Why Did Enron Collapse

5 Pages 1277 Words

Enron was one of the world’s largest electricity, natural gas, and broadband trading companies, with revenues of over $100 billion until its crash in the fall of 2001. Enron’s strategic intent was to become the blue-chip energy and communication company of the 21st century through its business efforts in four core areas: Enron Wholesale Services, Enron Broadband Services, Enron Energy Services, and Enron Transportation Services. Enron management claimed that each of these business units supported the company’s vision of “offering a wide range of physical, transportation, financial and technical solutions to thousands of customers around the world.” But Enron’s aspirations of becoming the leader in the energy and communications came to a screeching halt because of a strategy that was flawed by unethical behavior mainly GREED. But how does a corporation that becomes so successful become so greedy? I am of the opinion that the main reason was due to the corporate strategy that was implemented that was more concerned with the continuing growth of stock prices instead of looking at the long run. In the following paragraphs it is shown what constitutes a good strategy and examples of what went wrong.

We can start of by saying that a good corporate strategy is one that is shaped by management having an ethical view of external and internal considerations. External considerations include societal, political, regulatory, and community factors along with competitive conditions and overall industry attractiveness; a company’s market opportunities and threats. External considerations on the other hand are of great importance in today’s business world due to the global market that exists.

Primary internal considerations are company strengths, weaknesses, and competitive capabilities; managers’ personal ambitions, philosophies, and ethics; and the company’s culture and shared values. Internal considerations have ...