Enron was described as “House Of Cards” as it was built over a pool of gasoline. It all sort of became smoke and mirror. Louis Borget, former Enron's CEO was also exposed to be rerouting company’s money to offshore accounts. Once their schemes were discovered by the auditors, Kenneth Lay encourages them to "keep making us millions". However, the traders were fired once it was revealed that Enron's reserves were gambled away which nearly destroyed the company.
For this reason, the only solution is to have a good risk management plan in place that focuses on the larger threats. So this leads to the question, “what kinds of risks should a company be concerned with?” The author goes on to say that a big part of risk management is understanding the degree of the threat. There are many threats that can bring a company to a complete halt. In the insurance industry for example, anything that prevents the company and its agents from making claims payments, maintaining proper cash reserves, operational risks, financial risks, and especially any risks that involve the IT systems is a threat, because a failure of the systems that keep the company running can be disastrous. Financial institutions such as banks deal with these types of issues on a daily basis because of constant cash flow.
The perception of investors is determined by the information incorporated in the announcement itself and in firm specific characteristic, but also by economic conjuncture” The next reason of the board’s decisions lays in the fact that the GTX was prioritizing the relationships with stockholders, neglecting the other stakeholders at the same time. As for other kind of relationships between the stock prices, layoffs and mergers and acquisitions –
Brief overview of WorldCom’s case and general discussion of its fraud nature: Beresford, Katzenbach and Jr (2003) stated that, from 1999 until 2002, a few executives at WorldCom perpetrated accounting fraud that led to the largest bankruptcy in history. The principle business strategy of its CEO – aggressive growth through acquisitions underlined its collapse and eventually imposed pressure to management to commit fraud. In fact, WorldCom’s fraud was a consequence of a set of complex factors, including the existence of dominant senior management, structurally weak internal controls, inadequate audits by Arthur Andersen, the poor oversight of the Board, and pressure from Wall Street’s expectation, etc. The large scale collapses of WorldCom and Enron triggered immediate remedies of corporate governance, essentially the Sarbanes-Oxley Act, which aimed to solve the issue of “lack of confidence” in the reported financials. WorldCom’s fraud was an intentional misconduct of the perpetrated senior management that results in an $11 billion material misstatement in the financial statements via two principle forms: reduction of the reported line costs and exaggeration of reported revenues, in order to create an image of increased earnings and revenue and hold the line costs lower than the industry average rather than indicate the truth and fairness of WorldCom’s wealth and progress (Beresford et al, 2003).
DRP vs. BCP The terms Business Continuity Plan (BCP) and Disaster recovery Plan (DRP) are sometimes mistaken for each other, but they each have very different meanings. A BCP will pinpoint contingencies for continuing business should a disaster occur. The disaster could include but is not limited to natural disasters that cause an interruption in the business’ operation, information or security breach, communications failure, catastrophic hardware or software failures, fire, water damage, or complete power failure. A Business Continuity Plan will thereby allow a business to note key operational parameters to coordinate an encompassing Disaster Recovery Plan. The DRP would not be a complete document without the BCP.
Research Paper Nicki Hebert ENG 122 Prof. Hanscom February 22, 2010 Causes of Business Failure and Skills Needed to Keep a Business Afloat This paper will discuss the main causes of business failure and what skills are needed to keep a small business from failing. Business failure can be caused by many factors, but in some business literature, they treat business failure as a problem stemming from managerial failures. Small business owners should possess eight common traits if they intend on running a successful business. These traits are looked at differently among people but for the most part, they are all the same. Following key facts, business failure can be prevented.
The initial structure of IJV will inevitably lead to instability and dissolution (Yan and Gray, 1994), particularly when IJVs are treated as short-term transitional organizations by partners and enter IJVs with expedient motives. The processual approach stresses the importance of bargaining power within IJV, where the maneuvers of the parent companies in IJV is to enhance control over the partners and achieves its goal (Hamel, 1991). Here, IJV only serves as short-term instrument to help the company to achieve self-interest. Exploitations of weaknesses of the partners or opportunistic acts are common means of gaining advantages with such motive (ibid). Yan and Gray (1994) therefore argue that such is likely to provoke a “obsolescing bargain”, generating political power play within partners and eventually lead to poor performance or even dissolution (Shenkar and Yan, 2002, cited in Soulsby and Clark,
Being reactive or proactive is not just a mind-frame, it is also a potential business strategy depending on what the situation calls for. Reactive is when you react to situations affecting your business. For instance, say your competitor lowers the price of their goods. Your natural reaction is to cut down on prices too. This may seem like a viable solution at first, but reacting to situations the same way at all times may not the best solution for your business.
The country was faced with huge losses in manpower and economic destruction after the war, despite being one of the victors. The country was mourning the loss of an entire young male generation. With the onset of the Great Depression, the French people felt the democratic system had failed them and so they looked to extremist organisations to lead them. As the international situation was worsening, it became clear that the instability in France from 1920 to 1940 meant the nation was divided, depressed and in danger of being captured by the Germans in 1940. Immediately after the First World War, there was a period of political instability with the election of four different Prime Ministers in three years.
The irregular accounting practices, including manipulating stock prices, caused Enron to have to file bankruptcy in December of 2001 (Thomas, 2002). The scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s (Hanson, 2002). Enron collapsed for many reasons. .Among the many reasons were the lack of attention shown by members of the Enron board of directors to the books financial entities and the lack of truthfulness by management about the health of the company and its business operations (Hanson, 2002). The firm’s senior managers had engaged in fraud for an extended period through a scheme in which partnerships owned by the managers could receive payment for goods and services never provided to Enron.