Describe the Strategic Management Failure in Enron That Led It Into Its Demise?

1155 WordsNov 5, 20105 Pages
Do some research on the Internet about what has happened with Enron. Now apply the three questions used to test the merits of a winning strategy (text p13) to Enron. Describe the strategic management failure in Enron that led it into its demise? Enron was formed in 1986 from the merger of natural gas pipeline companies Houston Natural Gas and Internorth. At the time of filing for Chapter 11 Bankruptcy protection in December 2001, Enron had a portfolio of diversified activities ranging from the transportation of natural gas, the generation transmission and distribution of electricity; marketing of natural gas, electricity and other commodities and related risk management and financial services; development and operation of power plants…show more content…
Enron’s once aggressive accounting practices and market power that kept it safe from detailed scrutiny were unable to assist the Company any longer. Enron’s strategies in the early years were, I believe, both winning and fundamentally flawed at the same time. It’s difficult to know whether their desire for growth after the gas and oil sectors were deregulated allowing, supposedly, for more competition occurred as a consequence of personal greed and accounting malpractice or whether deception evolved over time..It is evident that uncontrolled growth without the necessary supporting structures in place to guide and direct such a growth is dangerous and unstable. It is apparent in the case of Enron that such structures were lacking. Responsibility for this must lie principally with Enron’s directors, but also with those responsible for independent external oversight, who it is clear failed in their responsibilities. Their strategies definitely fitted the Company’s situation, and were aligned along their strengths and weaknesses, allowing exceptional growth and results. However, there may be questions over the extent to which the Company’s activities became diversified. Furthermore it also allowed Enron what they may have thought to be a sustainable competitive advantage, though this was evidently false. Nobody

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