An Expired Meat Looks So Nice - Essay Example

?An Expired Meat Looks so Nice Big companies attract a lot of public attention. It means more people would want to invest because the company is so successfull. But no matter how big the company, it will still go bankrupt if they have commited unethical business practice just to achieve their successs. The classic example of a big business that went bankrupt because of its fraudulent and unethical business practice is Enron. Enron has interest in providing energy and at some point, became one of the biggest American energy commodities and services from 1985-2001 in American. It has dominated the business world in many divisions such as; natural resources, plastics, power, steel, broadband and principal investments. The men who were responsible of Enron’s demise were Kenneth Lay, Jeffrey Skilling, and Andrew Fastow. According to the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs Enron commited high risk accounting, and disclose too many information about their cashflow. They hid their loss to attract investors for them to keep investing in the company. No one in the company reveal the truth until the social analyst starts to do some research because some of its data just do not make sense and found out the fraud that Enron had been committing. The company can had been falsely registering profit with its value increasing at a dizzying figure of 10 billion to 65 billion. But these unfounded profits have its price as it adversely affected the lives of those who invested in the company because they never got their money back. The fraudulent and unethical business practice of Enron can be traced back to its leadership. Leadership at Enron took a twisted turn when it became obsessed with increasing the value of its stock prices. Its sense of excellence also became crooked as reinforced and perpetuated by its leadership. It promoted a corporate culture of callousness when it arbitrarily ranked half of its employees as non-performer which it will eventually fire. The other half remaining may have remained in the company but adopted a corporate value system that is virulently greedy and fraudulent as promoted and reinforced by its leadership through its performance appraisals. The culture of a company is one of the basic aspect of an organization and often, its behaviors are often based on that corporate culture. At Enron, the company culture has a structure where they place the individuals who have a higher position at the upper level of the office, and ordinary workers who have less power in the company occupy the ground level of the office. This company structure reflects that people who can better adapt with Enron’s unethical business practice will control most of the activites, and create a decision and others who cannot will be relegated as subordinates. This culture of giving too much power on people who are unethical promotes the culture of fraud in th eorganization where greed is encouraged and money became the central value of the organization that they no longer care about the environment as long they gain money. As a company Enron does not have positive control environment “ the tone or culture of a firm the control environemnt sets the tone of organization, influencing its people”. (Hartman and Desjardin Pg. 539). In my point of view the negative control environment that Enron company sets it is to make their workers adapt with the situation of the company that they work 12 hours per day only thinking of how to make a billion profit to the company by doing fraudulent on the stakesholder. This practice alone of inducing employees to work all day long and forgo other aspects of their lives such as family and social lives is not healthy. Duty care does not also exist in its organizational structure. Kenneth Lay, Jeffrey Skilling, and Andrew Fastow does not apply the duty of care aspect to on their decision. “Duty of care involves the exercise of reasonalble care by board member... their management responsibilities and comply with the law”(Hartman&Desjardins Pg. 541). By forgeting this norm in the company it leads Enron into destruction. Jeffrey Skilling, Kenneth Lay, and Andrew Fastow instead teaches their employees to be greedy, to make money for the company even if they have to defraud their cash flows. The stakesholder who invest in Enron are employees who worked in the company, bank corporation such as Citibank, JP Morgan Chase Bank, society at large and the government. The increasing price of the stocks intrigue them to keep investing their money in Enron. During this time however that Enron had been committing fraud, it already meant that you have just burned your money for them because eventually the company’s unethical practices will be uncovered. They were in fact losing but instead reported it as profit by hiding their losses. The company appeared strong in paper ”not only did they lose most or all of their investment in these companies... massively overstated or losses had been hiden but also officers of the companies did not seem to suffer commensurately” (Prentice&Bredeson.Pg 36). Sherron Watson may have came as a whistle blower but I think that it is too late. The fraud and illegal activities that Enron had been doing were already beyond repair. Enron was already at a point that they make the power system like a gambling system where industries who were able to pay for the more power will be allocated with more electricity while others are given less by rolling a black out in California. Enron case can be one of the biggest lesson for the bussiness people in the world. Enron’s accounting fraud scandal can reflect that it is not beneficial for the company in the long run to commit fraud and promote a culture of unethical business practice. For the business to last, it should practice with utmost integrity so that the public will trust the company. Its culture has to be healthy and its books transparent and authentic. Kenneth Lay, Jeffrey Skilling, and Andrew Fastow just set a wrong business tradition and brainwashed their employees to do illegal activities. Even though some of the employees realize that the decision that the Enron’s leader were wrong, they cannot do anything because the company culture put too much pressure on them to conform to this unethical business practices. Until finally it was uncovered and the stakeholders who invested in Enron lost their moneys. Enron taught us not to trust too much on the reports of companies. In my perspective, this is also a lesson for the analysts of the New York Stock Exchange. They gave too much trust on Enron that they inadvertently contributed to Enron’s fraudlent business practice and only cared about its rising stock prices. People say that this issue can happen again in the future, but I believe if people become more aware of this issue, business will instead pursue honesty at work that there will be no more second Enron case. References Gibney, A. (2005). Enron: The Smartest Guys in the Room. New York, NY: Magnolia Pictures. Hamilton, S. (2003). Case study: The Enron collapse. In Ethical issues in business: A philosophical approach, 8th ed.. Edited by Thomas Donaldson and Patricia Werhane. Upper Saddle River, NJ: Pearson/ Prentice Hall. Hartman, L. P., & Desjardins, J. (2011). Business ethics: Decision making for personal integrity and social responsibility, 2nd edition. New York, NY: McGraw Hill Irwin. Permanent Subcommittee on Investigations of the Committee on Governmental Affairs United States Senate (2002). The Role of the Board of Directors in Enron’s Collapse. Washington, D.C. Prentice, R. (2010). Student guide to the Sarbanes-Oxley Act, 2nd Edition. Mason, OH: South- Western Cengage Learning. Hartman, L., & DesJardins, J. (2011). Business Ethics (Decision Making for aaaaaPersonal Integrity & Social Responsibility). 2nd ed. New York: McGraw-Hill. Read More