Enron Failure of Leadership

In: Business and Management

Submitted By zameeludayar
Words 6914
Pages 28
Assignment: Background
Read the following Case Scenario and then attempt this task

Enron: How the Failure of Leadership, Culture, and Unethical
Behavior Brought a Giant to its Knees

Background
A company with humble beginnings, Enron began as a merger of two Houston pipeline companies in 1985. Although Enron faced a number of financially difficult years, the deregulation of the electrical power markets took effect in 1988, and the company redefined its business from "energy delivery" to "energy broker." Enron quickly changed from a surviving company to a thriving one. Deregulation allowed Enron to become a matchmaker in the power industry, bringing buyers and sellers together. Enron profited from the exchanges, generating revenue from the difference between the buying and selling prices. Deregulation allowed Enron to be creative—for the first time, a company that had been required to operate within the lines could innovate and test limits. Over time, Enron's contracts became increasingly diverse and significantly more complex.
Customers could insure themselves against all sorts of eventualities—such as a rise or fall in interest rates, a change in the weather, or a customer's inability to pay. By the end, the volume of such financial contracts far outstripped the volume of contracts to deliver actual commodities, and Enron was employing a small army of Ph.D.s in mathematics, physics, and economics to help manage its risk. As Enron's products and services evolved, so did the company's culture. In this newly deregulated and innovative forum,
Enron embraced a culture that rewarded "cleverness." Now that formal regulatory limits had been removed, pushing the envelope was seen as the best way to operate particularly in Enron's Finance Corporation. Deregulation opened the industry up to experimentation and the culture at Enron was one that expected employees to…...

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