Enron Case Study

4789 Words Jun 17th, 2015 20 Pages
EXECUTIVE SUMMARY

This report will analyse the groupthink’s concerns in the collapse of Enron. The collapse of Enron is less than three months, which Enron from a very prosperous company to a bankrupt enterprise. The collapse of Enron is one of the most grievous business failures in United States. This disastrous business failure had causes a large number of employees lost their jobs and retirement savings. Groupthink leads groups to make faulty judgments.

Groupthink occurs when a group make wrong decisions as the pressures of group lead to deterioration of “mental efficiency, reality testing, and moral judgment”. There are several symptoms of groupthink. The issues to be resolved for Enron are collective rationalization, stereotypes
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The dramatic transformation of the Enron collapse is one of the striking features, which is in less than three months, Enron from a very prosperous company to a bankrupt enterprise. Janis (1972) claimed that group members unconsciously create the illusions of superiority to share and hinder the reality testing and critical reflection is caused by groupthink. Thus, groupthink leads groups to make faulty judgments.

1.1 Purpose of the report
The purpose of this report is to analyse the groupthink’s concerns in the collapse of Enron. The faulty decision that made by Enron directors, which will cause the collapse of Enron. In this report, these writers also have to analyse the symptoms, causes and solutions of the Enron collapse.

1.2 Company Background
Kenneth Lay is the founder of Enron. Enron founded in 1968 at Omaha, Nebraska.

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