Enron’s Business Ethics Failure

Content

1. Overview ............................................................................................3

2. The Fall of Enron ...............................................................................4

3. Enron's ethical dilemmas ..................................................................6

4. Conslucions .......................................................................................7

5. Bibliography ......................................................................................8

1. Overview

The goal of this report is to analyze business ethics in the context of the Enron scandal.

Enron scandal became a classical example of how a major disregard for ethics and law occurred. It becomes obvious that the institution of business education has not paid a sufficient amount of attention in ethical guidance in executive management, before Enron's bankruptcy.

Multiple business principles are involved in the rise of fall of Enron. In order to succeed in today's evolving global market, organizations must adopt business principles and practices of knowledge sharing, shareholder protection and ethical business practices.

Currently, business ethics are considered to be very important, but there are still many organizations that do not engage in ethical behavior, not toward their employees and not toward other companies they work with, such as distributors and suppliers.

The behavior of Enron represents the need of organizations to evaluate their business practices from the bottom up, in order to design an organizational culture as well as organize the management team that will be committed to the benefit of all stakeholders.

This report will look at how Enron failed in various business practices including organizational development, business ethics, organizational culture. The report will specify how traditional business ethic codes were violated and lead the organization to bankruptcy.

As a result of the Enron scandal, corporate leaders, employees and the companies that represented Enron (Arthur Andersen) were affected, as well as the public. Enron destroyed the public's view that business operates for the good of the people, and promoted that honesty and integrity do not mean anything in business relationships.

2. The Fall of Enron

Enron became one of the largest natural gas and energy trading companies in the world.

During the 90's Enron was considered as innovative company within the global business market. Enron was known for its unique and innovative technologies and unique approach to trading in the world of e-commerce.

However, "Enron's success was short lived once officials discovered the company misrepresented itself by falsifying income statements and lying about the value of equity the company shared" (NRP, 2005). Enron collapsed, and the collapse was huge. Enron actually suffered from large debts and losses while the accounting firm Arthur Anderson helped the company to hide those losses. In 2001 the company was announced to be in a process of bankruptcy. The Enron scandal shocked most of the nation, and seriously damaged the financial life of many individuals who worked for the company. A lot of these people were nearing retirement age and everything they had worked for all of their lives was lost.

The company began to collapse by admitting that there had been falsified bookkeeping, and that the profits were actually balanced out by loss and charges that were not recorded. The stock that was selling at $90 per share two years before the collapse was suddenly worth 26 cents per share. Because of this, the company