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Ldr531 Managerial Organization

In: Business and Management

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Enron Managerial Organization
Ismael Cruz
University of Phoenix
Instructor Jerry Kahn

Enron Managerial Organization Organizational behavior theories help manage organizations with managerial issues, such as Enron, an energy company based in Houston, Texas, as in October 2001, revealed the largest accounting failure and internal financial corruption in U.S. history. Perhaps, the lack of transparency, and dishonest executives cause the company’s failure. The lack of specific organizational-behavior theories reviewed in this paper, help identify the reasons for Enron’s failure, and how the establishment and adherence to such theories could avoid such problems.
Enron’s History In 1985, Kenneth Lay created Enron by merging energy companies InterNorth and Houston Natural Gas, which became highly profitable through further diversifying and expanding its assets such as electricity plants, paper and pulp plants, gas pipelines, and other services. By 1992, Enron was the leader in natural gas sales n North America. From 1990 to 1998, the company’s stock had increased 311 percent, and its market capitalization was $60 billion by the end of 2000, which also received recognition as the most innovative company in America, by Fortune’s Most Admired Companies Survey (Roston, 2002).
Enron’s Scandal
President and Founder Kenneth Lay, with the aid of CEO Jeffrey Skilling, created Enron’s “special” board of executives, who were able to hide billions of dollars in deficit with a special team of executives, through accounting, and financial reporting loopholes, and special interest companies. This eventually was discovered when Enron’s stocks were less than $1 per share towards the end of 2001, coming down from a $90 per share in 2000, causing the Securities and Exchange Commission (SEC) to initiate an investigation (Roston, 2002). At the center of the…...

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