Examining a Business Failure

Examining a Business Failure

University of Phoenix

LDR/531

June 4, 2010

Abstract

This paper discusses how organizational behavior theories had the opportunity to predict or how they can possibly explain a company’s failure. Our main discussion will be focused on one of the most prevalent energy companies in the United States and how it failed. We will touch on how this disaster could have been prevented. Due to Enron’s dire organizational behavior its success in the energy industry came to a screeching halt. If all of the external and internal key players of the organization made ethical decisions, the demise of the company could have been prevented.

The Key Players

In any organization there are a group of leaders that play a key role in the success of the company:

1) Enron Senior Leaders

2) Enron Board of Directors

3) Internal & External Auditors

All of the key players listed above work along with the CEO in making business decisions that are required in running the company. The internal and external auditors exist for monitoring purposes. In Enron’s case, all of the key players failed to do their portion. Each one of these people in these positions plays an integral role of any organization, large or small. It is next to impossible for one individual to operate a company by his knowledge alone. An organizations success lies in the hands of all important personnel and their efforts collectively along with wise decisions. A company’s downfall doesn’t stand a chance if even one person is not performing their duties in an ethical manner.

The Failure

Per Senate Committee investigations, Enron’s internal auditors failed to investigate and report any mal-practice. Apparently they didn’t see the importance due to their focus primarily on the company’s increasing stock and projected future growth. The company’s Board of Directors failed to intercede and address management’s wrong decisions. (Levin, 2002)

The seventh leading...