Discover rusyns people


The Collapse of Enron: Managerial Aspects

Executive summaryIts revenues made up USincludes additional supporting services.
$139($184) billion, assets equaled $62($82)Operations sector is the heart of these
billion, and the number of employees reachedchanges that are made by leading companies to
more than 30,000 people in 20 countriesimprove their performance and increase
around the world.While Enron Corporation wascustomer base.The survival of commercial
so highly praised by the outside observers,company depends on ability of the
internally it had highly decentralizedorganization to focus and shape its
financial control and decision-makingoperational resources to meet the
structure, which made it practicallyexpectations of its stakeholders: customers,
impossible to get coherent and clear view onemployees and shareholders, expressed in
corporations' activities and operations. Oforganizational strategy (Russel, 1995) .
course, the problem was not exclusively dueIrrespective of economic sectors the company
to poor managerial performance, all theoperates in, the ability of operations
departments of the corporation were involvedmanagement of this company to fulfill those
in the ruining corporate ethical values andabove-mentioned tasks depends on their
principles, but executives and managers bearunderstanding that it is necessary to make
primary responsibility for the absence oftrade-offs. They cannot avoid the situation
corporate culture, clear accountability andof working under constraints and have to
transparence of the company. If operationsunderstand their capabilities and constraints
management worked properly, in its fullto provide significant inputs into strategic
force, and if it was given possibility todecision-making process involving further
work in such a way, there could be a chanceresources of the organization.Operations
of escaping the tragedy.Enron Corp briefmanagers in the organizations are not
historyEnron Corporation was one of theempowered to make strategic decisions, but
largest global energy, services andthey play important role in shaping the
commodities company. Before it filedorganization's strategy and contribute to the
bankruptcy under chapter 11, it sold naturalstrategic thinking ( Pasternack, Viscio,
gas and electricity, delivered energy and1998). Operations managers should be able to
other commodities such as bandwidth internettranslate strategic aims and objectives into
connection, and provided risk management andclear operational objectives and actions and
financial services to the clients around theto implement, design and improve the products
world.Enron was based in Houston, Texas, andof the company themselves and the processes
was founded in July 1985 (though company withof their delivery. They have to know how
Enron name emerged still in 1930 (Swatz,changes incorporated to external factors
Watkins, 2003)) by the merger of InterNorthinfluence the operation and how changes in
of Omaha in Nebraska, and Houston Naturalone aspect of the operating system influence
Gas. Enron Company quickly developed fromother aspects.Also, operations managers need
merely delivering energy to brokering energyto know how technological changes impact
futures contracts on deregulated energyorganization's capability of delivery, and to
markets. In 1994, the company started to sellincorporate their conclusions into strategic
electricity, and in 1995, it entered Europeanprocess (Peters, Waterman, 1982). Therefore,
energy market. By the middle 2001, Enronthe heart of operations thinking includes the
employed about 30,000 people globallyability to think dynamically and
(McLEan, Elkind,2003).Questionable accountingsystematically across time and space (Miller,
methods and techniques provided Enron with1998). Besides traditional tasks of operation
possibility to be listed as seventh largestmanagement, new perspectives and objectives
United States company and was expected toemerge connected with the emergence of new
dominate the market which the companytrends and developments of operations
virtually invented in the communications,management, such as total quality management,
weather and power securities (Bryce, 2002).shop floor control, global supply chain
But instead the corporation became themanagement, manufacturing planning software,
largest corporate failure in the globaland others.Total quality management has
history and an example of well-planned andbecome one of the most important developments
institutionalized corporate fraud. Enronof the operations management. The quest for
became wealthy due to its pioneeringhigher level of products and services quality
marketing and promotion of power andis caused by the globalization of markets, on
communications bandwidth services and riskthe one hand, and increasing litigation over
management derivatives, including suchservice or product failure. The relationship
innovative and exotic items as weatherbetween quality and market share performance
derivatives.In 1999, Enron launched anis doubtless. Those firms that fail to
initiative of buying and selling access tounderstand the issue of quality find
high-speed Internet bandwidth, and also Enronthemselves on the bottom of their industry
Online was launched as a Web-based tradinghierarchy. A significant share of the
site, making Enron e-commerce company. Inresponsibility for quality standards rests on
2000, the reported revenues of the companythe operations manager. Global supply chain
made $101 billion. It had stakes in almostmanagement is another very important
30,000 miles of gas pipelines, either ownedcomponent of operations management. The world
or accessed 15,000 miles of fiber-opticeconomy is becoming more global than ever.
network and had stakes in global operationsLooking for lower production costs, more
on generating electricity (Thomas, 2002).Inflexibility and local risk reduction,
the result, for five years in a row, fromcompanies are seeking to outsource and
1996 to 2000, Enron was named "America's mostproduce services and products on global scale
innovative Company" by Fortune magazine, and(Heizer, 2004). Operation managers are
headed the list of Fortune's "100 bestresponsible for fulfilling the task. Project
companies to Work for in America" in 2000.management is yet another task of the
Enron reputation was undermined by rumors onoperations management department. Operation
bribery and political pressure with themanagers bear responsibility for numerous
objective of securing contacts in South andprojects which range from considerable
Central America, Philippines and Africa. Thecapital projects to specific ones such as
Enron was blamed to use its connections withinstallation of new information
Clinton and Bush administrations to expresssystem.Effectively managing projects involves
pressure in their contracts. The events werefulfillment and delivery them in timely
followed by a series of scandals involvingmanner and within the budget (Stevens, 2001).
irregular accounting methods bordering onIn a word, operations management is
fraud which involved Enron and Arthurindispensable component of the organization,
Andersen accounting firm and led Enron on thesince it fulfills numerous important
verge of undergoing the largest bankruptcy infunctions of the company. Operations manager
economic history in November 2001handles daily running and functioning of the
(Emshwiller, Smith, 2001).Since Enron wasorganization.The implication of poor
always considered a blue chip stock, themanagerial performance for the collapse of
bankruptcy was a disastrous and unprecedentedEnron CorporationNow it is necessary to find
event in the global financial world. Enron'sout and analyze whether operations management
downfall was definite when it was found outof Enron Corp performed all the functions
that a considerable share of its profitsmentioned above and what was the quality of
resulted from deals with so-calledtheir activity.The Enron did have operations
special-purpose entities, limited partnershipmanagement department, which, according to
under control of Enron. It resulted in thetheir official source, fulfilled the
possibility of not reporting many of thefollowing functions: setup accounts and
company's losses in its financial statements.notify utilities, agency agreement from
The final plan of Enron's bankruptcy includedcustomer, verify the format of invoice, setup
creation of three new businesses which wouldinvoice data transfer, test algorithms of
be spun off the company.The reorganizationinvoice and file transfer to the customer,
process started in 2003 with the creation ofdetermine the reporting requirements of the
three companies - CrossCountry Energy, Prismacustomer (Enron Energy Services, 2000). As it
Energy International, and Portland Generalis seen from the source, the functions of
Electric. CrossCountry Energy was sold to CCEvery operations management department are
Holdings L.L.C., with the money to be usedvery limited. There are other management
for the repayment of the debts, while Prismadepartments which perform the functions of
Energy International and Portland Generaloperations management stated above:
Electric should emerge as independentoperations facility management, commodity
companies descendant of Enron (Swatz,management, energy asset management,
2003).Operations management scope offinancial operations, and capital management.
functionsTo understand the reasons of thisThough, most of functions performed by these
bankruptcy and the level of managerialdepartments, according to the source, are
implication in the quality performance of thepurely executive and lack integration,
company, particularly that of operationssystematic vision, responsibility, control
management, it is necessary to outline theand creative aspect. Besides limited scope of
main functions of operations management andfunctions assigned to operations management
impact it should have of functioning of thein Enron Corporation, another important point
organization.The principal task of operationsconcerns the quality of their performance and
management is effective transformation ofoverall corporate culture and atmosphere
inputs into "desired outputs" of the companycreated within corporation. As it was
(Shafer, 1997). The outputs are traditionallymentioned above, ideally, the functions of
understood in manufacturing and profit-makingoperations management include creating ethic
context within the organizations. Butvalues, integrity, competence and clear
recently it has been recognized thataccountability within the organization.
operations management is a discipline whichEnron's management failed to comply with
is not limited with such narrow functions; itthese tasks.Read the full version of this
can be deployed in practically any area wherearticle here.Anastasia Kurdina is a person of
the organization aims at achieving itsmanifold gifts. Almost every her writing is
objectives (Barnett, 1996). For instance,followed by lavish testimonials from
non-profit or public sectors have to learn tosatisfied customers. Anastasia specializes in
optimize their internal operations andmarketing, management, sociology, history,
processes in the situation of limitedworld cultures, literature and art.Anastasia
resources; service companies come toKurdina is not an essay writer in a common
conclusion that by reappraising theirsense. She is a Poet, an Analyst, an Artist,
delivery process they can revolutionize anda Critic, ... . Anastasia is one out of a few
significantly improve their approach towriters who remember "how it all started" :)
manufacturing companies and their. It is she who sometimes accomplished every
marketplace. Robin Wood (2001) gives thesecond order when Your Personal Writer was
example of such operations managementnothing more nor less than 3 writers and one
implication in Daewoo company, whichwebmaster; it is she who has still been
understood that it can specialize andaccomplishing special orders, which naturally
differentiate its product by adding definitego beyond regular write-me-an-essay orders.
bundle of benefits to its product which



1 A B 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77