Examining Business Failure of Enron

Examining Business Failure of Enron

Jane doe

LDR/531

June 3, 2011

Jane doe

Abstract

Many reasons can cause business failure. Business may fail because of recessions, taxation, management decisions, lack of interest for customers, ethical behavior, and many more. Businesses require hard work therefore it is very important that one is opening a business for the right reasons. Understanding the market of product, customers, and the buying habits of the customers is just as important. Cash flow not adequately anticipated and uncontrolled growth can also cause a business to fail. In the fall of 2001 the world watched as Enron a public energy, services, commodity, and global operations business collapsed. The purpose of this paper is to define how specific organizational behavior theories may have explained or predicted Enron’s company’s failure. Further a compare and contrast of how leadership, management, and the organizational structure play a part in the collapse of the Enron Corporation (University of Phoenix, 2011).

Examining Business Failure of Enron

Applying the organization behavior theories (OB) by leadership could have prevented the failure of Enron. According to Robins and Judge (2011) states, “OB is the study of what people do in an organization and how their behavior affects the organization’s performance” [sic] (p. 10, para. 2). Enron failed because of the unethical behavior of its senior management, auditors, directors, bankers, and consultants. The collapse of the Enron organization did not just affect the company it also failed its employees and those who invested in the stock of the organization. Consequently, investment brokers and government agencies also failed to catch the financial conflicts of the Enron organization. As a result of the collapse of Enron the Sarbanes-Oxley Act made an array of modifications to decrease deliberate corrupt behavior including the directives of public accounting firms.

The...