The paper "Unhealthy Organizational Culture of Enron" is a good eample of a management case study. It is about 15 years since the fall of Enron Corporation, a former American energy giant but the business community and scholars still continue to wonder as to what might have caused such a big and performing company to collapse and file for bankruptcy (Gini, 2004). Different arguments have emerged that attempts to explain how the former American energy giant was reduced from riches to rags. Some scholars and business analysts argue that Enron’ s record-breaking bankruptcy and its subsequent collapse was caused by unethical behaviors on the part of the leadership of the company as the leadership of the company were driven by greed (Gini, 2004).
Others, however, believe that the collapsed of Enron was the result of bad accounting practices, such as the mark-to-market accounting practices that were calculated to hide the huge financial debts that the company had accumulated. In some instances, business analysts point at a series of things that include the company’ s mismanagement of risk, adoption of bad organizational culture, coupled with overextension of capital resources as the major causes of Enron’ s downfall (Pojman, 2006). Despite these arguments, the story about the rise and the surprising fall of Enron remains a puzzle and continue to generate interests as people try to get to the root cause of the failure of this former energy giant.
This paper begins by providing a brief overview of the rise and fall of Enron as presented in the case study. It will proceed to identify what went wrong at the company based on ethical and leadership theories. The paper will then propose solutions to the problems identified in the case and make recommendations on the best solution to adopt and how the solution should be implemented. Brief Overview of the Rise and Fall of Enron Enron Corporation was an American energy company founded in 1986 when Houston Natural Gas and Internorth both of which were natural gas companies merged.
Although the company struggled in the initial years by posting a loss of $14 million, the company was quickly turned around to profit-making ways (Gini, 2004). In the 15 years that followed, Enron developed to become one of the largest companies in America has diversified its product portfolio to include natural gas, communication and electricity.
The good performance made Enron become the benchmark for most companies then. It was also one of the largest employers in America has employed about 22,000 people. Despite the many years of success, things were later to turn to the worse in 2001 when Enron was forced to file for bankruptcy (Gini, 2004). The filing for bankruptcy was triggered by the market loss in confidence following the move by the company to write down its assets and profits in the third quarter of 2001.
According to the case, the write-offs of assets and profits caused the loans that the company had sourced to finance its operations to become due for payment since the stock market collateral had collapsed that made it virtually impossible for Enron to continue borrowing more money to finance its operations. In this respect, Enron failed because of liquidity problems.
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