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Enron Case Study

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EXECUTIVE SUMMARY

This report will analyse the groupthink’s concerns in the collapse of Enron. The collapse of Enron is less than three months, which Enron from a very prosperous company to a bankrupt enterprise. The collapse of Enron is one of the most grievous business failures in United States. This disastrous business failure had causes a large number of employees lost their jobs and retirement savings. Groupthink leads groups to make faulty judgments.

Groupthink occurs when a group make wrong decisions as the pressures of group lead to deterioration of “mental efficiency, reality testing, and moral judgment”. There are several symptoms of groupthink. The issues to be resolved for Enron are collective rationalization, stereotypes of out-group, illusion of invulnerability, deceit to increase shareholders’ investments and self-censorship. The causes of the case study are illusion of unanimity, self-appointed mindguards, complicated transactions, belief in inherent morality of the group and direct pressure in dissenters.

The solutions to the case study are challenge the norms, discuss with trusted associates, forbid related-party transactions for the senior officers, monitor the power of CEO and assign the role of critical evaluator. When there are symptoms of groupthink, there must be solutions to prevent and solve.

TABLE OF CONTENTS

EXECUTIVE SUMMARY

1.0 INTRODUCTION
1.1 Purpose of the report
1.2 Company Background

2.0 SUMMARY OF THE CASE STUDY

3.0 GROUPTHINK 3.1 Definition of groupthink 3.2 Symptoms of Groupthink
3.2.1 Illusion of invulnerability
3.2.2 Collective Rationalization
3.2.3 Belief in inherent morality of group
3.2.4 Stereotypes out-group
3.2.5 Direct pressure on dissenters
3.2.6 Self-censorship
3.2.7 Illusion of unanimity
3.2.8 Self-appointed ‘mindguards’

4.0 ISSUES TO BE RESOLVED
4.1 Collective

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