March 5, 2011
Enron was an old line energy company, owning electric power production facilities and natural gas pipelines. It engaged in several acquisitions during the late 1980s and the 1990s that dramatically increased its size. Its acquisitions included power companies in the U.S. and abroad, as well as investments in various energy and technology companies. In the 1990s, Enron reorganized itself as an energy trading company, whose primary form of business was to trade in various energy vehicles, including contracts to provide electric power in the future at pre-determined prices and similar contracts to deliver natural gas, water rights, wind power systems, broad band …show more content…
2. Discuss whether Enron’s officers acted within the scope of the authority. Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. This provided ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this (Enron, n.d). Enron’s officers did not act within the scope of their authority, when Enron acted dishonestly and unethically to benefit over its shareholders and members, they were no longer in the scope of their authority.
3. Describe the corporate culture at Enron. There are clear strengths and limitations of Enron’s culture that led to Enron’s demise. Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. Once the values of risk taking and creativity led to more and more aggressive partnership arrangements to maximize share value and hide debt, the company failed to check its creativity with an equal commitment to