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The Rise and fall of Enron - Research Paper Example

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Instructor Date The rise and fall of Enron Facts In the 1990s a business empire was in the making. A business empire with a very bright future was created. Its market shares were in high demand among investors. In some critic’s arguments, the situation was too good to be true…
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The Rise and fall of Enron
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"The Rise and fall of Enron"

Download file to see previous pages It turned out to be an empire every ambitious employee wanted to work for. With human resource demands, consumer demand and investor interest the empire cemented its position in the market as the best business empire ever created. The business empire was known as Enron Corp. Enron drew interest to all analysts and audit companies. Many analysts predicted a downfall of the Company. However, the downfall was long to come by as Enron made business contracts with many small organizations which reduced their risk exposure and increased asset worth. The predicted collapse of the company finally occurred. Form a market value share of $126 per share the share dropped to a record low below 30cents per share. The collapse was very big that no stakeholder in the company was spared. From employees, investors and partners all experienced the harsh conditions. The fall of the company drew criticism towards the government on its efforts to protect investors. The big fall formed the biggest debate in the corporate world up to date. With the increasing profits of the company a good management will be the only key to keep the company in its successful status. The growth of a company will reflect on the depth of loss it may incur. In the case of Enron the management was up to the task. The company enrolled top educated professions in the industry. With such a talented workforce the status of Enron seemed to be improving. However this was not the real picture behind the profit making company. The management created an internal conflict in the organization. The management came up with a cruel way or ranking employee performance. The ranking was to decide whether an individual will be fired all retained. Mr. Skilling the then director of operations defended the move saying it would improve the performance. Although the performance levels increased, the conflicts between employees opened up a venue of secrecy within the company. The employees ceased to work as a team as each employee sought to impress Skilling. According to the management they ranking systems made employees work harder. To the employees, the ranking dictated their performance since it would determine their fate in the company. False Impression The secrecy culture in the organization infested even the management. The company had looses in its account books but they were not made public. With the profile of the company still protected, more investors and customers became interested in the company. At the first instant the company was able to contain the loss in the finances without the public being informed. The company continued to venture into high risks investment without the consideration of the investments in its stocks and assets. In the 1990s the U.S market was at its peak and investment opportunities were opening up. With the great profile Enron had in the market, it could not resist the urge to invest. The company had inexperienced staff which was not able to compete in the peak season of the U.S market. The management again downplayed that fact and ventured into many investments in the period. Permitting organizational abuse After the resignation of the C.E.O Kennedy Lay, Skilling was appointed the C.E.O. From the change in the management of the company, games of personal interest took charge on the finances of the company. The share value dropped to $24 per share. In addition to these mistakes, the management still declined to release in public the financial report of the company. Mr. Skilling resigned as ...Download file to see next pagesRead More
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