...Running Head: ENRON BUSINESS FAILURE Examining a Business Failure Paper Enron Rachel Y. Pointer University of Phoenix LDR/531 Ernest Price, Instructor January 17, 2010 Enron Business Failure One of the world’s most catastrophic business failures was Enron. Unveiled in October 2001, this scandal involves the renowned energy company Enron in conjunction with the accounting, auditing and consultancy schemes of Arthur Andersen. Enron disgraces ultimately lead the organization to a scandal that resulted in the biggest economic failure in United States history (TIME Enron, 2001). The Enron scandal also destroyed one of the foremost accounting agencies in the world, Arthur Andersen. Enron’s downfall was the result of their choice of accounting practices, in particular target entities and poor financial reporting. Enron’s accounting structure had so many loopholes that it was unproblematic for Andrew Fastow, the organization’s chief financial officer, to mask billions in debt from failed transactions and schemes. Fastow and other main executives purposely misinformed the organization’s board of directors and audit commission. The U.S. Securities and Exchange Commission (SEC) began an investigation into Enron after the organization’s stock price began to plummet and Dynegy offered to purchase Enron at a price much lower than normal market price. When the Dynegy deal did not happen, Enron filed for bankruptcy on December 2, 2001 under Chapter 11 of the...
Words: 1022 - Pages: 5
...Examining a Business Failure - Tyco International Ltd Organizational behavior is defined as the study of the behavior of individuals, groups and structure and the impact to an organization. Organizational behavior uses the information gathered from this study to improve the organization’s effectiveness (Robbins, 2011). Organizational behavior focuses on a number of areas including the behavior of leaders, inter-personal communication, processes and structure within the organization, conflict and employee motivation. The behavioral disciplines of psychology, social psychology, sociology and anthropology form the basis for the study of organizational behavior. Psychology and social psychology studies the impact of conditions in the workplace and the impact to the employees’ performance. Within these sciences, learning theorists also studies the impact of change and how to reduce the challenges of change in the work environment [ (Robbins, 2011, p. 12) ]. According to the authors, sociology, and anthropology contributes to the study of organizational behavior by focusing on the relationship of employees as a group and the impact to the organizational structure. The culture and group dynamic of the employees will direct the level of motivation that in turn will negatively or positively impact the performance of the organization [ (Robbins, 2011, p. 12) ]. Psychology evaluates changes in individuals’ behavior and the impact to learning, Emotions, leadership, and decision-making...
Words: 1292 - Pages: 6
...Examining Business Failure 1 Abstract The author of this paper will present an examination of the business failure of WorldCom Incorporated and also compare and contrast the leadership management and organizational structures and failures. Examining Business Failure 2 Introduction WorldCom was the second largest long distance provider and on July 19, 2002 filed the largest bankruptcy ever in U.S. history with its $41 billion dollar debt load, and more than $107 billion dollars in assets. In 1999 WorldCom’s profits began to decrease when WorldCom reduced budgets on telecom services and equipment. The former CEO of WorldCom, Bernie Ebbers, submitted his resignation from his position. Being CEO, he was the leader of WorldCom, and as such, should help an employee feel supported and safe enough to discuss openly or acknowledge the problem he or she is responsible for. When he resigned from the company, it raised questions because Ebbers had about $366 million dollars in personal loans from the company. Upon the revealing of his resignation to the employees, they were alarmed that something important was happening within the company, but had not yet been exposed. Bernie Ebbers started out in the telecommunications industry in 1983 providing long distance services in Jackson, Mississippi at a company formally known as LDDS. Over the years, the company grew through a series of business deals. In 1995, the name of the company was changed from LDDS to WorldCom...
Words: 1130 - Pages: 5
...Examining A Business Failure Otis Jones, Jr. LDR/531 February 7, 2011 John D. Thompson Examining a Business Failure Success is the goal that businesses and individuals have in common, but failure is the last option anyone person or standing entity wants to face. Outside failing, but orchestrating fraudulent information just to boost and boast the status of any entity is unethical and disgraceful. Bernie Ebbers, former Chief Executive Officer (CEO) of WorldCom, did what the average business person would not do, commit fraud. WorldCom was one of the leading giants in the telecommunication arena acquiring MCI Communications en-route to global success, but failing at the proposed merger of Sprint. What lead to the lies and deception of WorldCom downfall? This paper will briefly discuss some of the possibilities and the outcome of WorldCom’s fall as well as that of its CEO, Bernard (Bernie) John Ebbers. Contributions of Leadership Bernie Ebbers, CEO of WorldCom, impressed the business world with the fast growth and acquisition of small and larger companies. WorldCom, in the late ‘90s, was the nation’s second largest long distance company led by a man with a vision and drive for success. Bernie Ebbers showed skills of charismatic, effective interpersonal communication, and strong strategic judgment skills. The negative side of this effective leader is Ebbers ability and strength...
Words: 568 - Pages: 3
...Examining a Business Failure: ENRON LDR 531 Organizational Leadership December 5, 2011 . Examining a Business Failure Effective managers and leaders contribute to the organizational success of an organization. Companies lacking strong managerial leaders failing to enforce the ethical code of conduct of an organization are prone to organizational failure. Yukl (2006), states, “One viewpoint is that leadership occurs only when people are influenced to do what is ethical and beneficial for the organization and themselves” (p. 4-5). The notorious Enron scandal created a historic impact to the organizational culture and processes of businesses in the United States. The following paragraphs will address organizational behavior theories, which could have predicted Enron’s failure. Furthermore, a comparison of management, leadership, and organizational structures is scrutinized to determine the influence each had on Enron’s failure. Who was ENRON? Enron was founded in 1985 when Kenneth Lay merged Houston Natural Gas and InterNorth creating Enron (CBCNews, 2006). In the early 1990s Kenneth Lay commenced the sale of electricity at reasonable prices. However, Congress deregulated sales of natural gas. As a result, Enron’s earnings increased and became the largest retailer of natural gas. To expand, Enron diversified and incorporated gas pipelines, pulp and paper, broadband services, water, and electricity plants. Furthermore, the deregulation allowed Enron executives...
Words: 899 - Pages: 4
...Examining A Business Failure LDR/531 June 25, 2011 Dr. Catherine Garcia Examining a Business Failure This paper is about the company Kodak that recently filed for the bankruptcy. Kodak, once a very profitable organization is on the verge of another failure, like Enron, Tyco, etc. This paper will cover how the incorrect management decision lead to its failure. It will compare and contrast leadership, management, and organizational structure that contributed to this failure. History of Kodak and timeline George Eastman started Kodak in 1878. In 1888 Eastman presented a first simple camera to the world. He made the complex and complicated process of photography easy and simple enough to use by everyone. "you press the button, we do the rest," Eastman demonstrated his marketing ingenuity (History of Kodak, n.d.) . The success of Kodak continued and in 1895 Kodak introduced the first pocket camera. Later Eastman formed his companies guiding principle: volume production at affordable cost, global presence, creative marketing, satisfied customers with best customer service, and growth through uninterrupted research and development. Furthermore, he stressed on how important it is to value brand name and the quality it stands for. Eastman firmly believed in product quality and never compromised under any circumstances (Kodak, 2006). Introducing color photography, Kodak continued its growth and success by investing in R&D and by 1963 become standard in photography...
Words: 1297 - Pages: 6
...Examining a Business Failure George Konstantinopoulos Organizational Leadership - LDR 531 August 09, 2011 Milton Wingert Examining a Business Failure The purpose of this paper is to examine a large corporation that has excelled in their perspective industries and then unexpectedly failed, lost industry credibility or was force into bankruptcy. Leadership contrasts will be discussed between the failed companies versus the rebuilt companies. There are many examples that can be used but the TYCO Corporation will be used in this paper as it is a clear example of poor leadership that made unethical decisions. It is difficult to say exactly what the thought process was for each of the executives involved but one can speculate the a major factor was greed and self gratification. Tyco Corporation is a large company operating in over 100 countries. They are a major player or maker in the electronic components industry, undersea telecommunications systems, fire protection systems, electronic security systems and specialty valve as well as disposable medical products (Obringer, 2005). The three main executive that were involved in the fraud scandal were Chief Executive Officer, (CEO) Mark Koslowski, Chief Financial Officer, (CFO) Mark Swartz, and General Counsel, Mark Belnick. The fraud occurred when the three executives were accused of giving themselves interest free or very low interest loans by the company. These loans were never approved by the Tyco Board of Directors...
Words: 847 - Pages: 4
...Examining a Business Failure LDR/531 Organizational Leadership September 17, 2012 Examining a Business Failure Motivation is the process that considers an individual’s intensity, direction, and persistence of effort toward achieving a goal. While general motivation is related to the effort toward any goal (Robbins & Judge, 2007). This paper will describe how specific organizational-behavior theories could have predicted or explained Tyco’s International Ltd. Failure. It will compare how leadership, management and organizational structures contributed to the failure. Tyco International Ltd Tyco International Ltd. Is a diversified company that provides security products and service, fire protection and detection products and services, valves and controls, and other industrial products. Tyco operates in the Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific. It is headquartered in Schaffhausen, Switzerland and employees 102,000 people (Datamonitor 360, 2011). On 2002 three former high-level executives were accused of fraud. The three accused manger, former CEO L. Dennis Kozlowski, former Chief Financial Officer Mark Schwartz, and former general counsel Mark Belnick, have been indicted for fraud and theft by the Securities and Exchange Commission (SEC) as well as their former employer ("Tyco Fraud Infocenter", 2006). The "Tyco Fraud Infocenter" (2006) website stated that, “the SEC and...
Words: 919 - Pages: 4
...Examining a Business Failure: Enron Examining a Business Failure: Enron Most people today have heard of the big Enron scandal through various different forms of entertainment such as television, radio, and the internet. Even those business people that never have time to watch the news heard some bits and pieces of the rise and fall of Enron. The basic issue that got Enron in trouble to begin with was the lack of good leadership and management. We know that insider trading is an unethical business practice. With that said, the big business executives and other members of the administration team at Enron had unethical business practices, and only one of those being insider trading. This paper will discuss the contributions of leadership, management, and organizational structures that led to the demise of Enron. Leadership, Management, and Organizational Structures Leadership has many definitions. According to Yuki, (2006) “leadership is behaviors, influence, interaction patterns, role relationships, and occupation of an administrative position” (p. 2). With this definition in mind, the average person can see the clear issues behind the fall of Enron. Csorba (2006) states that Enron’s management was built based on deception and lies. Even though some of the Enron leaders knew fraud and deception was taking place, like lifting conflict of interest rules for the CFO, they continued to look the other way and continued their employment and working dishonestly. One of the many...
Words: 707 - Pages: 3
...of Koss former employees, Sujata Sachdeva and Julie Mulvaney were the ones to engage in a wide-range of accounting fraud to cover up Sachdeva's embezzlement scam. From the lack and inadequate internal controls and failures in overseeing the accounting and financial reports by the CEO and CFO they were able to embezzle a huge amount of money. Throughout my research I will write a paper in which I must assess the failures of the firms accounting information system to prevent the related fraud/ embezzlement; Also, evaluate the effectiveness of Koss stakeholders in the event that a third-party accounting system suffers a breach. Along with assessing the level of responsibility of the software provider to the business and their clients. This paper will determine what advances in accounting and/or information technology could have done to prevent such acts from occuring, the paper will give changes that should be made to both the Sarbanes-Oxley Act of 2002 and other current laws in order to make them more effective in deterring companies from committing crimes. Lastly, Recommend a strategy that Koss Corp may use to prevent future business information failures. Indicate how the company should approach the implementation of The recommended strategy. Assess the failure of the firm’s accounting...
Words: 2242 - Pages: 9
...Examining a Business Failure - Enron Patricia Davis LDR531 May 14, 2012 Thomas Ach Examining a Business Failure - Enron * Organizational behavior is defined as a field of study that investigates the impact that individuals, groups, and structure have on behavior within the organizations for the purpose of applying such knowledge toward improving an organizations effectiveness; specifically organizational behavior focuses on how to improve productivity; reduce absenteeism, turnover and deviant workplace behavior; and increases organizational citizenship behavior and job satisfaction (Robbins & Judge, 2007). This paper will summarize the Enron scandal that caused the company to fail and show how organizational behavior theories could explain the failure. * According to Wikipedia - The Free Encyclopedia, retrieved on May 13, 2012, “Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives not only misled Enron's board of directors and audit committee on high-risk accounting practices, but also pressured Arthur Andersen, their outside accounting firm, to ignore the issues” (Enron Scandal). * To make Enron’s shares...
Words: 880 - Pages: 4
...The concern for ethical decision-making among the regulators, social groups, and managers has substantially increased in recent years following the failure of some of the prominent business organizations owing to strong social condemnation of some of their business practices. This paper reviews the literature to address this concern by examining and discussing significant issues of ethical decision-making in organizations. Literature shows that the research to examine the linkage of ethical decision-making with other organizational construct is inadequate. This paper tries to fill this gap by developing a comprehensive framework of organizational ethical decision-making and behaviour of individuals in organizations. The framework identifies three groups of variables: a) moral intensity, b) intrinsic factors, c) extrinsic factors. Further, it is used to analyse the implementation of code of conduct at Tata Steel. Ethical problems are problems of choice owing to the conflicting nature of values. They occur when the individual values and the social norms conflict with each other. Often, due to conflicting interests of different stakeholders, managers in organizations face the dilemma of identifying the righteous decision as perceived by these stakeholders. Hence, it is important to guide managers — by articulating and communicating unambiguously — regarding what is right and what is not. Intense socialization will be required at different levels to imbibe organizational...
Words: 274 - Pages: 2
...Abstract This study firstly examines the current literature concerning ERP implementation problems during implementation phases and causes of ERP implementation failure. A multiple case study research methodology was adopted to understand “why” and “how” these ERP systems could not be implemented successfully. Different stakeholders (including top management, project manager, project team members and ERP consultants) from these case studies were interviewed, and ERP implementation documents were reviewed for triangulation. An ERP life cycle framework was applied to study the ERP implementation process and the associated problems in each phase of ERP implementation. Fourteen critical failure factors were identified and analyzed, and three common critical failure factors (poor consultant effectiveness, project management effectiveness and poo555îr quality of business process re-engineering) were examined and discussed. Future research on ERP implementation and critical failure factors is discussed. It is hoped that this research will help to bridge the current literature gap and provide practical advice for both academics and practitioners. Keywords: Critical Failure Factors, ERP Implementation, ERP Life Cycle. 1. Introduction An ERP system is an integrated software solution, typically offered by a vendor as a package that supports the seamless integration of all the information flowing through a company, such as financial, accounting, human resources, supply chain, and customer...
Words: 737 - Pages: 3
...Examining a Business Failure G. L. Ivie University of Phoenix Organizational Leadership LDR/531 Rodney Walton, M B A. March 18, 2012 Examining a Business Failure This paper is a brief examination into how different variables both dependent and independent in relation to various theories of organizational behavior played a significant role in the failure of the once profitable and prominent Swiss Air Airline company. It provides specific examples of how certain organizational behavioral theories if applied before the company’s insolvency might have predicted the airlines impending bankruptcy. It also compares and contrasts the different aspects of the company’s leadership, management, and corporate structure, and the significant role that these organizational behavioral variables played in the company’s downfall. Swissair The year of 2001 was not only noted for the terrorist attacks of 911, but it was also the year that the world witnessed the collapse of Swissair, one of the world’s most successful airlines and the first to officially fly the Swiss Flag as a national carrier. In October of that year the airlines was forced into filing Sweden’s form of Chapter 11 in an effort to protect itself from its creditors. Several organizational behavioral theories and their associated variables could have predicted the likelihood of the failure based on the behavior of the corporation’s top leadership and the management of its subsidiaries as the company began the strategic...
Words: 1232 - Pages: 5
...Concord Bookshop Paper HCS/587 Concord Bookshop Paper The Concord Bookshop was a thriving entity that provided many forms of literary materials to the community of New England. This 64 –year-old business began to experience a major slump because of the new innovative ways that literature can be obtained. Since the inception of this bookstore, much has changed in the industry as it pertains to the way books are printed. Technology has afforded many readers the ability to purchase a digital print of a book instead of actually buying a book or purchasing the book online at a fraction of the cost. This technique caused the bookshop to lose customers as well as money. To counteract this development the owners decided to implement some changes. The Phases In order for any organization to implement change, there are certain phases that employees should be walked through. Failure to do such will result in an atmosphere of further resistance. Though resistance is inevitable when it concerns change in the workforce, it has a way of escalating when the phases are not incorporated into the plan. Three phases that should be implemented in the revamping of an organization is turnaround, tools and techniques, and, transformation. The first phase, which is involves a turnaround deals with the improvement of an organizations finances. In improving finances there is an evaluation as to what is causing the decrease in the financial aspect of the organization. In this...
Words: 699 - Pages: 3
