Free Enron Case Analysis Essay Sample

According to McLean and Elkind, Enron as a single company was the most innovative corporation in the United States until early 2000 and their employees are disguised as the smartest in their field. The company’s problems were shown when it filed Chapter 11 bankruptcy protection where more than 4,000 employees were laid off. This is caused by the scandals and frauds by the top management of the company. This has been seen as a culture since every CEO has followed the same trend of frauds and other stakeholders. The key issues in this case are how the top management of Enron promoted its failure and how the money laundering and frauds was revealed resulting to the arrest and charges of the key perpetrators.

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Enron Opportunities

The Enron’s name and brand are their main opportunity because the name is well known in the market as an energy provider in all the years it has been operating. They have the advantages for expanding the supply of their products since they are the main supplier of gas pipeline and many related material goods related to it in America. When deregulation of energy in the market occurred in 1970’s the Enron got the opportunity to rise and started their business in the market.

Enron Threats

Enron was threatened by the conditions of the internal environment, which was not so good as they term it as their culture. This is because there is lack of trust among the employees of the company itself thereby increasing the chances of the competitors to continue threatening Enron. This also caused competitors to have the opportunity of collaborating with Enron and manage to pull out some of the organization’s profit due since there is no cooperation and trust between the employees.

The innovation of new technology also is a threat to Enron, where many people and organizations are in search of alternative materials, which can also be used as oil and gas. This is due to the price increase as regulated by the market thereby threatening the profit of the organization.

Enron Strengths

Being the biggest natural gas pipeline system company which is operating in United States of America, Enron has established itself in the American market due to its reliability and due to the fact that it gives its customers awareness with their branded name. It also has the advantage of market dominance as it is the biggest company, which supplies energy over its competitors. Enron has also an advantage of keeping the competitive and reasonable prices and offering better services against the competitors thereby strengthening their goals.

Enron Weaknesses

Despite the company’s strengths, Enron have also several weaknesses; lack of fair and truthful activities between the employees and the management is the major weakness affecting the company and its as their culture. This causes the employees to be unethical while acting on their duties and sometimes he/she works very wrongful. The company has a problem in controlling the employees since it relies on the company management system. The conflict caused by the lack of co-operation between the employees and the management causes many errors in the day today transactions resulting to inaccurate output resulting to either loss or less profit. This may affect the company in drafting the growth strategies due to inaccurate or constant data.


Enron should hire professional auditors to reveal and recover the monies lost in frauds by charging the guilty victims of the scandal. This will affect the top management like Lay or Skilling, since they were responsible and have the information for the occurrence of the scandal. The consultant will also be fired since it’s the one, which was on spot as it also offers the auditing services which are unfavorable and is against the company’s integrity.  The employees will also benefit since the money recovered will be compensated to those who lost their employment and also secure the current employees.

The company should also hire professional consultants and different auditing firm in order to set up a firm and stable vision of the company as explained by Collins and Porras (1996).  They should also regulate their guiding laws of conduct to control their financial system, which will prevent the frauds by drafting strict penalties to any victim found guilty on such cases. This will be highly welcomed by the employees since will help end the culture of scandals thereby securing their jobs as company grows. The implementation of new laws will also help the stakeholders who were harmed before especially partners and investors of Enron who experienced a major loss in their shares caused by the fall of Enron in the market.

The regulation of code of conducts will change the employee’s motives towards bad phenomena of the company (Sinclair, 1993) and co-operate in working together with one vision thereby promoting the growth of the company. This will also help other partners of the company also to grow profitably and revive the falling subsidiaries, also remove the fear from investors, and assure them growth.


As a strategic consultant, the best recommendation for Enron to implement is to regulate their accounting systems in order to prohibit the ownership of both the auditing and consulting services by the same accounting firm. The accounting firms have already started to serve their consulting services and businesses.

 The creation of SEC should also adopt the additional disclosure requirements which will eradicate their culture of greed as shown by Behr et al. (2002). Different regulators should also tighten the requirements for directors in order to be vigilant and provide the security and protection of the whistleblowers who might bring the improper behavior in the company to the attention of the public attention. As a final analysis of the Enron, the solution of the scandal lies in the directors’ attention and the truthfulness and integrity of the executives because every clever individual finds ways always to conceal the information or the fraud engagement.


  • Ethics comes from the top of the organization.  Enron’s code of ethics was based on four attributes: respect, integrity, communications, and excellence. Were the actions of Enron’s senior management and Board of Directors consistent with the code? Was the problem systemic, or just a few “bad apples”?

The actions of the top management of Enron were not consistent with the company’s code of ethics (Sims & Brinkman, 2003). This is because of the systemic problems of the Enron scandal which is the legal and regulatory structure in America where current laws and SEC regulations allow firms like Arthur Andersen to provide both the consulting services to an individual company and then also provide the audited report about the financial results of these consulting activities. This is an obvious conflict of interest that is built into the legal structure. A private company like Enron hires and pays its own auditor who has an incentive in order not to issue unfavorable making it to conflict the interests of the legal structure. Due to the fact that most large companies like Enron are allowed to manage the pension funds of their employees, the company has an incentive to use these funds in ways that advantage the company and disadvantages employees. This also shows that the problem was systematically derived from the legal system of the company.

  • What was the culture at Enron? How did the culture impact unethical activities at Enron?

The actions of leadership in Enron established a culture which has the values of greed and pride. This is against the printed code of ethics which described the company’s commitment to conducting the company’s business affairs in accordance with the applicable laws and in a moral and honest manner and this espoused the virtues of respect and integrity as core values, and the behaviors and attitudes of its people often stood on the opposing side. This culture contributed to unethical behavior among leadership in Enron where it was strengthened after establishment. This culture of greed is better seen in the actions which were taken by Andrew Fastow, the former Enron Chief Financial Officer and one of the company’s board of directors when he undertook an elaborate process of establishing the special partnerships to bundle assets and secure loans. The board of Enron then voted to suspend the code of ethics as they understand the Fastow involvement in these partnerships was a violation of the company’s code of ethics.


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