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"Business is very risky." This is what my dad told me when we talked about business. This is true especially when people allot a huge sum of money and do not monitor their business well. Some companies tend to do everything just to maintain/keep the business. But it was different for the company that we discussed in class, which is Enron.
Enron : Former energy corporation that is considered the staple example for corporate corruption and accounting fraud. In 2001 it was uncovered that the company had position itself as a leader in the industry by falsifying accounting records company wide. The company filed for bankruptcy after the revelation and as of 2007 has sold the majority of its remaining assets. A number of company executives were also forced to pay stiff fines for their involvement in the accounting scheme. (businessdictionary.com, n.d.)
Enron was able to continue its success by becoming one of the companies to survive the dot-com bubble burst in 2000, and it was named as the most admired corporation by Fortune magazine. However, Enron was questioned by investor Jim Chanos and Fortune reporter Bethany McLean because of the irregularities about the company's financial statements and stock value. This started the divulgence with what was happening with Enron and its real status.
In the film, people would be able to see what they consider as one of the greatest corporate disasters in history. The top executives of Enron walked away with over a billion dollars and they left the investors and employees with nothing. The never before seen/heard evidences such as insider accounts, corporate audio and video tapes were also revealed in the film. Many people were involved with the company and the problem with Enron produced a tragic domino effect especially to the shareholders and employees. They say that what happened with Enron could shape the economy and ethical code for the years to come.
Enron was able to continue its success by becoming one of the companies to survive the dot-com bubble burst in 2000, and it was named as the most admired corporation by Fortune magazine. However, Enron was questioned by investor Jim Chanos and Fortune reporter Bethany McLean because of the irregularities about the company's financial statements and stock value. This started the divulgence with what was happening with Enron and its real status.
In the film, people would be able to see what they consider as one of the greatest corporate disasters in history. The top executives of Enron walked away with over a billion dollars and they left the investors and employees with nothing. The never before seen/heard evidences such as insider accounts, corporate audio and video tapes were also revealed in the film. Many people were involved with the company and the problem with Enron produced a tragic domino effect especially to the shareholders and employees. They say that what happened with Enron could shape the economy and ethical code for the years to come.
There are a few things that I learned after watching the film. Enron's downfall was because most of them focused on greed. It was individual to collective greed which was in the atmosphere of what they call the market euphoria and corporate arrogance. For a lot of people, the company was too good to be true but many still believed. Many were encouraged to buy stocks so that they could be part of the corporate mantra and fulfill their dream. Through time, the company made different deals including high-risk ones even if it was outside the company's typical asset control process. This was the start of their downfall because there was a loss in investor and creditor trust. The financial statements/books were falsified to disclose the complicated financial dealings. From this situation, we were able to see that the company also lacks transparency especially in reporting its financial status.
Enron wanted to portray itself as profitable and stable. In their TVC, it ended with a phrase: "Ask why, why, why" and this is what everyone did when they learned about what happened with the company. I think that the people in the company especially the ones in the top positions lack virtues. They focused on greed and they also lack moral compass. This is what happened with Andrew Fastow. He created a network of shell companies that were designed to do business with Enron. He did this so that there would be a dual purpose, first was sending money from Enron and second was hiding its increasing debt. He vested financial stake in these venture and used it to defraud Enron. He also takes advantage of the greed of Wall Street investment banks, wherein he pressured them to invest in his shell companies which would result to conducting business deals with himself. During his last visit in the country, miss asked him if he thought of the things he did, but what he said was that he was given permission by the other officers in Enron. He didn't really pray or asked for guide and last, he didn't consider what was ethical.
Based on what we learned in CSRGOVE, Enron officers should have practiced good corporate governance. This could have been their guide in managing the business/company. They need to learn that good corporate governance ensures that the business environment is fair and transparent and that companies can be held accountable for their actions. What Enron had was weak corporate governance which led to waste, mismanagement, and corruption. Only good governance can deliver sustainable good business performance. There are properly designed rules of governance that focus on implementing the values of fairness, transparency, accountability, and responsibility to both shareholders and stakeholders. This is what the company lacked which caused their downfall.
I think Enron should have stayed firm by taking things step-by-step. In my opinion, the company wanted an overnight success which was ineffective. They didn't do things properly and didn't follow the right steps. One of the biggest mistakes they did was lose the trust of everyone including their investors. Enron would have been a great company if only the people behind it followed good corporate governance and didn't think about themselves.
Sources:
http://www.businessdictionary.com/definition/Enron.html
http://www.imdb.com/title/tt1016268/plotsummary
Enron wanted to portray itself as profitable and stable. In their TVC, it ended with a phrase: "Ask why, why, why" and this is what everyone did when they learned about what happened with the company. I think that the people in the company especially the ones in the top positions lack virtues. They focused on greed and they also lack moral compass. This is what happened with Andrew Fastow. He created a network of shell companies that were designed to do business with Enron. He did this so that there would be a dual purpose, first was sending money from Enron and second was hiding its increasing debt. He vested financial stake in these venture and used it to defraud Enron. He also takes advantage of the greed of Wall Street investment banks, wherein he pressured them to invest in his shell companies which would result to conducting business deals with himself. During his last visit in the country, miss asked him if he thought of the things he did, but what he said was that he was given permission by the other officers in Enron. He didn't really pray or asked for guide and last, he didn't consider what was ethical.
Based on what we learned in CSRGOVE, Enron officers should have practiced good corporate governance. This could have been their guide in managing the business/company. They need to learn that good corporate governance ensures that the business environment is fair and transparent and that companies can be held accountable for their actions. What Enron had was weak corporate governance which led to waste, mismanagement, and corruption. Only good governance can deliver sustainable good business performance. There are properly designed rules of governance that focus on implementing the values of fairness, transparency, accountability, and responsibility to both shareholders and stakeholders. This is what the company lacked which caused their downfall.
I think Enron should have stayed firm by taking things step-by-step. In my opinion, the company wanted an overnight success which was ineffective. They didn't do things properly and didn't follow the right steps. One of the biggest mistakes they did was lose the trust of everyone including their investors. Enron would have been a great company if only the people behind it followed good corporate governance and didn't think about themselves.
Sources:
http://www.businessdictionary.com/definition/Enron.html
http://www.imdb.com/title/tt1016268/plotsummary
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