Essay

The Enron corporation was created out of the merger of two gas pipelines companies in 1985. When this company started it provided products and services related to natural gas, electricity and communication for its wholesale and retail customers. Enron company transported natural gas through pipelines to customers all over the United States. By this we can understand that this Enron Company was really a big company and it can win peoples heart by making a believe in them that this company is making a lot of profit. This company also marketed natural gas, electricity and other commodities globally. It also involved in the development, construction and operation of power plants, pipelines and other energy related projects all over the world including the delivery and management of energy to retail customers in both the industrial and commercial business sectors. The achievements of the company in early 1990’s was started by the CEO Jeffrey Skilling, Chairperson Ken Lay and CFO Andrew Fastow. These master minds transformed Enron from an old style electricity and gas company into a $150million energy company and Wall Street favorite and traded power contracts in the investment markets. From 1998 to 2000 alone Enron’s revenue grew from about $31billion to more than $100billion making Enron Corporation the seventh largest company in the world. How'' The income from wholesale energy represented 93% of 2000 revenues, the other 4% derived from natural gas and electricity. The other 3 % came from broadband services and exploration. But with surprise it was that in that year the actual profit earned was not $100billion and not even near that since the profit was only $42million. the examiner found that despite Enron’s claim of $3billion in cash flow in 2000, the company had the cash flow of negative $154 million(-$154m). such a big game was being played around the company. Thus this essay highlights on the contribution of the corporate culture towards the collapse of Enron Corporation, how the bankers, auditors and attorneys contribute to the demise and what role the financial officer played in creating the problem that lead to such huge collapse in downfall of such a company to which people had so much trust and invested in this company blindly. To begin with, the corporate culture of the Enron’s case contributed to the company’s downfall by: Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer - and not just shareholder - value. Because the Enron corporate culture was not well grounded, a single scorecard - maximized price per share of common stock - became its reason for being, and even its positive values became liabilities. Enron’s corporate culture also seemed to embrace a value - massive size - that is not so much a value as it is a strategy through which to achieve a larger mission. This dedication to sheer size, left unchecked, made the company prone to use of its size to bully and intimidate those who, for example, questioned some its balance sheet practices. Enron became arrogant.Once the values of risk taking and creativity led to more and more aggressive partnership arrangements to maximize share value and, for example, hide debt, the company failed to check its “creativity” with an equal commitment to integrity.