The Enron Companys Situation of Downfall - Case Study Example

Enron’s former CEO Jeffrey K. Skilling and ex CFO Andrew S. Fastow produced and carried out business thoughts that created major problems, that could not be solved either ethically or legally thus causing the downfall of the organization. For this purpose, the company was created to be an asset-light company as its risk management and trading skills were applied to assets heavy outsiders. In order to maintain its high credit rating and raising more capital, most of its assets were relocated by Enron into complex off-the-book special-purpose units.

The key players in this fraud, the top management, preferred their own short-term fiscal profits and stakeholder deceit that destroyed not only their business, social and personal reputations, and position. Being pressured by Enron’s senior management, Arthur Anderson and Vinson and Elkins aided it in its deceit. Thus the fundamental source of fraud was the neglect of organizational and individual integrity capacity. The moral infrastructure at Enron lacked the system integrity capacity that’s why could not constrain the development of such fraudulent, immoral and illegal activities.

In order to avoid such frauds in the future, the managerial legal duties scope should be enhanced to comprise the democratic participation of institutionalized stakeholder in corporate governance. All level employees and stakeholders should be made accountable for their immoral conduct. An ethical culture should be developed in an organization that is supported by all the member of the organization. Such immoral acts should be firmly penalized at all levels and ensured that their reoccurrence is minimized.

Employee survey should be taken periodically to ensure that such acts can be reported from all levels within the organization. Whistleblowers should be encouraged and rewarded.