Lessons Learned from Enron's Failure

957 WordsMay 23, 20084 Pages
The well-established company Enron, which was once ranked by Fortune as “the most innovative company in America” faced bankruptcy and thus the downfall of Enron. One of the causes of Enron’s failure is that there is a weak corporate governance of board of directors. Their lack of social responsibility from the 4 main criteria identified by Archie Carroll, which is economic, legal, ethical and discretionary responsibilities. They only want to make profits without taxes and move up, leaving all the details behind for worrying later. They are doing business using the classical view, where the management’s only responsibility in running a business is to maximize profit . Secondly, Enron’s fall was initiated by a flawed and failed corporate…show more content…
These broad guidelines can help ensure that scandals such as Enron’s would not happen again . Besides that, lessons that can be learned form Enron’s failure is to be careful on making the right or wrong choice, as there is always a first intentional misstep. This first misstep often involves a small transgression, but none are more important; because this small compromise or minimal transgression will almost always lead to worse conduct. Once you step over the line, it is difficult to go back to the right course. In Enron, because a manager made a bad decision, so he tries to cover it up. In fact, he should try to solve that problem critically, whether it is tax frauds or corporate offenses, otherwise, after the first misstep, it always gets easier and easier to continue these misconduct . Finally, the lessons that can be learned form Enron’s failure is learn to be satisfied with what you have legitimately earned, as greed is a vicious vice that can destroy you. If you judge success in life by what you can accumulate, you will never be fully content, as someone will always have more, your children or others will always want more from you, and therefore, you will never have enough. It is in the human nature to be greedy, but not until you have to take illegal actions to earn it. Consider this example, managers in Enron such as Jeffrey Skilling wanted to make more money and at the end, they received their punishments. Skilling was sentenced to 24 years in prison in
Open Document