The paper 'Problems that Led to the Downfall of Enron" is a great example of a business case study. The main purpose of this case study is to find out the problems that led to the downfall of Enron. It also aims at finding alternative solutions and offer appropriate recommendations. Enron was founded in 1986 and became one of the leading companies in the energy sector. However, in 2001, the company went bankrupt when the market lost confidence in it after major profits and some of its resources were written off. There a number of factors that led to the collapse of Enron, including unfavorable corporate culture, poor leadership, and conflict of interests, especially when it comes to auditing and consultancy services that were offered by one company, Arthur Andensen.
Some of the individuals that are blamed for the downfall of Enron include its former CEOs Jeff Skilling and Ken Lay due to their self-enriching behavior. The board was also blamed for not adequately playing their oversight role on the management. The company had a deceitful culture where both employees and the management cheated their way through in order to get financial benefits.
Any employee who opposed the immoral and unethical behaviors that were taking place in the company was either dismissed or silenced. The unethical behaviors in the company were unsustainable, which led to the collapse of Enron. Findings Unfavorable Organizational Culture Enron culture was the main factors that led o the many problems that the company faced that led to its collapse. The company laid a lot of emphasis on competition and financial goals that led to the unethical behaviors among senior and junior employees (Johnson, 2003).
Consequently, the unethical practices and behaviors in the company were also associated with the deceptive culture that also affected the genuine performance of junior employees. Therefore, poor organizational culture was the main problem that made Enron file for bankruptcy. Enron internal stiff competition environment that was accompanied by intense employee performance evaluation led to the culture of deception in the company (Li, 2010). Due to stiff evaluation of the performance of employees, they feared to lose their jobs and they only concentrated on ways of making their performance look good.
Since Enron majorly focused on financial goals, employees were forced to shun the ethical standards that were put in place and only focused on financial achievements (Currall & Epstein, 2003). Consequently, employees started cheating on their works, as this was the only way they could secure their jobs and look good in the eyes of senior management that were obsessed with the financial performance of the company. Workers were evaluated based on their ability to cheat. Unfortunately, people who were not able to cheat did not find a place in the company and they were fired or regarded as odd employees who did not deserve to work at Enron.
As a result, the culture of deception that was in the company accelerated its collapsed, as it was not sustainable in the long run. The culture of deception led to the covering of errors, which later led to the collapse of the company. Senior management discouraged junior employees from airing their views and thoughts about the condition of the company, especially financial performance. At the same time, workers could not question the decisions made by the senior management even when they knew they were not good for the company (Pavel, Encontro & Mve, 2013).
Besides, because of internal competition among employees, they found it hard to share ideas and resources as they competed with one another. The poor working environment significantly reduced employee performance because only a few of them fully understood their work. Consequently, they ended up hiding their errors and the workers were not ready to learn from one another. The nature of the working environment led to more errors and cheating in the company.
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