Examining a Business Failure

Examining a Business Failure
Philip Tracy
LDR/531-Organizational Leadership
January 3, 20111
Dr. Donald Wicker

Examining a Business Failure
Once touted as a prosperous and highly successful corporation, Enron sold natural gas and electricity, energy and other commodities and provided risk management and financial services to clients worldwide. Enron imploded as a result of poor managerial decisions, greed, collusion, lack of effective oversight and inaccurate financial reporting. The failure of Enron resulted in the loss of jobs, incomes and pensions for thousands of employees, the incarceration of several company executives, and the collapse of the well known accounting firm Arthur Anderson.   The objective of this paper is to examine the failure of this former energy industry star to identify the parties involved and the factors affecting the organizational behavior involved in the demise of this company.
Enron Culture of Mismanagement
Enron was based in Houston, Texas and was founded in July 1985 by the merger of InterNorth of Omaha in Nebraska, and Houston natural gas. In 1994, the company started selling electricity, and in 1995, it entered the European energy market. By the middle of 2001 it employed about 30,000 people globally. Spearheading the rapid growth and success of the company was Ken Lay, Enron’s Chairman and Chief Executive Officer, Jeff Skilling, company President, and Andrew Fastow, Chief Financial Officer. Ken Lay made it a point to employ only those individuals who shared his vision of success at all costs. The pinnacle of success was measured by the number of deals made and the amount of money the company made. The basic rule of thumb was to make money and profits any way possible. The corporate culture appeared to be that of a “take no prisoners” approach. In general its senior management had developed enormous arrogance due to early business successes (Chandra, 2003). This sentiment is echoed by Malcolm Gladswell who New Yorker...