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Analysis of famous ‘Enron case study’ while discussing the various aspects of Business ethics

Number of Words : 3071

Number of References : 7

Contents

 This paper answers the following 2 questions on the Enron Case study –
 1 “What all these principles of ethical correction have to confront is the problem that if they were applied rigorously to business, they would seriously attenuate [weaken] the mechanics which drive and galvanise the system. It could be said they already have.” Norman Barry, (Workpack page 13). Set out the arguments in favour and against Norman Barry’s view, using the case study as the basis of your answer, but remember to use ethical theory
 2 From the many interested groups in this large company, is it reasonable to hold any group more or less to blame morally for the collapse of the company? What practical steps could the various groups have used to avert the collapse of the company?
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Description

The collapse of Enron has been one of the most shocking and infamous events in the financial market in the history of the world and the reverberations of the collapse of Enron were felt in the global market. Prior to its collapse, Enron was one of the leading companies of the US placed in top 10 admired corporations and was the most desired place for working. The revenue the company made up was USD 139 billion, employing over 30,000 employees across 20 countries of the world. <br />The company was always been praised from the outside, but from within, it was facing decision making issues and decentralized financial control that made it difficult for the owners and the workers to have a clear and coherent view on the operations and activities of the organization. The reasons were not exclusively poor management, but it was the combined effort of all departments that ruined the ethical principles and values of the organization. However, the executives and managers blame the absence of clear accountability, transparence and corporate culture in the company. If only the operations management would have worked properly, and if they would have had a chance to work in such a way, then Enron could have escaped this tragedy.<br />There were various reasons for downfall of Enron. Enron did not have transparent financial statements that did not detail clearly about the finances and operations with the analysts and stakeholders. With this, the complex business model of Enron stretched the accounting limits that required the company to use the limitations of accounting for management of earnings and modification of the balance sheet to portray favorable description of performance. According to the analysts, the Enron scandal aroused from steady accumulation of values, actions and habits, which began long before the final collapse of the company. Since late 1997, the accounts of Enron showed cash flow, income, asset values and liabilities at rise. The balance sheets and financial structure was so complex that it is still difficult to understand for some. (Fox, 2002)<br />

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