Enron : A Model Of The Innovative Company

Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.

The Enron corporation was an amalgamation of Houston Natural Gas and Internorth two of the largest natural gas suppliers in the United States. It was built upon the company 's ability to convince congress to deregulate the sale of natural gas through supplying electrical pieces at market prices. This allowed Enron to begin to sell power at higher prices therefore driving their revenue up. The company also began to spread its grasp out of natural gas and into a myriad of other power sources across the globe including water, pulp and paper plants. This was all done through a massive series of loopholes and massive amounts of money being funneled into Congress to lobby against regulations of such activities.

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

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

Enron was a business conglomerate during the 1990s, formed by the merger of smaller oil and energy companies. Houston executives Kenneth Lay (Chairman), Jeffrey Skilling (chief executive officer (CEO) and Andrew Fastow (chief financial officer (CFO) parlayed their new mega-company into a favorite Wall Street company, bragging of record profits with negligible losses. During the 1990s, the three senior executives changed Enron from a traditional gas and electricity company into a $150 billion energy corporation. For instance, from 1998 to 2000 only, Enron’s returns rose from approximately $31 billion to over $100 billion, making the company to be the seventh biggest conglomerate of the Fortune 500. Unidentified to nearly everybody, this picture was the result of one of the largest swindles in financial history (Ferrell, Fraedrich & Ferrell, 2013).

Enron was the result of a merger of Houston Natural Gas and Internorth. The company benefitted from being the first mover in their market, setting an internal growth strategy at an aggressive increase in revenue of 15% per year. “It became the largest energy trader in the world, with $40 billion in revenue in 1998, $60 billion in 1999, and

During the preceding years of Enron’s expansion, they discovered oil traders in New York that crippled the accounts of company to the amount of almost $1 billion. However, the company had treated the loss up to $142 million and due to that loss the corporation started developing various services so that it would reduce the risk of the price fluctuations.

Around this time the company was involved in horrible investments. They were buying ridiculous amounts of power plants, pipelines and other ventures which were over priced and not even going to be profitable. With Jay and Skilling wanting to continue this trend of growth “Enron turned itself into a factory for financial deeds that would pump its profit, protect its credit rating and drive up its stock price.” So Enron turned to its Financial Chief Officer Andrew Fastow who set up several partnerships. The very first one to note was called LJM1 which hedged risky stock investments.

In 1985 Houston Natural Gas merged with Internorth and renamed itself Enron. In 1990 Jeffrey Skilling was hired to focus on trading in commodities. Skilling later becomes the president of Enron in 1997. Andrew S. Fastow is named as Enron’s financial chief in 1998. According to the New York Times Fastow created partnerships which the company claimed were to buy company assets which were not performing very well. We now have come to realize that these partnerships were instituted in order to conceal the company’s debt and give an image of overinflated profits to the public (2006). In 2000 through 2000 there was shuffling around of key leadership. Skilling resigned citing personal reasons only. Six days later Sherron Watkins approaches CEO

Enron was a corporation that reached heights unknown, only to watch it fall apart from the inside out based on a foundation of falsehoods and cheating. Enron established a business culture that flourished on competition and was perceived in society as an arrogant corporation, mainly because of its corporate leadership. The fairytale of Enron actually ended as a nightmare with it destroyed by one of America’s largest bankruptcies in history. The demise of Enron impacted the livelihood and futures of numerous employees, their pensions, and in due course impacted Wall Street in a significant way. Even people today are amazed at how such a powerful company met its demise so rapidly. Enron’s end was a product of greed when certain executives of Enron were not eager to accept the failure of their company. The company utilized mark-to-market accounting that detailed the projected impending profits from a long-term deal (Lawry, 2015, p. 28) The results of the deals did not generate revenue as anticipated, but tremendous loss instead. This resulted in Enron accumulating enormous amounts of debt that they attempted to keep classified from the public. Ultimately the truth came to fruition.

Some of Enron’s overseas investments were unsuccessful which caused the company to incur losses. However, in a desperate attempt to satisfy its stakeholders, Enron

Numerous factors impacting Enron lead to perceived solutions exacerbating the issues and escalating the magnitude of fraud perpetuated. As time progressed Enron faced increasing competition while simultaneously enduring the effects of the beginning of economic recession. The above issue increased the pressure on executives to continue posting performance numbers despite the reality of outside

The following paper will explain the reason of why Enron as a company failed. It will compare and contrast the contributions of leadership, management and organizational structures to the failure.

Enron was originally a pipeline company in Houston, Texas in 1985. Enron became a company that was able to profit by providing deliveries of gas to utility companies and businesses. As the deregulation of electric power rose, Enron diversified the business and entered into an energy broker, which traded electricity and other types of commodities.

From a pipeline company in 1980 Enron grew into worls largest energy trader using the internet to buy and sell the natural gas and electric power supplies form utilities and indusrial power uses and helping them hedge against fluctuations against power price