Examining a Business Failure

Examining a Business Failure

Kirsten Penn

LDR/531

September 13, 2010

Don Frey

One of the world’s leading electricity and natural gas companies. Enron was an American energy giant based in Downtown Houston, Texas. They were an employer of approximately 22,000 employees. It was said by experts, that Enron’s failures were due to accounting fraud and corruption. However, all irregularities associated with Enron’s failure were due to poor organizational behavior. The failure of the Houston-based Enron Corporation poses some of the toughest policy challenges of any financial collapse in recent memory (Brookings 2002). The following will be discussed about Enron’s failure: Contributions of leadership, management and organizational structures.

An outlay of the strategic plan Enron attempted to implement was not properly planned prior to implementation. Enron attempted to purchase assets and build a business around it. The way that a strategic plan is developed depends on the nature of the organization's leadership, culture of the organization, complexity of the organization's environment, size of the organization, expertise of planners, etc (managementhelp.org). These investments would require a large outlay, yet they could not be paid in the short term. Therefore, this was an issue and Enron had the option of funding these investments by issuing new equity, however, this would dilute current shareholders. Issues-based strategic planning often starts by examining issues facing the organization, strategies to address those issues and action plans (managementhelp.org). This was a clear sign that Enron was headed in the wrong direction. Unfortunately, they continued in this direction seeking outside investors to help finance their investments. At this point it was evident that the executive in participating in unethical practices. However, some recent work and ideas hold out considerable potential for understanding how different patterns of strategic...