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

$0.00
January

February

March

April

May

June

July

August

September

October

November

December
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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?
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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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