Enron Collapse

What was the cause of the Enron collapse?

The insufficient audit supervision over the real financial status and control of the company. Enron collapsed because it was perceived to be much bigger than it really was. Losses were covered by the transactions between its subsidiaries and itself.

Another reason is because of its organization culture. The corporate culture encouraged greed and fraud. The adventure spirit was encouraged.

Creation and ideas were high valued by the management. They believed every new idea would create value. However, it is not always true. When a new idea comes up, the company should consider the cost, otherwise there wouldn't be a profit.

What were the potential problems with the Enron corporate culture regarding ethics and leadership?

The company emphasized on the cleverness. They highly valued ideas and creation. The culture expected employees to explore this field in full strength. It was considered survival skills if employees had done something out of the limits, no matter if this performance was against the ethical codes. The CEO, Skilling, encouraged employees to be innovative and aggressive. The company motto: ask why tends to lead the employees to the situation that asks themselves why they cannot make a profit and consequently leads to their violation to the law.

The company also encourage people making money, and the management like high risk. The higher the risk is, the more profitable it would be.

The corporate culture encouraged greed and fraud. The adventure spirit was encouraged.

Employees put too much worship and faith to the leaders.

The deregulation system is another potential problem. The rules were too complicated and hard to follow and put a control on them.

The leaders lived luxury lives.The executives were highly paid in millions, and they all cared about how to share the money. When there was a hint for the financial problem or there was a potential loss for a projects underlying, no one...