Managerial Organizational Assignment
Managerial Organizational Assignment
Enron fraud was one the largest securities fraud scandals in history that’s results in Enrons bancrupcy in December 2001 (Lawyershop.com). Enron, within fifteen years, grew from a small gas company in Texas, to be the seventh most valuable business group in the United States, according to Fortune magazine in mid-2001.
Understand how a company that he developed an empire so great, is a difficult task, but it is even harder to understand how it was possible to hide debt for amounts greater than six hundred million dollars. The results of the actions of the leadership of the company entailed to hundreds of thousands of workers remain unemployed and homeless and unable to recover their provident fund.
Just as thousands of investors who relied on the financial statements, audited by Arthur Andersen, saw their assets go up in smoke when their actions a record price of U.S. $ 84.85 just five cents in early 2002. According Lawershop.com, this debt was hidden through partnerships with other companies, creative accounting and illegal loans. Among those involved in the above are: RADR, Chewco and Southampthon, all Enron executives linked to one or another way.
Specific organizational theories could have explained the companys failure
Organizational theory is the study of organizations that pretend to identify common themes with the purpose of solve problems, maximize productivity and meet the needs of stakeholders. According Steve Middendorp, 2012, it aims to understand the structure between organizations.
We have to consider the Management Theory that’s resume that the company successful depends on its capability to focus its resources to meet the expectations of its customers. In case of Enron it had an operations management department that worked with all the aspects evolved in the operation and was almost impossible that with that behavior Enron succeed, that operation management was destined to fail.
Otherwise, companys decision making was centralized to a few executives made it difficult to get a clear view of the activities and operations of the company. Similarly, the lack of transparency and creative accounting practice were key factors that fraud will take longer to discover.
Enron failure from the perspective of Leadership theories
The relevant Leadership Theory to Enron was the “Great Man Theory”, that assumes that the leaders are born and not made and posses certain traits which were inherited and the great ones can arise when there is a great need.
Kenneth Law was a born leader and not made but he lied and deceived and this cost 4,000 people their jobs and scores of people their investments. Had there been a participative leader or a servant leader the outcome could have been different.
Actually, the type of