1. What was the corporate culture like at Enron?

What contributed to creating

this culture?
In today's business environment, culture has a huge impact on the performance of an
organization. The adoption of organizational culture as an effective control tool
provides an opportunity to influence trust and evaluation. In Enron's case, its
corporate culture played a major role in the company's downfall. It is a culture of
greed and making money, such attitudes seep into the entire company from the top
down to individual workers. The organizational culture supported unethical practices
– corruption, fraud and forgery became common. The leadership is blindsided by
greed and ambition, their decisions go terribly wrong. As a result, the company fell
and the managers paid with fines and imprisonment. Disregard for organizational
culture, poor management, and greed were among the main factors that brought Enron
“the most innovative company” down.
Enron's top manager (Kenneth Lay) did not have the right goals, interests, and
mission in the organization to influence others and the true interests and goals of the
company. K. Lay's position as president is just a corporate title and proof of that is the
act of transferring responsibility to Jeff Skilling. It can be seen as the countdown of
the organizational breakdown that is relevant to the bottom line of all businesses.
Enron's leadership couldn't help but offer guidance to keep the business alive. It's
clear evidence that Jeff Skilling has proclaimed Enron's corporate culture - a culture
of greed, corruption, and deception. He wanted to make a profit at all costs, recruiting
practices became obsessed with finding aggressive, greedy, unethical employees who
could provide short-term returns on demand. organization's. Enron has no respect or
responsible decision-making. The management of the organization is completely
disrupted by the company executives who turn over their responsibilities to
unprofessional employees and do not have strict performance standards for their
business. surname. Senior management failed to maintain an open and trusting
relationship with employees. The downfall is due to the lack of respect, lack of care
by the leadership and no real goal. The company's massive losses destroyed the lives
of Enron employees and investors who had trusted and invested heavily in the
business.
2.  What was the company like to work for (list the positives and negatives)?
Positive:
Even with the loss of thousands of jobs and millions of dollars, there are lessons to be
learned from Enron, and those lessons can be valuable byproducts of the company's
downfall. Many believe it is important for the government to get involved in the case
against Enron executives. They believe it sends a message that manipulation of
financial statements will not be tolerated. In that respect, the prosecution of Lay and
Skilling has hit the mark for many. Most importantly, the collapse of Enron brought
attention to issues closely related to financial reporting fraud and fraud by executives.
Good corporate governance has become a priority for many companies, and a focus
on ethics and integrity in financial reporting has helped increase investor confidence
in some companies.

Negative:
Enron's collapse caused thousands of people to lose their jobs and pension funds, and
investors to lose millions of dollars. The trust of the investment community and the
general public has been compromised. The above accounting regulations have created
enormous costs for many companies. The implementation of Sarbanes-Oxley has cost
public companies millions and millions of dollars. And while there are certainly
positive results from revised controls for the accounting and financial reporting
systems, there are questions about whether those positive results can be offset for
huge costs or not.
The compromise on auditor independence during the Enron crisis changed the audit
profession forever. New regulations on auditors have been created, while others have
been revised to provide more clarity on auditor responsibilities. Fraud now plays a
larger role in the planning and execution of audits. There is no finite cost to the fallout
from the Enron scandal and fallout. The costs continue as former employees try to
rebuild their lives and retirement accounts. Companies will continue to shoulder the
costs year after year as they comply with regulations put in place after the collapse of
Enron. Everything I've seen indicates that the manipulation of financial statements at
Enron goes beyond bad management. A bad investment or a bad management
decision is one thing. It is another thing to create fake deals and entities that increase a
company's earnings significantly and unfairly. It was the greed of the moderators that
pulled out millions of dollars before the collapse of Enron.

3. Were Lay and Skilling effective leaders? Explain.

While both Lay and Skilling were essentially managers appointed by those with the
most shares in Enron, it was clear that during their tenure they possessed leadership
qualities that influenced their subordinates.
Jeff Skilling, CEO of Enron is seen as the leader in this case. He is energetic,
intelligent and possesses exemplary leadership qualities, which has contributed to the
aggressive culture of competition in the company. He has inspired many people
including stock holders, employees, media and even brokers, stock analysts. These
people followed him blindly because of his charismatic leadership style. The
functional approach to leadership shows that Skilling earned its leadership status as
recognized with Enron's visionary move into the online trading medium.
Unfortunately, it's possible that this new complex transaction has paved the way for
accounting fraud to emerge and cause problems. His charisma has many dark
tendencies that ignore the ethical side of the business, causing the company to go
down for a few years.

Lay is widely admired for his rise from a humble family of preachers to "Washington
insiders" and CEO of a billion-dollar company. In the US, individualism is seen as a
predominant culture in the workplace and so the influence of CEO Enron Lay is
enormous. Once led, Lay flatly lied to his subordinates and investors about Enron's
financial condition when it was in financial trouble. This prolongs the duration of the
debt and may be the reason for the speed of eventual collapse.

4. Can you be effective in inspiring people and not be honest, moral, or ethical?
Explain. 
The key to excellent leadership lies in the ability to relate effectively with people and
their emotions. The goal of effective skills is good relationship management.
Managing relationships will include the ability to develop others, inspire, resolve
conflicts, and build a spirit of cooperation. What is essential to great leadership is the
ability to inspire others to give their best. When people choose to give their best,
satisfaction increases, pride grows, progress is enhanced, productivity is improved,
sustainability is enhanced, and profits are generated.

5. Besides Enron’s top leadership, who else played a role in Enron’s downfall?
- The board of directors, which abandoned Enron's conflict of interest rules to allow
Fastow to run the partnerships, known as LJM and Chewco, failed in its oversight
duties. Although it has established procedures to oversee Fastow's compensation.
- Enron's external auditor, Arthur Andersen LLP, failed to fulfill his professional
responsibilities in his audit work. Andersen was paid $5.7 million specifically to
review and approve the establishment of the partnership that led to Enron's demise.
- The firm's external law firm, Vinson & Elkins, should have provided a stronger,
more objective, and critical voice when considering Enron's necessary disclosures to
investors regarding its transactions. Complex collaborative translation and the role of
Fastow.
- Michael J. Kopper, an assistant at Fastow who made $10 million from the
partnership, and Ben F. Glisan Jr., an Enron accountant who later became the
company's treasurer refused to be interviewed.

6. What role did the value of the company’s stock play in the overall situation
with Enron? Please also share the history of the value of the stock (on a graph or
chart) from beginning to end. 
In 1985, Kenneth Lay merged Houston Natural Gas and InterNorth to form the energy
company Enron. In the early 1990s, Lay contributed to the campaign to sell electricity
at market prices, so that traders like Enron could sell energy at a higher price and
significantly increase their profits. By 1992, Enron had grown to become North
America's largest natural gas trader. Enron's stock price skyrocketed, jumping 311%
from the early 1990s to the end of 1998, outpacing the growth rate of the S&P 500
index. In the two millennium hinge years, Enron's share price continued to increase by
56% and 87%, while the S&P index rose 20% in 1999 and fell 10% in 2000. Enron
continued to be a shining star in the stock market.
As of December 31, 2000, Enron stock was priced at $83.13 per share and the
company's market capitalization surpassed the $60 billion mark, 70 times earnings
and six times book value, showing that the stock market high expectations on the
future prospects of Enron. In addition, Enron has been rated as "America's most
innovative company" by Fortune Magazine for 6 consecutive years.
However, when the case broke in October 2001, Enron officially disclosed a huge
quarterly loss and said it had systematically overstated earnings for at least four years.
Enron stock fell from its peak to less than $1 by the end of November 2001.
7. Please list several stakeholders and how they were harmed the downfall of
Enron.
Stakeholders are customers, investors, employees, suppliers, government entities and
many others who are “involved” or secured in some part of categories, activities,
markets. , industry and organizational results. There are two types of stakeholders:
primary stakeholders and secondary stakeholders. The main stakeholders are the
people with whom they associate and the assets are absolutely fundamental to the
existence of the association. These include representatives, customers, and investors
as well as regulatory agencies and networks that provide important frameworks.
Secondary stakeholders are not typically connected specifically in conversations with
an organization, and these stakeholders are not the basis of the organization's
existence. These include media outlets, exchange links and small gatherings.
Affected stakeholders in this case are executive managers, employees and
shareholders. Stock owners lose money when investments are lost. Employees
inadvertently have to be separated from their positions and as a result, they can no
longer rely on their retirement savings from the company. Managers believe in
competing to be the best and protecting their reputation.
8. What various other stakeholders (besides the top management of Enron)
played a role in helping to create and /or maintain this scandal? What did each
have to gain (why did they do what they did)?

9. What ever happened to main people involved in Enron (e.g. Ken Lay, Jeff
Skilling, Andrew Fastow, Lou Pai, Sheri Watkins, etc.)? [what was the outcome
AND where are they now? Look it up and tell me the outcome for each of them.]
- Kenneth Lay, founder, former president and chief executive officer: Lay founded
Enron with the merger of two regional natural gas pipeline companies and over the
course of the next 16 years. In 2004, he was indicted by a grand jury for his role in
widespread public fraud schemes and charged by regulators with illegally profiting
more than $90 million from the sale of shares. promissory note. A jury convicted him
but the charge was reduced after he died at the age of 64 in July 2006 while on
vacation, just months before his sentence  was scheduled to take place.
- Jeffrey Skilling, former president and COO: Skilling came up with the idea to
transform Enron from a gas company into a broker of natural gas contracts between
producers and wholesalers. Skills was hired to lead that effort and eventually became
CEO of Enron, for a short time, before quitting in July 2001 just a few months after
assuming the role. In 2006, he was found guilty by a Houston jury of conspiracy to
commit securities fraud, making false statements to auditors, and insider trading. His
24-year prison sentence was eventually commuted and he was released from prison in
2019.
- Andrew Fastow, former chief financial officer: Fastow, is considered one of the
main architects of using off-the-book partnerships to hide billions of dollars in losses
and debt, committing securities fraud and money transfers in 2004 and was sentenced
to six years in prison. His wife, Lea, also worked at Enron, where she was assistant
treasurer. She was sentenced to one year in prison. Last year, Fastow said he takes
"full responsibility" for his actions and considers himself "probably the person most
responsible for Enron's failure"
- Lou Pai, former CEO of Enron Energy Services: Pai runs Enron's retail energy unit,
coming to the company after working at ConocoPhillips and DuPont. He left Enron
six months before it collapsed in late 2001, pocketing more than $265 million from
exercising Enron options and selling stock. Pai was later featured in the news as a
symbol of Enron excesses, with the alleged aim of liking corporate jets and strip
clubs. In 2008, Pai paid insider trading fees and agreed to pay managers $31.5
million. He has not admitted wrongdoing and he has not been charged with a crime.

- Sherron Watkins, the whistleblower who started it all: In August 2001, Watkins
warned Lay about problems with the company's books, warning in a memo that Enron
could "cause a wave wave of accounting scandals”. She was hailed as one of Time
Magazine's Person of the Year in 2002 along with two other whistleblowers,
WorldCom's Cynthia Cooper and FBI's Coleen Rowley. Watkins is currently the
"executive director" at Texas State University's McCoy School of Business and
teaches a course at UNC's Kenan-Flagler School of Business, she told Bloomberg
News.

10.What new legislation (laws and regulations) resulted from the Enron case
(and other similar cases)?

The scandal led to a wave of new regulations and laws designed to increase the
accuracy of financial reporting for publicly traded companies. The most important of
these measures, the Sarbanes-Oxley Act (2002), imposes harsh penalties for
destroying, altering or falsifying financial records. The act also prohibits “auditing”
firms from conducting any “concurrent” consulting business for the same client.

11. In business, what keeps senior management from doing the wrong thing? 
Managers play an important role, they are responsible for operating, influencing and
creating trust for employees. In business, the important factor that makes a good
leader is ethics. Ethics in business creates trust and human values, thereby helping
businesses to stay strong in today's competitive marketplace. A good manager needs
to understand the value of people, they believe in effective two-way communication
and listening, creating an environment in which employees are empowered to take on
their jobs. Show leadership and clear direction, Believe  in teamwork and Put the
customer at the heart of your reason for being, and treat the reporting staff as
customers.
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