Importance of Ethics in Business As Illustrated in Enron - The Smartest Guys in the Room - Essay Example

Importance of Ethics in Business As Illustrated in Enron - The Smartest Guys in the Room “Enron: The Smartest Guys in the Room” is a classic documentary that highlights a culture of corporate recklessness, outright fraud and the astonishing lack of ethics in business. Enron is amongst the most famous fraudulent companies in the history of business. The story of Enron brings a perception of human tragedy in the complications enshrined in the unethical display by the top management. As depicted in the movie, the company and the executives display an utter lack of ethics.

The company makes millions in light of perpetuating fraudulent activities. Fraud is an element that limits the ethical requirements in the corporate world. Jeffrey Skilling makes jokes about matters that highlight the cause of the collapse of the giant corporation (YouTube). Evidently, the movie simplifies the complicated issues that involve the operations of the company. The use of “Mark to Market Accounting” allowed the company to make bookings of potential profits that were future prospects.

This accounting technique created off the book partnerships that assisted to hide the losses of the company, and manipulated the company’s stock prices to meet individual projections. Transparency is critical in defining the success of businesses. In this case, the investment banks, government regulators, market analysts, auditors, and lawyers had the position to expose the irregularities at Enron. Instead, all these parties overlooked the fraud and allowed corruption to satisfy their individual financial desires.

The most unethical practice comes in at the climax when Enron takes advantage of the deregulated California energy environment. Enron tampers with California power supplies with the aim of driving the cost of energy upwards in California (YouTube). The company deliberately rerouted power out of California and created artificial power shortages. As a result, the infamous “rolling brown outs” erupted, hence causing the disruptions to the lives of many California residents and further damaging the economy of California.

This forced the state to declare a state of emergency. Corporate Social Responsibility is an ethical component that obligates companies to protect and promote the society, the environment, and the surroundings at all costs. In the case of manipulating the power supplies, Enron violates the ethical requirements of the society, hence highlighting the selfish nature of the individuals in the company. The California energy crisis depicts greed as the company aims to gain profits unfairly at the expense of the California economy.

However, the collapse of Enron illustrates the need to embrace ethics in business. The sleight of hand accounting coupled with unethical trading eventually culminates into balance sheets that fail to balance and products that do not exist. Initially, the company had their stock prices skyrocket, while deceiving investors through partnerships with fraudulent regulators. In conclusion, the ingredients of unethical practices involved in the Enron case include arrogance, pride, greed, and theft.

This shows the impact of being unethical, selfish, dishonest, fraudulent, and intolerant. When these misdeeds came into light, Enron came down faster than expected. Works Cited YouTube,. 'Enron: The Smartest Guys In The Room Full Movie (Documentary)' Retreived from https://www.youtube.com/watch?v=pRWXW87YrlM N.p., 2015. Web. 15 June 2015.