Enron Scandal

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Problem statement: What factors could have avoided Enron’s collapse? Environment Analysis • Political De-regulation in the energy markets: This deregulation across different parts of the world provided numerous opportunities to Enron to grow in various markets and diversify its investments. In many cases this deregulation was initiated by Enron itself. • Economic Competition within the auditor industry was increasing. Standardization of accounting procedures resulted in outsourcing of auditing work. This led to issues in transparency of outsourced work and to the scandals like the one in Enron. • Technological Internet was being used as a new medium of doing business. It helped in growth in the trading business SWOT Analysis of Enron Strengths Weaknesses • Largest seller of natural gas • Diversification into different industries • Asset light strategy which led to reduced capital requirement • High autonomy to employees • Attracted the ‘best and brightest’ in the industry by offering annual bonuses up…show more content…
This was to ease the operation of finance purchases only but as the time progressed, many SPEs were created at its discretion. Later on, few SPEs were created to disguise additional debt on books, which was done by putting debts in the accounts of SPE. Thus, this was omitted from the company’s books of accounts 5. Deregulation in the industry: The deregulation in the industry led to increased diversification by Enron. Instead of integrating vertically, it also diversified into unrelated businesses. Although, they had tools like RAC and DASH to review the business plan and assess their relations to Enron’s existing core businesses. But there was no limit set to the investments and acceptance of projects. This not only led to investment in many unrelated businesses but also piled on the losses. They had to ultimately write off the assets which contributed to the fall of Enron 6. Conflict of

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