Responsible Commerce from the Movies

Week 4 tut: Responsible Commerce from the Movies (Assessed)

1. Why did Enron fail? Give two key reasons.

* Unethical behavior that the business use accounting limitations to change the earnings and alter the balance sheet to show they are good property.

* Company has established many foreign companies to tax avoidance with foreign companies and improve corporate profits. Overseas companies set up to follow one's inclinations of Enron move money without being noticed, at the same time to cover the company's operating losses (Fox, L. 2003). So the company became obese. But at the same time, the company’s senior cover losses and inflated profits in every quarter.

2. Ken Lay was a son of a Baptist minister and Enron’s other senior executives like Jeff Skilling were educated at prestigious business schools. Identify and explain three reasons why despite this family and educational background the senior management of Enron failed to uphold ethical principles.

* Consensus/Peer Pressure: people have a tendency to succumb to peer pressure, both because people want to “fit in” and succeed within an organization, but also because our actual thinking is changed (Mario Fernando, 2013). Money and power tempt. Jeffrey Skilling and Ken Lay changed the business strategy and corporate culture of Enron. They appeared to make Enron very profitable, so the shareholders are getting rich and stock is rising, but it is deceptive phenomena.

* Sunk Costs and Loss Aversion: people tend to continue toward an unethical course of action simply because they are reluctant to accept that their prior choices or investments were wrong or wasted (Mario Fernando, 2013). Unethical behavior can be contagious. As the Enron turn up financial crisis, senior used set more foreign companies to cover losses and inflated profits.

* Slippery Slope: People are willing to do unethical things because they have already done smaller, less extreme acts that make the bigger choice...