Question

Give Main reasons WHY ENRON CORPORATION Collapsed?

Answer 1

In simple terms, I would just say because they were a fraud but here's 4 good reasons:

1)Enron’s Culture.


Enron’s culture seemed to be a mix of arrogance, greed, & cutthroat fear. The company seemed to a company where rule breaking was acceptable from top to bottom. Rumors of indecent behavior in the executive ranks ran rampant. They raised their noses up at companies like Exxon Mobil. Skillings commented, “We are going to eat your lunch.” They also made the prediction that their stock, which was at $80 a share, would sell for $126 per share. Employees seemed paranoid to the point that there was very little camaraderie. They were too afraid to go to the rest room for fear that a co-worker would use information found on their computer to their advantage. Employees were so afraid of becoming the bottom 20%, because it meant that they may loose their jobs.

2)Did Enron always have this culture? If not, what changed the culture?

Money was always the priority and shareholders came second. Greed was evident, even in the early days. One example given was in the energy services division. Compensation was based on a market valuation formula that relied on internal estimates. This led to pressure to inflate the value of contracts. If market valuations are done in-house the temptation to inflate prices will be there. Since Enron already had the culture of putting shareholders last and executives first this behavior will be perpetrated.
3) Was this a productive or non-productive culture? Explain.

I don’t think this culture was productive. Any culture that encourages flouting rules is destined to be doomed. People were too afraid to make mistakes, so they would cover them up for fear of being fired.” People perpetuated the myth this myth that there were never any mistakes.” If employees cannot go their boss to let them know that they made a mistake, they may not be productive. If you’re so afraid to make a mistake, it may hold you back from being innovative, and definitely slow down productivity. Employees should not have to work in an environment were they are constantly looking over their shoulders. Genuine belief in the company and shareholders should be upheld. If people are stepping over each other to get money, promotions and power the company will no longer exist. Enron had no focus on the shareholder and only on adding money to executive’s pocket.

4)What ethical dilemmas did Enron employees face?
Pressure to lie, cheat steal.