The Rise and Fall of Enron

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Learning Outcomes
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LO 1

Understand the relationship between strategic management and leadership
1.1 Explain the link between strategic management and leadership

1.2 Analyze the impact of management and leadership styles on strategic decisions

1.3 Evaluate how leadership styles can be adapted to different situations LO 2

Be able to apply management and leadership theory to support organizational direction
2.1 review the impact that selected theories of management and leadership have on organizational strategy

2.2 create a leadership strategy that
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Enron took advantage of this and ventured into the power business, this resulted it being the bread and butter for the company, both as an energy company and a Wall Street type trading firm. Lay then employed Jeffery Skilling to further develop and redefine Enron’s business strategy. He proposed a new business model which was buying gas from suppliers and selling it to consumers. (Peter & Ross 2002) this resulted in profits due to guaranteed supply and sales price and eventually a fixed commission involved in the transactions (Thomas, 2002)

It is widely known that the influence along with the clearly exhibited leadership styles by Skilling who first served as the COO (Chief Operating Officer) and later went on to become the CEO, played a definitive role in leading the company to bankruptcy. According to Seabury, 2011, Skilling had a way of concealing financial loses of the company by adopting the marl to market accounting practice. Skillings also hired Andrew Fastow who created (SPE) Special Purpose Entities. SPEs were used to conceal low performing assets and to keep these off Enron’s financial books. SPEs were then compensated through shares in Enron.
Enron failed largely due to the unethical practices of its executives (Johnson, 2003) Primary motivators is known to have been greed amongst managers and their subordinates, most of whom seemed to have been in a race to receive larger
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