Business Failures

Business Failure Paper
Jenna Fox
University of Phoenix
LDR/531 – Organizational Leadership
Michael Ventrone

Business Failure Paper
      Enron was established in 1985 when, Internorth, a natural gas company based in Omaha Nebraska, merged with Houston-based Natural Gas Inc.   Enron employed approximately 22,000 employees and was one considered of the world's leading electricity, natural gas, communications and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000 (Wikipedia, 2010).   Within this paper, I will discuss the business failure of Enron and the issues surrounding the collapse.
      Enron began trading natural gas commodities in 1989 and electricity in 1994 and in just a few years, became the largest natural gas merchant in North America.   The company made widespread use of the internet and quickly became a recognized and reputable powerhouse within the natural gas and electricity industries.   During the mid 1990s, Enron tried to capitalize upon earlier achievements in the energy markets by expanding and diversifying into global commodities trading.   Guided by the strategic advice provided by world-renowned business consultants McKinsey and Company (McKinsey), and the leadership of its former CEO, Jeffrey Skilling (a former employee of McKinsey), Enron transformed itself from an energy company to a risk management firm that traded everything from commodities to derivatives (American Journal of Business, 2002).
         Around 1990, Enron started acting as a liaison for the 30 day contracts, known as Gas Bank, and gathered multiple contracts from various producers and then offered long-term, non-negotiable priced contracts to local utility companies.   In essence, Enron was putting the risk upon itself, for a fee and this was the turning point for entire natural gas industry.   In the coming years, Enron had branched out and was serving as a liaison for electricity, oil, and even paper.   In just 15 years, Enron became...