Enron Failure Enron Corporation started with Kenneth Lay merging two regional gas pipeline companies and evolving into the largest and most successful companies in the energy field. In the 1990s the energy industry changed around the world and Enron saw the opportunity to go global buying companies from United Kingdom to Latin America to India. However, Enron’s leadership were ambitious they want to be the biggest energy industry in the United States and the world. The result of the ambitious plan the company began to expend and invert with no control then the leadership started to opaque financial reports and creating off- balance sheet by private companies to provide the liquidity it needed for the rapid growth of the trading operations. The company change how to managed the business by conservative engineers in a low risk environment to an entrepreneurial, innovative corporate culture where people were creating new products, opening new markets, and reinventing a new whole business model, but the story of this big and innovative company turn for the worst Enron filed bankruptcy in December 2001.
The company had both a strong internet and print media following so, Bob Harrell was charged with building a national sales force. Jugenheimer and Kelley note, “After much debate within the brick walls of Glib Media, Bob persuaded his management to establish a commission deal with existing media rep companies as a means of quickly ramping up a national sales arm” (p. 89). The five regional media firms were set up with a sliding commission on sales. In addition, Bob indicated to the firms that Glib Media would only offer a twenty percent discount on media to all their customers and would not negotiate a larger discount. Bob has previously experienced similar requests from other regions and has turned them down when additional discounts on sales have been requested.
Harold Holmes, the new banker in charge of the Reed account requests to see company books and after examining what Reed presented, decided to deny the increase in the Reed credit line. Additionally, Reed owes the bank in excess of $100,000 which Holmes has requested payment within 30 days. Holmes suggested changes Reed could make to make his business profitable again and be able to stay on top of debt. These changes included hiring a consultant to overlook the financial and inventory aspects of the business, and reducing inventory and account receivables to the industry average. Upon reviewing the balancer sheet, Holmes suggested accounts receivable being considerably reduced, since this was an area which was controllable.
In 1990, Enron’s CFO Jeff Skilling hired a well knowledgeable businessman by the name of Andrew Fastow who was well known for his works in the deregulation of the energy market. Enron’s company grew mainly due to the marketing and promoting its stock prices. Ex-employees stated the company posted current stock prices in elevators, bathrooms and other available areas of the building. From 1996 to 2001 they were named “America’s Most Innovative Company” by Fortune magazine and also made the “100 Best Companies to Work for in America in 2000. The case of Enron is said to be a “smoke and mirrors” act dictated by top executives presenting the positive financial wealth of the company.
Society as a whole is responsible to conduct business ethically. Parallel to the formula that we use for inventing the laws that a society created to promote specific behaviors and actions that are appropriate to build trust and relationship, it is similar in corporations' behavior. According to Svensson & Woods "Society does have expectations of business and of its business leaders" (Svensson & Woods, 2008, p. 306). Ethical business behavior is a combination of values and normative ethics, which drive an organization. When analyzing Anglo-American and Primark for this case study.
In order to evaluate the success of those decisions, managers must be able to analyze their decisions and fully understand the impact past decisions will have on the past, present, and future health of the company. The tools to analyze the business in such a manner are found in corporate finance. Thus corporate finance is important to all managers because it provides the necessary tools to evaluate decisions that satisfy every company’s two main goals. Brigham, Ehrhardt. Financial Management: Theory & Practice, 13th Edition.
The AICPA have several publication that helps with guiding the accounting profession and to enhance the member’s technical and professional abilities. One thing that the AICPA requires of their Accountants and CPAs is to continue with professional education, so that they will stay abreast of all current accounting and business issues. The AICPA is considered the foundation of ethical reasoning in accounting because each individual in the accounting profession whether they are certified or not has the obligation to be ethical with the public in business dealings and having access to financial information. All
In my opinion, all this cannot do without Tony Hsieh, the CEO of Zappos. He invested $350 million of his own money to change downtown Las Vegas, encountered the dilemma of out of money twice, helped company make it through and finally made a profit, and he even rejected a buyout offer by Amazon until Amazon had come to appreciate their company culture as well as their strong sales. He mentioned in Emily Yellin’s book that “while there [was] this kind of [daydream] of the best service here, we still [had] to make [a decision] at the end of the day. We still [had] financial goals to make, your call was important to us. [And] we still [had] to look at P&L statements, and a balance sheet, and [figured] out what [were] the best place to invest our resources to have the biggest return.” With the outstanding leadership of him, Zappos gradually built up its own brand effect which is famous for its brilliant customer service.
An efficient, effective, and successful accountant must be prepared to adhere to a steadfast code of ethics. At some point in their career, most accountants will encounter challenges that will test their resolve. There will inevitably be pressure from clients and others to manipulate financial statements or to reveal confidential information they feel may give them an economic advantage. Therefore it is important that accountants learn to practice with impeccable ethics and maintain a level of professionalism that is beyond reproach. According to the American Institute of Certified Public Accountants Code of Professional
The strength or limitation of a capital market will result in the indication of how well a manufacturing company market value will be perceived. The most important goal of an effective manager is to raise the perceived value of a company. Hi Jamie This is a great response to the discussion question and was very informative. It is very important for a manager to have knowledge on capital markets. It is important to do a thorough review of all performance activities up to the current date.