A Sad Tale: The Demise of Arthur Anderson - Essay Example

A Sad Tale, the Demise of Arthur Anderson College A Sad Tale, the Demise of Arthur Anderson Arthur Anderson was a major accounting firm that had win over the market through strategy and innovation. The firm employed technology to win and marketing strategy to win over many contractors leading to a rapid growth of the organization. However, the firm eventually collapsed as a result of poor strategic management at a time when competition was at its peak in the business environment. When the management failed to manage the tension between the audit and the consulting department, the organization lost employee trust.

The greed for high profits led to the loss of accountability, tension with the government and loss of corporate images. As a result, the organization lost customer loyalty and its competitors won over the market. The management of Anderson committed a number of mistakes that resulted in organizational failure. First, the company failed to manage the tension between the accounting and the consulting departments. As result, the employees of the accounting department who were perceived as inferior lost job security and lost commitment to work.

The “2X” strategy that required accountant obtain double amount in non-accounting sales oppressed this group. Secondly, the organization lost its integrity after committing accounting felonies. For instance, the organization overstated its profits by 60%. Thirdly, the organization played hard on the government after refusing to be investigated by the government. The loss on Anderson’s integrity lead to the loss of customer trust and most of them opted to move to other accounting firms (Brown & Dugan, 2002).

The loss of customers resulted in the failure of the organization as the organization’s profits declined at an alarming rate. The organization’s failure would have been avoided if the organization had strategic management strategies typical to the 21st century business environment. In a competitive business environment like one that Anderson operated, customer loyalty is a crucial factor for business success. To win customer loyalty, the management required to establish integrity and transparency in their daily business operations.

The organization should have avoided felony by remaining honest in its accounting figures. Also, it was crucial for the organization to admit to government investigation which would have seen the company regain its public audit customers (Brown & Dugan, 2002). Anderson’s loss of corporate image led to the loss of customer trust. Secondly, the company would have strived to maintain employee loyalty to sustain its performance. The organization treated the audit group as inferior workers leading to a feeling of job insecurity.

Employees who fear losing their jobs lose their long term commitment to the organization. The management would have opted to streamline its audit department rather than underpaying its employees. This way, the employee would have remained committed and innovative. In conclusion, Anderson’s failure resulted from its poor strategic management. The organization failed to manage tension between its departments and failed to uphold organizational integrity. This led to loss of employee and customer loyalty, leading to a decline in organizational profits.

Consequently, the customers opted to seek services from Anderson’s competitors. If the organization had remained transparent and efficient in managing interdepartmental relationships, Anderson would have remained strong in the market. ReferencesBrown, k., & Dugan, J., (2002). Arthur Anderon’s Fall from Grace is a Sad Tale of Greed and Miscues. Retrieved from:< http://bodurtha.georgetown.edu/enron/Arthur%20 Andersens%20Fall%20From%20Grace%20Is%20a%20Sad%20Tale%20of%20Greed%20and%20Miscues.htm>