In the late 1990s, the state of California deregulated many af its electricity markets, opening them up to private sector energy companies. Enran Corparation had long lobbied for deregalation af soch markets and would hikely have profited greatly had California's experiment suCceeded and become a model for other states. Enron CEO and the chairiman of the Board of Directors Ken Lay wrote a public statement saying that Enron "believes in conducting basiness affairs in accordance with the highest ethical standards... your recognition of our ethical standards allows Enron employees to work with you via arm's length transactions and avoids potentially embarrassing and unethical situations." At the same time, Tim Belden, a key Enron employee in its energy trading group, noticed that California's "complex set of rules... are prone to gaming." Some Enron employees admitted that their schemes were "kind of squirrelly." but used them because they were profitable. The impact on customers was clear: electricity prices rose and rolling blackouts Occurred. Enron's profits, however, quadrupled. An Enron lawyer later wrote that the Enron traders did not think "they did anything wrong." Another employee admitted, "The attitude was, "play by your own nules.". The energy markets were new, immature, unsupervised. We took pride in getting around the ... rules." In October 2001, Enron's unethical and illegal business practices became public knowledge. Enron's stock prices plummeted, and the company filed for bankruptcy in December 2001. 1. Explain the Dilemma in the above case? 2. Explain the type of conflict shown in the case. 3. From corporate governance perspective, what is wrong with the structure of the company? Explain.
In the late 1990s, the state of California deregulated many af its electricity markets, opening them up to private sector energy companies. Enran Corparation had long lobbied for deregalation af soch markets and would hikely have profited greatly had California's experiment suCceeded and become a model for other states. Enron CEO and the chairiman of the Board of Directors Ken Lay wrote a public statement saying that Enron "believes in conducting basiness affairs in accordance with the highest ethical standards... your recognition of our ethical standards allows Enron employees to work with you via arm's length transactions and avoids potentially embarrassing and unethical situations." At the same time, Tim Belden, a key Enron employee in its energy trading group, noticed that California's "complex set of rules... are prone to gaming." Some Enron employees admitted that their schemes were "kind of squirrelly." but used them because they were profitable. The impact on customers was clear: electricity prices rose and rolling blackouts Occurred. Enron's profits, however, quadrupled. An Enron lawyer later wrote that the Enron traders did not think "they did anything wrong." Another employee admitted, "The attitude was, "play by your own nules.". The energy markets were new, immature, unsupervised. We took pride in getting around the ... rules." In October 2001, Enron's unethical and illegal business practices became public knowledge. Enron's stock prices plummeted, and the company filed for bankruptcy in December 2001. 1. Explain the Dilemma in the above case? 2. Explain the type of conflict shown in the case. 3. From corporate governance perspective, what is wrong with the structure of the company? Explain.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Please give me short answers. Please answer all 5 parts plz
Transcribed Image Text:In the Iate 1990s, the state of California deregulated many of its electricity markkets, apening them up
to private sector energy companies. Enran Corparation had long lobbied for deregalation of soch
markets and would hkely have profited greatly had California's experiment suCceeded and become a
model for other states
Earon CEO and the chairman of the Board of Directors Ken Lay wrote a public statement saying that
Earon "believes in conducting business affairs in accordance with the highest ethical standards... your
recognition of our ethical standards allows Enron employees to work with you via arm's length
transactions and avoids potentially embarrassing and unethical situations" At the same time, Tim
Belden, a key Enron employee in its energy trading group, noticed that California's "complex set of
rules...are prone to gaming."
Some Enron employees admitted that their schemes were "kind of squirrelly." but used them because
they were profitable. The impact on customers was clear: electricity prices rose and rolling blackouts
Occurred. Enron's profits, however, quadrupled. An Enron lawyer later wrote that the Enron traders did
not think "they did anything wrong." Another employee admitted, "The attitude was, "play by your own
rules.
The energy markets were new, immature, unsupervised. We took pride in getting around the
...
rules."
In October 2001, Enron's unethical and illegal business practices became public knowledge. Enron's
stock prices plummeted, and the company filed for bankruptcy in December 2001.
1. Explain the Dilemma in the above case?
2. Explain the type of conflict shown in the case.
3. From corporate governance perspective, what is wrong with the structure of the
company? Explain.
4. Is it ethical to blow the whistle in this case? Justify your answer based on the conditions
vou have learnt that make whistle blowing an ethical act.
5. Which department is concerned with the dilemma? How can this department solve
the dilemma conflict?/
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