Case Study: The Enron Failure (Case)

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The Enron Failure (Case Study)

Enron Corporation was an American energy firm founded in Houston, Texas. It was formed by Kenneth Lay from a union (Houston Natural Gas and Internorth). Enron hired around 21000 people and was one of the world’s top electricity, natural gas, pulp and paper and communications firms with claimed incomes of $111 billion (2000). Enron was become the largest supplier of natural gas in North America in 1992. Enron was graded the most innovative large corporation in America.

Enron’s beliefs code was based on respect, honesty and communication. These values were described as follows:
Respect: They treat others as they would like to be treated their selves. They do not unmannerly behavior. Ruthlessness, cruelty and pride do not belong there.
Honesty: They work with customers with fairly and sincerely. When they say they will do something, they will do it.
Communication: They have duty to communicate. They believe that information is meant to exchange.

The Rise of Enron:

Through the late 1990s, Enron was nearly universally considered one of the country’s most innovative companies and the second largest supplier to the country’s net income. Enron has challenge to achieve further growth, Enron followed a divergence strategy. The company continued to build power plants and
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Enron went insolvent. The problem for Enron was that after some achievements, the traders began to have some financial failures and Enron was no longer making a profit. The losses could be enclosed up in a number of ways and the deficits enclosed by borrowing from Wall Street. Enron’s complex financial statements were unclear to shareholders and experts. In adding, its difficult business model and wrong practices required that the firm use accounting restrictions to misrepresent incomes and adjust the balance sheet to show favorable performance. The mixture of these issues caused the insolvency of the

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