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Why Was Enron Such an Admired Company Prior to 2000?

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Why was Enron such an Admired Company Prior to 2000?
Enron was first founded on the year 1985. It is an acquisition between the Internorth and Houstan Natural Gas (HNG) that formed HNG/InterNorth and it was renamed to be Enron. However during the whole process of acquisition, the company incurred a large amount of cash outflow. Not only that, acquisition take place in the midst of deregulation and it cause the company to lost their exclusive right on pipelines. Deregulation means the natural gas at the spot prices will be lower than the bundled price offered by the pipelines. All these had made the company management have to come up with new strategy that could increase the profits and income of the company. Enron came up with the new strategy of investment which is the energy derivatives. Energy derivative is the long term fixed price contract with the customers with the objective to stabilize the natural gas market price. Meanwhile, in the same time, Enron manage the risk that need to be faced by them using financial derivatives. This technique could help Enron in reducing the risk of fluctuation exposure in spot price of the gas.
Later on, in the November 1999, Enron developed a Web –based transaction system which called EnronOnline. This system is created by a young consultant, Jeffrey Skilling and he managed the Finance Corp of Enron. Under this system, users can carry out the trading process which is the buying, selling, trading of commodity products online globally with Enron. Thus, it helps to made Enron develop the business more aggressively. In year 1997, new market developed in Enron after natural gas which is electric power. The company acquired the Portland General Electric and also some electric distributors in Brazil and Argentina. However, Enron found out that electricity which produced could not fulfil the usage during the peak season.

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