Question

Managerial and Leadership implications of Enron scandal and its impact on stakeholders.

Answer 1

The managerial and leadership implications of Enron scandal are bankruptcy of the company, loss of employment by the employees including their retirement savings, social and economic disruptions as many of the deals done by the company were fraudalent, low moral and ethical standards, misuse of power, irresponsible corporate behavoiur, failure of communication based responsibilities, lack of transparency of company operations , false reporting of company performance and lack of accountability for actions by management and leadership.

Enron as a company started with unconventional approach towards management and business. It started with a bold and ambitious approach towards business. The company had skilled workers who worked without much control and supervison from the top management. The emphasis of the company was on profits.

The liberal work culture, emphasis on economic gains and lack of accountability led to the collapse of the company as there was fraudalent reporting of sales , revenues, profits. Exaggerated self promotion and unrealistic commitments were reasons behind the false portrayal by the company. Incorrect accounting was done to hide high debts and the top officials manipulated accounts in order to enrich themselves . This practices misled the stakeholders and in identifying the actual business condition and taking any timely remedial measures.

Various stakeholders like government, shareholders, employees, suppliers and customers were negatively impacted. Customers lost their source of supply and suffered from inflation. Government faced disturbed market mechanisms and economic losses. Shareholders lost trust in the mechanism of corporate filings and were upset over their investments losing interest in investing in the company. Employees lost their job and source of income affecting their personal lies, friends and family due to this scandal.