Examing a Business Failure

Enron

Enron Corporation was a famous Texas-based energy company and it was the seventh largest company in U.S. By the time of its foundation, it was energetic and had full of highly trained and educated individuals. Fifteen years after its foundation, its growth rate was skyrocketing up to 1700% along with 100 billion dollar sales and its assets were up to473 dollars worth (E-Daily, 2010). However, with the collapse of dot-com bubble, Enron lost its edges in 2001. Enron’s fall was caused by fraudulent accounting, moral hazard and back-scratching alliances with politics. Enron was not disclosing its losses to the public by not showing them on the financial statements. Enron’s executives lost its focus on becoming the number one energy corporation and as a result, it was recorded as the largest fraud in the history. Enron’s executives were not only involved in fraudulent activities but also encouraged employees to take part in their illegal and unethical operation. Officials as well as employees were entitled to receive incentive bonuses which were equivalent to their base salaries or even higher (E-Daily, 2010). Both the top and bottom management were also able to purchase Enron’s shares in a lower price. This proves that lack of morality and ethical standards can result in a bankruptcy of highly reputable corporation. Many people believe that its fall is mainly caused by accounting fraud however, there are many other reasons.

Organizational behavior

Organizational behavior refers to “the systematic study and careful application of knowledge about how people - as individuals and as groups - act within organizations” (Wikipedia, 2010). Organizational behavior includes the main sources of motivation, behavior of leaders, interpersonal communication, organizational structure and so on (Wikipedia, 2010). The study can identify the methods with which people can operate effectively within an organization. Therefore, managers should realize that employees of the...