Enron's Business Failure Analysis

Enron's Business Failure Analysis

Introduction

Enron emerged in 1985 from the merger of Houston Natural Gas and InterNorth , of Nebraska , and became a corporation engaged in transporting natural gas between various states through a pipeline network of 60,000 kilometers, at that time, was suspended regulation of gas and energy services, and Enron entered the business of buying electricity and natural gas producers, and sell more expensive. Nearly all purchases of Enron were made by computer or by phone at Houston headquarters, or by EnronOnline. Most sellers of Enron never approached a gas well, a power cable or optical fiber (Chatterjee, 2003).

In 1989 began operating as intermediary derived from natural gas and electricity, and came to form a complex network of associates to carry out some of its business and break into others, such as telecommunications through broadband and Internet, and distribution of drinking water. The company diversified, structuring from a combination of natural gas, electricity, Internet and financial markets, with operations in over 30 countries. His main invention was the trading, like the bag, but energy and broadband (Internet). Due to the speed of these operations was rapidly adding business risk, ending all with a concealment of returns. By Furthermore the company's liabilities were transferred to the subsidiaries and it allowed to exhibit dramatic gains until shortly before bankruptcy. This form of "fantasy accounting" led to Enron into bankruptcy.

Some time ago Enron was considered the 7th largest corporation in the U.S. . Besides been tagged as " Most Innovative Company "for five consecutive years, the best in" quality management ", and the second on" quality employees ", all according to the list of the" 500 most important companies "of the magazine Fortune . In USA controlled over 25% of the energy market. Today the scenario is completely different. On December 2, 2001 Enron filed for bankruptcy, after it has unfold shadowy maneuvers began in the business world, which is still under investigation and involving senior executives of the company as well as some U.S. policymakers USA.

Discussion

In just 15 years, Enron, formed by the merger of Houston Natural Gas and InterNorth, went from being a marketer of natural gas regulated to be one of the largest gas marketers in the world. The key to explosive growth was the deregulation of energy markets, enabling it to sell gas like a “commodity "(such as grains, meats, copper or oil) and then in the same way as electricity or water. Enron is a diversified services company, which owns power plants, water companies, gas distributors and other business units involved in direct relative distribution services to consumers and businesses. Moreover, it became notorious applying style Wall Street traditionally these markets asleep.

The genius of Enron was considered that all these services and even dark and complex products such as Telecom bandwidths were actually " commodities "that could be bought, sold and stored as is done with stocks and bonds. Enron thus became a huge "market maker" in the United States, the main ...