The paper 'Enron Corporation Risks" is a good example of a marketing case study. Enron Corporation was incorporated in 1930 as a Northern Natural Gas Company. Before filing for bankruptcy the company was the largest in the natural gas and energy production. It had global markets that enabled it to market its products to several clients across the globe. As well, it had the most notable gas transmission systems running for more than thirty-six thousand miles and served both industrial and emerging markets. The company substantially incorporated innovative strategies to overcome its competitors.
Some of the key competitive advantage strategies utilized included weather futures and gas futures. However, in the early 90’ s the company run into numerous difficulties that eventually led to its collapse. The accounting practices exercised led to a magnitude of continuous losses. In addition to the above, the losses were not revealed to the investors. Some of the key dates in the company include 1947 when the company was listed on the New York stock exchange. In 1985, the company merged with Houston Natural Gas Corporation while in 1986 the name of the company was changed to Enron and was based in Houston.
In 1999, the company launched Enron Online (EOL) where the company could market their products online. Finally, in 2001 the company filed bankruptcy after experiencing magnitude losses eventually leading to its collapse and fall out. INTRODUCTION Enron is one of the companies that have been studied on various occasions by scholars, researchers and other interested parties. The main objectives of the studies are to determine the reasons and factors that led to its collapse. However, the purpose of this paper is to discuss the various risk issues associated with the fall of the company.
This fall is considered as one of the most infamous actions in the present American corporate history. One of the most significant reasons that led to the collapse of the company is poor leadership and management. There are several issues and decisions that conducted by the company managers that are substantially questionable. Secondly, the accounting principles exercised in the company are not up to the standards. Most of the accounting practices were realized to be fraudulent and thus led to the bankruptcy experienced by the organization before its fallout.
Therefore, it is imperative to note that Enron Company neglected various business risks that had an influential role in the success of the company. Some of the most profound and notable risks include market risk, legal risks, internal control risks, high degrees of leverage, and several other competitive industry risks that play a vital role in the overall success of the company. RISK THEME DISCUSSION One of the departments that substantially played a vital role in the collapse of the company is the accounting department.
Arthur Anderson is the primary firm that provided tax issues, accounting services and audit services in the United States during this period. Typically, the firm was among the best five that was considered as the most outstanding in accounting and related issues. One of the key pillars and principles of the company is the provision of high quality and risk management practices. This is whereby every step in the accounting process proceed with great care and strict adherence to the code of conduct.
Hence, Arthur Andersen provided the required consultancy and procedures to be followed in accounting to the Enron Company. As a result, due to this strong adherence to accounting principles Enron emerged as the fastest-growing energy company in the United States during the ’ 90s. However, it is imperative to note that there are some core risk factors that were substantially ignored eventually leading to the collapse of the company.
Curall, Steven C., and Marc J. Epstein, M. J. (2003). The Fragility of Organizational Trust: Lessons Learnt From the rise and fall of Enron. Organizational Dynamics, 32 (2), 193-206.
Thomas, C. W. (2002). The Rise and Fall of Enron. Journal of Accountancy, 193 (4), 41.