Rebecca GamboaCarole GutierrezMaria FernandezJoanne Gutierrez

Case study

Company Motto

“Respect

Integrity

Communication

And Excellence”

Early Beginnings

• Formed in Omaha, Nebraska

• 1932• Known as Northern

Natural Gas Company

• Reorganization led to a holding subsidiary of InterNorth

• 1985• Merged with Houston

Natural Gas• CEO Kenneth Lay

changes the name to Enron

• Headquarters is relocated to Houston, Texas

http://photohome.com/pictures/texas-pictures/houston/enron-center-5a.jpg

Employment:

Approximately 22,000

employees

Principle Assets of Enron

Promising Future Ahead!

Fortune magazine 1996 -2001

“America’s Most Innovative Company”

Scandal of 2001.

Chance of Redemption?

Opportunities

• Merger of two natural gas pipeline company’s – Houston Natural Gas & InterNorth

• Bandwidth trading was $36 million, more than gas & electricity combined in 2000

• Energy trading gave great profits in 2001

Unsuccessful Attempt.

Threats

• Tried to monopolize the broadband trading

• Modified balance sheets

• Forced telecommunication companies to accept their trading model

• Pressure to hide debt

• Accounting irregularities

• Confrontation & Impatience

http://images.google.com/imgres?imgurl=http://antwerp.files.wordpress.com/2006/07/enron.jpg&imgrefurl=http://antwerp.wordpress.com/2006/07/24/become-a-master-in-applied-ethics-the-cynical-demise-of-yet-another-word/&usg=__2iLCkZlg4kZ0NxmifzJFS1nHeO0=&h=311&w=401&sz=27&hl=en&start=4&um=1&tbnid=F3dpJHCWP2cwoM:&tbnh=96&tbnw=124&prev=/images?q=enron+pictures&hl=en&rlz=1T4ADBR_enUS306US307&sa=X&um=1

Present Solution & Recommendations

Solution/Recommendation 1

• Structured communication with their competitors.

• Brief communication allows healthy competition.

• Create propositions for diverse industry players and competitors.

Solution/Recommendation 2

• Accounting representatives should have followed the guidelines of the Generally Accepted Accounting Principles (GAAP ) rather than violating them.

• Compliance with the guidelines would have allowed for appropriate assistance to help.

Solution/Recommendation 3

• Each department within the corporation could have tried to maintain better communication with each other and human resources.

• Ensure the best interest of the shareholders and employees whose pensions were invested in the corporations stock.

Conclusion

• Main area of concern stemmed from the falsified financial documentation.

• Correct information might have prevented the falling out of this booming trading corporation and its practices.

References• Cunningham, Gary E. and Jean E. Harris. (2006). Enron

and Arthur Andersen: The case of the crooked E and fallen A. Global Perspectives on Accounting Education Volume 3. http://gpae.bryant.edu/~gpae/Vol3/Enron%20and%20Aurhur%20Andersen.pdf

• "Enron Scandal," Encarta Online Encyclopedia 2009. Retrieved on October 29, 2009 from http://encarta.msn.com

• Enron scandal. (2009, October 28). In Wikipedia, The Free Encyclopedia. Retrieved 19:14, October 30, 2009, fromhttp://en.wikipedia.org/w/index.php?title=Enronscandal&oldid=322529264

References Continued• Ferguson Niall, The Ascent of Money, Video

http://www.pbs.org/wnet/ascentofmoney/featured/watch-the-two-hour-the-ascent-of-money/24/

• McLean, Bethany. (2006). Is Enron Overpriced? http://money.cnn.com/2006/01/13/news/companies/enronoriginal_fortune/index.htm?postversion=2006011818

•  Schwartz, Andrew. (2003). Enron's Missed Opportunity: Enron's Refusal to Build a Collaborative Market Turned Bandwidth Trading into a Disaster. UC Berkeley: Berkeley Roundtable on the International Economy. Retrieved from: http://escholarship.org/uc/item/0k61f1nb

• Wikipedia: Enron

http://en.wikipedia.org/wiki/Enron