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Ethical Dilemas: Nike & Enron Essay

1890 words - 8 pages

Today, more than ever before, American companies are held under a microscope by society and the media. Globalization and the continuous advances in technology have allowed for a wider spectrum of information available to anyone and everyone, thus bringing greater awareness to the public. This microscope held over the companies, forces them to act not only within the obligations of the law, but also with a sense of ethics, and social responsibility. A quick browse on any major company’s website will reveal content on social and ethical responsibility. Their main goal is to establish a trust relationship with the customer. However, due to repeated scandals in the past fifteen years, the ...view middle of the document...

It was a combination of unfortunate accounting choices, a casino like corporate culture, and most notably the human greed, individually and collectively. What Enron made seem to be innovative and creative account practices, is now clearly seen as shady and misleading. In the early to mid 90’s, Enron would incorporate “mark-to-market accounting” for its transactions. This type of accounting practice would basically allow Enron to record estimated earnings. In other words, Enron could show its investors projected future earnings, as present earnings, thus enhancing the façade of a strong company, one that seemed to be growing steadily. A major example of misuse of the mark-to-market accounting method, mentioned in the movie “Enron: The Smartest Guys in the Room”, was a 20 year agreement, in which Enron and Blockbuster Video had signed. A new On Demand Entertainment project was estimated to generate more than one hundred ten million dollars. However, this project would eventually fail. Nonetheless, Enron maintained the future estimated profits in its books.
Another notorious reason for Enron’s demise was certainly its corporate culture. Jeff Skilling, former Enron president, wanted results at any cost, thus he rewarded them, no matter how it was achieved. In order to make sure employees were always performing, he instituted a hard-hitting employee review program. At one point, his division was replacing 15% of its workforce. This put fear into employees, leading them to move quickly to find reasons justifying their employment in Enron. In a parallel universe, this would generate competitiveness, which would elevate the performance of employees who cared for their jobs, thus generating profits for the company, making everyone happy. However, at Enron, the corporate culture was different. The competitiveness would lead employees to do whatever it took, ethically and unethically for Enron. Jeff Skilling didn’t care, as long as Enron looked like a strong corporation (Enron: The Smartest Guys in the Room).
Human greed can lead people to do unthinkable things. At Enron human greed was at its highest. Top executives overlooked suspicious transactions, as long as they enhanced Enron to prospective investors and Wall Street. One of the more infamous roles played at Enron’s downfall was played by Andrew Fastow, its chief financial officer. Even though former Enron President Jeff Skilling would later state he had no idea of what was going on, Fastow was allowed to set up a network of shell companies, which would only make deals with Enron, and would build up on Wall Street’s greed, to pressure them to invest in these shell companies. The conflict of interest was obvious, as Andrew Fastow was using Enron to do business with himself, in a win-win situation. But as long as the country’s 7th largest company’s reputation was intact, nobody cared how it was achieved ((Enron: The Smartest Guys in the Room).
From the outside, Enron Corporation seemed to be a...

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