A people`s history of the united states chapter summary

The Collapse of Enron: Managerial Aspects

Executive summaryIts revenues made up US				includes additional supporting services.
$139($184) billion, assets equaled $62($82)				Operations sector is the heart of these
billion, and the number of employees reached				changes that are made by leading companies to
more than 30,000 people in 20 countries				improve their performance and increase
around the world.While Enron Corporation was				customer base.The survival of commercial
so highly praised by the outside observers,				company depends on ability of the
internally it had highly decentralized				organization to focus and shape its
financial control and decision-making				operational resources to meet the
structure, which made it practically				expectations of its stakeholders: customers,
impossible to get coherent and clear view on				employees and shareholders, expressed in
corporations' activities and operations. Of				organizational strategy (Russel, 1995) .
course, the problem was not exclusively due				Irrespective of economic sectors the company
to poor managerial performance, all the				operates in, the ability of operations
departments of the corporation were involved				management of this company to fulfill those
in the ruining corporate ethical values and				above-mentioned tasks depends on their
principles, but executives and managers bear				understanding that it is necessary to make
primary responsibility for the absence of				trade-offs. They cannot avoid the situation
corporate culture, clear accountability and				of working under constraints and have to
transparence of the company. If operations				understand their capabilities and constraints
management worked properly, in its full				to provide significant inputs into strategic
force, and if it was given possibility to				decision-making process involving further
work in such a way, there could be a chance				resources of the organization.Operations
of escaping the tragedy.Enron Corp brief				managers in the organizations are not
historyEnron Corporation was one of the				empowered to make strategic decisions, but
largest global energy, services and				they play important role in shaping the
commodities company. Before it filed				organization's strategy and contribute to the
bankruptcy under chapter 11, it sold natural				strategic thinking ( Pasternack, Viscio,
gas and electricity, delivered energy and				1998). Operations managers should be able to
other commodities such as bandwidth internet				translate strategic aims and objectives into
connection, and provided risk management and				clear operational objectives and actions and
financial services to the clients around the				to implement, design and improve the products
world.Enron was based in Houston, Texas, and				of the company themselves and the processes
was founded in July 1985 (though company with				of 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 InterNorth				influence the operation and how changes in
of Omaha in Nebraska, and Houston Natural				one aspect of the operating system influence
Gas. Enron Company quickly developed from				other aspects.Also, operations managers need
merely delivering energy to brokering energy				to know how technological changes impact
futures contracts on deregulated energy				organization's capability of delivery, and to
markets. In 1994, the company started to sell				incorporate their conclusions into strategic
electricity, and in 1995, it entered European				process (Peters, Waterman, 1982). Therefore,
energy market. By the middle 2001, Enron				the heart of operations thinking includes the
employed about 30,000 people globally				ability to think dynamically and
(McLEan, Elkind,2003).Questionable accounting				systematically across time and space (Miller,
methods and techniques provided Enron with				1998). Besides traditional tasks of operation
possibility to be listed as seventh largest				management, new perspectives and objectives
United States company and was expected to				emerge connected with the emergence of new
dominate the market which the company				trends 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 the				management, manufacturing planning software,
largest corporate failure in the global				and others.Total quality management has
history and an example of well-planned and				become one of the most important developments
institutionalized corporate fraud. Enron				of the operations management. The quest for
became wealthy due to its pioneering				higher level of products and services quality
marketing and promotion of power and				is caused by the globalization of markets, on
communications bandwidth services and risk				the one hand, and increasing litigation over
management derivatives, including such				service or product failure. The relationship
innovative and exotic items as weather				between quality and market share performance
derivatives.In 1999, Enron launched an				is doubtless. Those firms that fail to
initiative of buying and selling access to				understand the issue of quality find
high-speed Internet bandwidth, and also Enron				themselves on the bottom of their industry
Online was launched as a Web-based trading				hierarchy. A significant share of the
site, making Enron e-commerce company. In				responsibility for quality standards rests on
2000, the reported revenues of the company				the operations manager. Global supply chain
made $101 billion. It had stakes in almost				management is another very important
30,000 miles of gas pipelines, either owned				component of operations management. The world
or accessed 15,000 miles of fiber-optic				economy is becoming more global than ever.
network and had stakes in global operations				Looking for lower production costs, more
on generating electricity (Thomas, 2002).In				flexibility and local risk reduction,
the result, for five years in a row, from				companies are seeking to outsource and
1996 to 2000, Enron was named "America's most				produce services and products on global scale
innovative Company" by Fortune magazine, and				(Heizer, 2004). Operation managers are
headed the list of Fortune's "100 best				responsible 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 on				operations management department. Operation
bribery and political pressure with the				managers bear responsibility for numerous
objective of securing contacts in South and				projects which range from considerable
Central America, Philippines and Africa. The				capital projects to specific ones such as
Enron was blamed to use its connections with				installation of new information
Clinton and Bush administrations to express				system.Effectively managing projects involves
pressure in their contracts. The events were				fulfillment and delivery them in timely
followed by a series of scandals involving				manner and within the budget (Stevens, 2001).
irregular accounting methods bordering on				In a word, operations management is
fraud which involved Enron and Arthur				indispensable component of the organization,
Andersen accounting firm and led Enron on the				since it fulfills numerous important
verge of undergoing the largest bankruptcy in				functions of the company. Operations manager
economic history in November 2001				handles daily running and functioning of the
(Emshwiller, Smith, 2001).Since Enron was				organization.The implication of poor
always considered a blue chip stock, the				managerial performance for the collapse of
bankruptcy was a disastrous and unprecedented				Enron CorporationNow it is necessary to find
event in the global financial world. Enron's				out and analyze whether operations management
downfall was definite when it was found out				of Enron Corp performed all the functions
that a considerable share of its profits				mentioned above and what was the quality of
resulted from deals with so-called				their activity.The Enron did have operations
special-purpose entities, limited partnership				management department, which, according to
under control of Enron. It resulted in the				their official source, fulfilled the
possibility of not reporting many of the				following functions: setup accounts and
company's losses in its financial statements.				notify utilities, agency agreement from
The final plan of Enron's bankruptcy included				customer, verify the format of invoice, setup
creation of three new businesses which would				invoice data transfer, test algorithms of
be spun off the company.The reorganization				invoice and file transfer to the customer,
process started in 2003 with the creation of				determine the reporting requirements of the
three companies - CrossCountry Energy, Prisma				customer (Enron Energy Services, 2000). As it
Energy International, and Portland General				is seen from the source, the functions of
Electric. CrossCountry Energy was sold to CCE				very operations management department are
Holdings L.L.C., with the money to be used				very limited. There are other management
for the repayment of the debts, while Prisma				departments which perform the functions of
Energy International and Portland General				operations management stated above:
Electric should emerge as independent				operations facility management, commodity
companies descendant of Enron (Swatz,				management, energy asset management,
2003).Operations management scope of				financial operations, and capital management.
functionsTo understand the reasons of this				Though, most of functions performed by these
bankruptcy and the level of managerial				departments, according to the source, are
implication in the quality performance of the				purely executive and lack integration,
company, particularly that of operations				systematic vision, responsibility, control
management, it is necessary to outline the				and creative aspect. Besides limited scope of
main functions of operations management and				functions assigned to operations management
impact it should have of functioning of the				in Enron Corporation, another important point
organization.The principal task of operations				concerns the quality of their performance and
management is effective transformation of				overall corporate culture and atmosphere
inputs into "desired outputs" of the company				created within corporation. As it was
(Shafer, 1997). The outputs are traditionally				mentioned above, ideally, the functions of
understood in manufacturing and profit-making				operations management include creating ethic
context within the organizations. But				values, integrity, competence and clear
recently it has been recognized that				accountability within the organization.
operations management is a discipline which				Enron's management failed to comply with
is not limited with such narrow functions; it				these tasks.Read the full version of this
can be deployed in practically any area where				article here.Anastasia Kurdina is a person of
the organization aims at achieving its				manifold gifts. Almost every her writing is
objectives (Barnett, 1996). For instance,				followed by lavish testimonials from
non-profit or public sectors have to learn to				satisfied customers. Anastasia specializes in
optimize their internal operations and				marketing, management, sociology, history,
processes in the situation of limited				world cultures, literature and art.Anastasia
resources; service companies come to				Kurdina is not an essay writer in a common
conclusion that by reappraising their				sense. She is a Poet, an Analyst, an Artist,
delivery process they can revolutionize and				a Critic, ... . Anastasia is one out of a few
significantly improve their approach to				writers who remember "how it all started" :)
manufacturing companies and their				. It is she who sometimes accomplished every
marketplace. Robin Wood (2001) gives the				second order when Your Personal Writer was
example of such operations management				nothing more nor less than 3 writers and one
implication in Daewoo company, which				webmaster; it is she who has still been
understood that it can specialize and				accomplishing special orders, which naturally
differentiate its product by adding definite				go beyond regular write-me-an-essay orders.
bundle of benefits to its product which

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The Collapse of Enron: Managerial Aspects