Friday, October 18, 2019

Enron subverted within the structure of the rational business Essay

Enron subverted within the structure of the rational business organisation - Essay Example The book by Bethany McLean and Peter Elkin (2005), talks of the way 'the hypothetical future value' of their investments were booked and profits shown for the shareholders to consume. Enron started with Oil pipelines and made it to the broadband and to a host of other services including electric distribution and power supply. While the core competency of the company lies in pipelines, they went into energy trading and broadband systems. They did not work out and build over their core competencies which are advocated by most of the management theorists (C K Prahlad & Gary Hamel, 1990). Enron was bankrupt on January 25th, 2002. Though there were number of fraudulent practices that the company and its executives practiced, it is also true that the society had a leading role to play in the making of the company and its debacle. Supporting an untrue situation arises when the people involved are greedy and tempt a crowd to be greedy as well. Enron became ambitious with the change in leadership and when the mantle was taken over by Jeff Skilling. Enron was ambitious even prior to that under the stewardship of Ken Lay. The growth was steady and the finances proved strong. But with Skilling taking over the leadership of the company, there was a subtle but a sure change in the approach of the management towards making money. ... It was just that Enron did not have time to reorient itself and plan for a classic change and none of the theories of change management seem to have been adopted (Kotter & Schlesinger, 1979). The company's executives were paid using the company shares which were traded freely in the market. The company maintained a high price for their shares and this resulted in their own staff having a larger value added to the share prices of the company. The company started benefiting by insider trading and ensuring that the company continued to have a high share price and the rate of growth of the company was well over 30 to 50% every year. This was too good to believe but then the share holders and the company employees too continued to believe in this performance. The company hid a number of facts about the debt status of the company and failed to show the right numbers on their reports. Hidden in numerous shell companies across the world were all these losses that was used by the senior execu tives of the company to hide and mislead the public and the share holders by giving them wrong information during critical times (Bethany McLean & Peter Elkin, 2005). This has also resulted in a gross violation of law by the company and its board. These hidden facts were so high that the company could not rectify these problems and come out of it unscathed. This in itself led the company to file for its bankruptcy. The senior executives were held for taking the country and its people for a ride and having misled them. The employees of the company and the share holders of the company felt cheated at the end of the game. This debacle led not only the company to bankruptcy but also took most of the senior people into the jail. Organisation Culture Organisation culture of any organisation

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