (10). They reported extraordinary profits in a short amount of time. For example, in 1998 Enron shares were valued at a little over $20, while in mid-2000, those same shares were valued at just over $90 (10), the all-time high during the company’s existence (9).