Introduction Why pick Enron?
The answer is that Enron is a well-documented story and we
can apply our method with the great advantage of retrospection to show how the end result
could have been predicted. It is also a good example to illustrate how ethics drives culture
which in turn pushes the ethical boundaries and is a key influence on all the four other key
elements of good corporate governance. History of Enron Enron was created in 1986 by Ken
Lay to take advantage of the opening he saw coming out of the deregulation of the natural
gas industry in the USA. What started as a pipelines company was transformed by the vision
of a McKinsey consultant, Jeff Skilling, who had the idea of applying models used in the
financial services industry to the deregulated gas industry. He persuaded Enron to set up a
Gas Bank through which buyers and sellers of natural gas could transact with each other via
a regulator (Enron) whose contractual arrangements would provide both parties with
reliability and predictability regarding pricing and delivery. Enron duly recruited him to run
this business and he rapidly built up a major gas trading operation through the early
nineties. During this time Enron was extending its pipeline operations into a wider power
supply business, initially in the USA and then on an international scale, completing a large
plant at Teesside in the UK and contracting to build a huge plant near Mumbai in India. In
due course it had deals all around the globe, from South America to China. The hard driving
expansion of Enron's power business worldwide created a global reputation for Enron.
Skilling's vision was to transform Enron into a giant, asset-light operation, trading power
generally and his next target was trading electricity. Lay was lobbying Washington hard to
deregulate electricity supply and in anticipation he and Skilling took Enron into California,
buying a power plant on the west coast. Enron's national reputation rested on the rapid
expansion of its domestic business and its steadily growing revenue and earnings from
trading. So, on the back of his track record, Skilling was appointed Chief Operating Officer by
Ken Lay and he then embarked upon transforming the whole of Enron to reflect his vision.
Observing the dotcom boom, Skilling decided Enron could create a business based on a
broadband network which could supply and trade bandwidth and he set out to build this at a
great pace. However, the experiment in deregulation in California didn't work well and in
due course was reversed with recriminations all round. Moreover, the international business
expansion wasn't underpinned by adequate administration and many of the contracts later
turned bad.
1. How did the corporate culture of Enron contribute to its bankruptcy?
https://www.chegg.com/homework-help/questions-and-answers/corporate-culture-enron-
contribute-bankruptcy-corporate-culture-enron-aggressive-arrogant--q23482351
2. What role did Enron's stakeholder relationships play in its demise? Examine the
company's relationships with employees, customers, investors, the media, auditors,
andattorneys.
3. How did the Enron scandal change expectations of corporate social responsibility?
https://www.ukessays.com/essays/management/the-enron-case-corporate-responsibility-
management-essay.php
