Examining a Business Failure
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Research a failure that occurred at a large organization such as Tyco, Chrysler/Daimler-Benz, Daewoo, WorldCom, or Enron.
1. Describe how specific organizational behavior theories could have predicted or can explain the failure of the company.
2. Compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure.
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1. Research a failure that occurred at a large organization such as Tyco, Chrysler/Daimler-Benz, Daewoo, WorldCom, or Enron. In 1.050 words, describe how specific organizational behavior theories could have predicted or can explain the failure of the company. Compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure.
Enron
The Enron scandal was a corporate scandal involving the American energy company Enron Corporation based in Houston, Texas and the accounting, auditing and consultancy firm Arthur Andersen, that was revealed in October 2001. (http://en.wikipedia.org/wiki/Enron_scandal)
Although the Enron's reported revenue was based on its exploitation of a loophole in accounting rules that allowed it to book revenue from huge energy-derivative contracts at their gross value, not their net value as is done with other securities transactions. To be fair, Enron's competitors such as Dynegy (nyse: DYN - news - people ) account for revenue the same way. The tactic may be legal, but few investors--and few Wall Street analysts--understood how Enron was booking revenue, even though the distorting technique is what allowed Enron to be billed as the "seventh-largest company in America." Enron's finances has focused on its balance sheet--in particular how it hid debt by allocating it to supposedly independent private partnerships. But the jet engine of Enron's share-price rise was not its asset and liability picture, but it's unbelievably increase in revenue: Between 1996 and 2000, Enron reported an increase in sales from $13.3 billion to $100.8 billion (http://www.forbes.com/2002/01/15/0115enron.html).
In 2002, CBS report that Americans believe there was wrongdoing at the Enron Corporation, although few are concerned that what happened to Enron's employees is likely to happen to them. And while many speculate that the Bush administration may not be telling ...
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