Enron

ENRON: The Business Failure Critical Analysis

Presented by-: Prabhat Mani Tripathi

Overview  Background of Enron  Source of Enron’s problems  Ethical dilemma  Controversies happened  Moral theories  Conclusion – Who’s to blame?  Sources

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Background of Enron Once the 20th largest company in the world Enron dealt mainly with energy and international trade America’s largest supplier of energy Dealt with many overseas companies involving millions of dollars

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The source of Enron’s problems Enron started to collapse in June, 2001 Used poor accounting procedures Failed to record all assets on balance sheets This problem was compounded thousands of times

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Graph of Enron’s stock prices in 2001 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00

December

November

October

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May

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March

September

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February

January

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Ethical dilemma Stockholder reports inform public about financial information and business transactions Enron officials did not notify public about accounting practices Should Enron have informed the public/stockholders? Page  6

First side – Corporate Officials  These include Ken Lay, Jeff Skilling, and Andrew Fastow  Believe Enron was great for economy  Circulated money, provided jobs, dealt with international companies  Did not inform public in order to keep Enron in business

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Public/Stockholders Believed they should have been informed about accounting practices Most lost all of their retirement funds and investments One lost over $700,000 in retirement funds invested in Enron

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Conclusion  Enron should have informed public in stockholder reports  Many would have saved all their money  If Enron was more closely regulated, could this have been prevented?  Enron scandal should be a lesson for future businesses involving ethical dilemmas.

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