Business Failure

Week 1 Individual Examining a Business Failure
Angela Martin
LDR 531 - Organizational Leadership
University of Phoenix
March 29, 2010
Timothy Williams, Facilitator


In this paper the discussion will be how organizational behavior theories will predict or explain the failure of a company. We will discuss how one of the largest energy companies in the United States failed and how the company could have prevented this catastrophic failure. Enron fell from its glory days to bankruptcy because of bad organizational behavior. The fall would have never happened if all the players (internal and external) of the organization had played his or her parts ethically and appropriately.

The main players of any organization are as follows: senior leadership, board of directors, internal auditors, and external auditors. The CEO alone does not run a company, but the senior leadership, board of directors are also part of all the decision making processes. The internal and external auditors exist for making sure that there is monitoring of the system. In case of Enron, all the players failed to do his or her part. All these players play an important part of any organization because it is impossible for one person to run an organization. The success of the organization lies in the collective efforts and smart decisions made by these important players. The downfall of the organization cannot be prevented even if one of the players is not executing their part ethically and sincerely (Levin, 2002).

Failure of Key Players
The internal auditors failed to investigate any mal-practice because they did not deem it necessary because of the company’s rising stock prices and projected growth. Board of directors of Enron also failed to intervene into the wrongdoing of the management, as per the senate subcommittee investigations (Levin, 2002) “Fiduciary Failure. The Enron Board of Directors failed to safeguard Enron shareholders and contributed to the...