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Enron Case study

Enron Case study. Rebecca Gamboa Carole Gutierrez Maria Fernandez Joanne Gutierrez. Company Motto. “Respect Integrity C o mmunication And Excellence”. Early Beginnings. Formed in Omaha, Nebraska 1932. Known as Northern Natural Gas Company.

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Enron Case study

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  1. EnronCase study Rebecca Gamboa Carole Gutierrez Maria Fernandez Joanne Gutierrez

  2. Company Motto “Respect Integrity Communication And Excellence”

  3. Early Beginnings • Formed in Omaha, Nebraska 1932. • Known as Northern Natural Gas Company. • Reorganization led to a holding subsidiary of InterNorth 1985. • Merged with Houston Natural Gas. • CEO Kenneth Lay changes the name to Enron. • Headquarters is relocated to Houston, Texas.

  4. The fifth largest • company in the United States. • One of the world’s leading energy distributors. • Stated revenues of 111 billion dollars.

  5. Labor Force Approximately 22,000 employees.

  6. Principle Assets of Enron

  7. Promising Future Ahead!

  8. Fortune magazine 1996 -2001 “America’s Most Innovative Company” S T R E N G T H S

  9. Scandal of 2001.

  10. W EAKNESSES

  11. Chance of Redemption?

  12. Opportunities • Merger of two natural gas pipeline company’s – Houston Natural Gas & InterNorth. • Bandwidth trading was $36 million, more than gas & electricity combined in 2000. • Energy trading gave great profits in 2001.

  13. Unsuccessful Attempt.

  14. Threats • Tried to monopolize the broadband trading. • Regarded competitors as uncompromising and did not want to work with them to create profit. • Did not engage in collaborative markets that competitors worked with. • Should have collaborated with stakeholders, to protect the market share, and to create new products

  15. More threads: • Failed due to financers did not know about bandwidth or telecommunications. • Accounting irregularities. • No company trust. • Operated with great overconfidence and increased expectations with investors.

  16. Enron’s long-term debtdeclared : $13 billion Real Debt: $38 billionHidden debt: $25 billion Communication Problem

  17. Present Solution & Recommendations

  18. Solution/Recommendation 1 Enron could have structured their communication with their competitors instead of refusing to involve any communication whatsoever. Having brief communication would allow for the corporation to partake in healthy competition in such a way that allows them to expand and broaden their value of creating propositions for diverse industry players and competitors.

  19. Solution/Recommendation 2 The accounting representatives should have followed the guidelines of the Generally Accepted Accounting Principles (GAAP ) rather than violating them. As a result, financial documents contained incorrect financial information regarding the corporation’s financial status. By complying with the guidelines the appropriate assistance could have been provided to help.

  20. Solution/Recommendation 3 Each department within the corporation could have tried to maintain better communication with one another and its human resources department, to ensure that the proper courses of action were taken to ensure the best interest of the shareholders and employees whose pensions were invested in the corporations stock.

  21. Conclusion Enron Corporation’s main area of concern stemmed from the accounting representatives overlooking some crucial strategies involving falsified financial documentation that could have prevented the falling out of this booming trading corporation and its practices.

  22. References Cunningham, Gary E. and Jean E. Harris. (2006). Enron and Arthur Andersen: The case of the crooked E and fallen A. Global Perspectives on Accounting Education Volume 3. http://gpae.bryant.edu/~gpae/Vol3/Enron%20and%20Aurhur%20Andersen.pdf "Enron Scandal," Encarta Online Encyclopedia 2009. Retrieved on October 29, 2009 from http://encarta.msn.com Enron scandal. (2009, October 28). In Wikipedia, The Free Encyclopedia. Retrieved 19:14, October 30, 2009, from http://en.wikipedia.org/w/index.php?title=Enronscandal&oldid=322529264 McLean, Bethany. (2006). Is Enron Overpriced?http://money.cnn.com/2006/01/13/news/companies/enronoriginal_fortune/index.htm?postversion=2006011818  Schwartz, Andrew. (2003). Enron's Missed Opportunity: Enron's Refusal to Build a CollaborativeMarket Turned Bandwidth Trading into a Disaster. UC Berkeley: Berkeley Roundtable on the International Economy. Retrieved from: http://escholarship.org/uc/item/0k61f1nb Ferguson Niall, The Ascent of Money, Video http://www.pbs.org/wnet/ascentofmoney/featured/watch-the-two-hour-the-ascent-of-money/24/ Wikipedia: Enron http://en.wikipedia.org/wiki/Enron

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