Examining a Business Failure- Enron

Running head: EXAMINING A BUSINESS FAILURE

Examining a Business Failure

Kristie Shreve

University of Phoenix

Organizational Leadership

LDR/531

Natasha Mackey

January 06, 2010

Examining a Business Failure

A big scandal in the United States involving accounting was the financial failure of Enron. Enron was a marketing corporation in the energy industry. Enron contracted the organizations accounting to an accounting firm for auditing purposes. The scandal consisted of non-approved accounting procedures in the internal accounting department during the 1990s. The organization manipulated stock prices and claimed money in different organizations. When Enron filed for bankruptcy in December 2001 the review of financial statements showed discrepancies (Thomas, 2002). On the information released regarding the scandal some management and leadership issues surfaced. The following will discuss the management and leadership issues present that helped in the Enron scandal. Knowing the issues management could have predicted the upcoming scandal and bankruptcy. The following will also discuss proper organizational management structure that Enron could have used to structure positively the organization.

Enron Failures:

The current executives of Enron had one focus to increase the wealth of the shareholders. In increasing the wealth the stock prices of Enron were not correct and the desire for the stock was decreasing. Organizations executives and accounting managers began to use unapproved methods of accounting to manipulate the organizations financial statements. With the idea in play that Enron’s stock needs to become more desirable, the executives made the decision to rely on increased capital from investors without revealing the risks of investing in Enron. Each year the need for the un-approved accounting increased. Enron’s main goal at the end of the day was to continue moving forward with costs and filling the shareholders pockets with...