These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer – and not just shareholder – value. Because the Enron corporate culture was not well grounded, a single scorecard – maximized price per share of common stock – became its reason for being, and even its positive values became liabilities” (Schuler, 2002, para. 3). Unethical professional values were symptoms of systemic problems for Enron.
Identify the possible causes of conflict which may arise in this situation. A cause of conflict would be that it is not fair on the taxpayer because they do not have say in the company; this is because they only own a minority share. The taxpayers are giving their money to bail out the banks and in return they may not receive a sufficient return on their share. Once again the taxpayer is being forced to bail out a major bank without it being in the interest of the taxpayer. This links in with an argument from shadow chancellor Ed Balls who claims that Nick Clegg’s proposal has not been thoroughly thought through, because it is not in the long-term interests of the taxpayer.
The loophole employed by Enron has since been plugged by the Sarbanes-Oxley Act, however, the external auditors’ failure to exercise professional judgment in relation to such dealings reflects poorly on the effectiveness of their audit practices. The external auditors’ inability to recognize the nature of these special entities and the transactions being entered into by Enron prevented the auditors from recognizing them as part of the larger Enron economic entity. As a result, revenues were significantly overstated while liabilities were
Enron Corporation did not give the CFO’s factual or expected benefits from these previous transactions or provide financial statements in its entirety. Not changing the original structure could have been completely different. Enron made a huge decision by hiring people that was outside the company and giving them the power to make critical decisions that would affect the organization. The reward system within the company changed and gave the Top performers more opportunity for bonus and stock options. Since this system was organized by an internal authority, it did not work too well.
The general public and news reporting agencies would have created uproar. SCOTT SULLIVAN: Scott Sullivan, the CFO of WorldCom was not acting in an ethical manner whatsoever. Once he found out about the internal audit and the findings, he started asking questions to those in charge of performing the audit. Why would a CFO be so concerned about an internal audit now, when there been so little interest in the past? Sullivan started to become more involved in the internal audit.
The company’s proforma statements did not take into account any external factors such as a retail recession taking place. The amount of money invested in inventory is almost double what was forecasted for the nine-month period. Profit margin was only 10%, which was much lower than the forecasted 15-30%. By October of 1995 it should have been obvious to SureCut Shears that sales were not keeping up with what was forecasted causing inventory to build up. Conclusion: If Fischer wants to be able to repay his loan he needs to be more accurate
The goals of the company do not fit managers’ personal goals. * Organizational justice (OB, p. 256) was taken to extremes : * Uniform reward for branch managers did not take into account location and the
INTRODUCTION He didn’t coin the term “lemons,” but whenever consumers get stuck with one - whether it’s a used car, a faulty appliance or a less-than-adequate health care insurance policy - George Akerlof’s prize-winning theory comes alive. When some parties to business transactions may have an information advantage over others, the economy is said to be characterized by information asymmetry. Information asymmetry causes markets to become inefficient, since all the market participants do not have access to the information they need for their decision making processes. There are two types of information asymmetry. The first is adverse selection.
2. Because of the government’s lack of knowledge or lack of care to what happened with the money, the bailouts of 2008 weren’t used how they were originally planned for. The money was used to pay top executives instead of actually bailing the company out. 3. Labor unions have really diminished over the years.
2. First mistake is that he did not prepare enough for this short meeting with Norio, and he just rushed into the signing the contract part. Second one is that he did not sense what his client wanted and obviously had a difficulty to understand cultural differences. 3. I think Norio thought the company he cooperated with was not respectful for their meeting, because he sent out some messages to Michael about missing predecessor Roger was disturbing and the duration of the meeting was only five minutes.