Enron Case Study

M7A1:Case Analysis: Enron’s Ethic Policies

Section 1: Introduction and situational analysis

Enron was formed in 1985 as a result of a merger between two Houston pipeline

companies. After deregulation of electrical power markets in 1988, Enron blossomed and

“redefined itself from energy delivery to energy broker”(Sims,Brinkman,2003). The lack of

regulation allowed Enron to skirt the boundaries and push the limits to maximize profit. This

lack of regulation led to Enron forming partnerships that allowed them to sell assets and create

earnings that artificially enhanced the bottom line. They basically were creating revenue that

simply was not there. This all arose from the culture that surrounded Enron, success. Employees

were seen as the best and brightest and simply did not fail. They constantly pushed the limit to

uphold that image. Another situation that plagued Enron was that of conflict of interest. Many of

Enron’s top executives ran or were partial owners in many companies that had partnerships with

Enron. This created a conflict of interest because Enron’s executives were the ones that reviewed

dealings with the companies. There was simply no oversight because they were basically

overseeing themselves. As this continued, Enron simply could not keep moving money from

company to company to cover the losses. “The company’s failure in 2001 represents the biggest

bankruptcy every while also spotlighting corporate America’s moral failings”(Silverstein,2012)

Section 2: Stakeholder Analysis:

The Key stakeholders in this case was Enron stockholders, employees, engineers,

customers and their families, factory workers and their families, communities around their

production facilities and American energy industry. This case showed that Enron was willing to

sacrifice everything for profit. Enron executives’ greed and want of success led to the disregard

of