What brought about Enron's Collapse?

Essay by ladygemini July 2004

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What brought about Enron's Collapse?

What brought down Enron? Most X Americans would say that greed brought its demise. I would agree that greed did factor into the fall of Enron, once named "the most innovative company" but further investigation into the company and its business and accounting practices reveal more than greed. Mismanagement of huge proportions, disregard to organization, and financial irresponsibility are amongst key factors of its fall.

Enron wanted to be bigger, better, and more progressive than all other companies and it seemed to be well on its way but the company did not a top manager (Kenneth Lay) with the right interest at the right time in his company's objective and mission. Mr. Lay was Enron's chairman in title only, "Enron had a distracted, hand-offs chairman..."(Fowler).

The company's top manager must be accountable for all that happens in the company. They are "responsible for overseeing the whole organization..."

(McNamara). He or she must have real and productive interests, goals, direction and real leadership ability for the company and be able to influence others within the organization. Success is dependant upon that. With regards to accountability, real interest and leadership, Mr. Lay passed along his responsibilities to his right hand man, Jeff Skilling and began the downfall of Enron and the breakdown of its organizational structure.

Organizational structure is key to any and all businesses. A company's organizational structure equates with the company's wise decision-making abilities and is absolutely essential in reaching the company's objectives. The people chosen to make the company's wise and important decisions were clearly top management and but did not have productive objectives in mind. Key decision-making was left up to the chief financial officer and the chief operating officer. The scope of responsibility was outside their abilities. Their span of...