Examining a Business Failure - Enron Corporation

Examining a Business Failure - Enron Corporation

Enron scandal is considered one of the most notorious within the American business history. It is a prime example of how behavior of individuals in an organization can cause the largest bankruptcy of its time. Organizational Behavior and theories are a great way to predict the actions of others. Organizational Behavior (OB) is a field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization’s effectiveness (Robbins & Judge, 2011). It obtains a wide range of topics with the likes of human behavior, change, leadership, teams, etc. This paper provides insight on how the organizational behaviors of Enron and how leadership, management and organizational structures contributed to the failure and how a proper organizational behavior of management and leadership could have impacted this company positively.

Enron was a multinational energy corporation that was founded in Omaha, Nebraska in 1985 (Laws.com, 2011). Enron grew from nowhere to one of the largest company in America with over 21,000 staff in more than 40 countries but was found later on that it was a scam all along when it was revealed later on in 2001 that this firm lied about its profits and concealed debts so that it didn’t show up in the company’s account (Enron Scandal at-a-glance, 2011). The scandal involved irregular accounting procedures of which took place during the 1900s. Stock prices were also manipulated, and all of this eventually caused Enron to file bankruptcy in December of 2001.

Just like most companies who are seeking to make the most profit possible, the initial goal at Enron was to create an enterprise that would create as much profit and increasing dividends paid to their shareholders. Enron became really success and caused the executive board to become too relaxed because of its success, thus leading to the oversight of management. Enron was growing and the executive became very greedy.

Enron also counted on the sale of the company’s stock. The problem that caused the scandal was that the stock not as valuable as the executives expected. Because the goal was mainly to increase the wealth of a group of people in the company and to increase the value of Enron’s stock, the executive team then relied on new capital assets and hid the possible risks to the stakeholders. Enron’s executive team continued this method that eventually became the end to one of the most successful organizations in the United States (Gudinkunst, 2003).

What really went wrong at Enron? According to the Organizational Behavior study, individuals, groups and structure behavior impact greatly in an organization. Individuals’ explanations on Enron scandal