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Enron Collapse Essay

607 words - 3 pages

Task 2
1. What were the individual factors that contributed to the failure of Enron? Briefly explain two key factors.

Enron collapsed in large part because of not responsible business. So Enron executives were charged with criminal acts. Those charges were fraud. If didn’t occur this acts, Enron would become one of large company in the world. They should keep their self-interest to themselves. They only think of the short-term benefit not thinking of the long-term effect which leads them to bankruptcy.
Greed is first individual factor. It can blame for the failure of Enron. Every time and everyplace can increase greed. Greed has no time or limit. In order to get more profit, they did massive fraud and insider trading. They use many different way to cover up they acts. Like once their schemes were discovered by the auditors, their schemes were discovered by the ...view middle of the document...

2. What were the organisational factors that contributed to the failure of Enron? Briefly explain two key factors.

The organisational factors are Enron’s system. Once unethical behaviour of appears in Enron’ leader, employees were afraid to loss job. In order keep the job, employee would help leader to do some wrong thing. In the result, the company is broken. Arthur Andersen, an auditor and consultant, was convicted of obstruction of justice for shredding documents related to its audit of Enron, resulting in the Enron scandal. However it is disregard of law. After all the social would found Enron’s problem.
Another organisational factor is Enron’s strategic. Enron’s leader comes up with a way to rise price of stock. In fact, companies have large debt. The maximisation of profit was aggressively taken to such an extreme that the leadership trait of integrity became a non-factor within the culture at Enron.
3. What were the social factors that contributed to the failure of Enron? Briefly explain two key factors.
One of social factors contributed Enron’s failure was corporate social responsibility. It is increase ability of increase profit. Then it would be put more people to work and buy their stock. Andrew Fastow used it as a tactic whereby it would take a poor performing asset off Enron‘s hands at the end of a quarter. Once the quarter was over, the asset would be sold back to the company at a profit. Bank knows this way have some problem. They were continuing cooperation. It was blatantly an illegal transaction. It also had some company praised this method. More and more people know this illegal transaction. They would find some problem. The company is not responsible for the public too; the company lack of ethics and integrity and without it, the business would fail.
Another one was Enron’s culture. There were rewards and incentives in the form of cash or stock if one were considered moneymakers. In order get more money, employee would follow the top management act to do. In the end, company would had more unethical acts.

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