Fall of Enron

Essay by noagendaUniversity, Bachelor'sA-, August 2004

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The falling of Enron, it is a story of old fashion robbery and terrible acts that brought about the demise of Enron. The top executives in charge could only execute this type of deceit. The checks and balances in Enron were not checked and many who were directly or indirectly involved became rich. People, power, and greed were the beginning of the end for Enron.

In order to comprehend what went wrong at Enron there is a need to understand the importance of proper management structure within an organization. "Systems theory has had a significant effect on management science and understanding organizations. First, let's look at "what is a system?" A system is a collection of part unified to accomplish an overall goal. If one part of the system is removed, the nature of the system is changed as well." Comparing this to Enron, the "system" was to run a profitable company.

What happened is that rules where broken to accomplish this. Management set a tone of "you with us or not" and employees felt compelled to go along, fearful of losing their jobs. What Enron did was take a working system and start to cut slices out of it. This started back in 1987 when company auditors learned of a billion-dollar oil-trading scandal at the company's Valhalla, N.Y., offices. For years, traders there had falsified transactions to boost volume and fatten their bonuses. Instead of firing the traders and contacting authorities, Chairman Ken Lay and his management team kept them on the payroll and tried to cover up the problems. Lay said the company needed the revenue. A compromise of ethical proportion had begun and the snowball affect was created. Again, a slice of the ethical pie was cut.

Enron's corporate culture best exemplified...