Case Study of Enron
Response to organizations in art or entertainment
(Enron, the Smartest Guys in the Room, 2005)
Introduction There is a proverb “too good, to be true”, and it means the same, that some things are too great, to be real. In business world, it is often used to describe market conditions or companies under unbelievable success. Although, there were not too many companies that would fit the saying Enron was one of them. In a period of sixteen years, Enron’s value grew from 10 to 70 billion dollars making it the seventh biggest company in the USA with more than 20000 employees in some 40 countries. Such growth was not of normal proportions and was enabled by monopolized corporation (Enron) in a process of massive extortion of its customers. Enron was one of the biggest corporations in U.S. history, yet due to insider trading and fraud they failed, and the collapse of Enron has been the major business disaster of new millennium. The aim of this paper is to present organizational theories and use them to analyze and explain what happened at Enron Corporation and why managers acted the way they did. This paper is based on company, portrayed in the documentary movie – “Enron: The Smartest Guys in the Room”. The focus of the paper is to analyze the bureaucracy and hierarchical structure of Enron as well as power relations and the ways power has been acquired and used. More to that, I am going to analyze rational choices of individuals at Enron and how they affected the company. However, before diving into detailed analysis, an elaboration of theories that are going to be used is required.
Organizational theories
Bureaucracy
We will work with Weberian term of bureaucracy, first introduced in his works. Bureaucracy has become one of the most popular ways to base company’s structure and strategy on. It is not by any circumstance that bureaucratic organizations have dominated the modern society. This dominance of bureaucratic organizations shows the effectiveness
(Enron, the Smartest Guys in the Room, 2005)
Introduction There is a proverb “too good, to be true”, and it means the same, that some things are too great, to be real. In business world, it is often used to describe market conditions or companies under unbelievable success. Although, there were not too many companies that would fit the saying Enron was one of them. In a period of sixteen years, Enron’s value grew from 10 to 70 billion dollars making it the seventh biggest company in the USA with more than 20000 employees in some 40 countries. Such growth was not of normal proportions and was enabled by monopolized corporation (Enron) in a process of massive extortion of its customers. Enron was one of the biggest corporations in U.S. history, yet due to insider trading and fraud they failed, and the collapse of Enron has been the major business disaster of new millennium. The aim of this paper is to present organizational theories and use them to analyze and explain what happened at Enron Corporation and why managers acted the way they did. This paper is based on company, portrayed in the documentary movie – “Enron: The Smartest Guys in the Room”. The focus of the paper is to analyze the bureaucracy and hierarchical structure of Enron as well as power relations and the ways power has been acquired and used. More to that, I am going to analyze rational choices of individuals at Enron and how they affected the company. However, before diving into detailed analysis, an elaboration of theories that are going to be used is required.
Organizational theories
Bureaucracy
We will work with Weberian term of bureaucracy, first introduced in his works. Bureaucracy has become one of the most popular ways to base company’s structure and strategy on. It is not by any circumstance that bureaucratic organizations have dominated the modern society. This dominance of bureaucratic organizations shows the effectiveness
Bibliography: Albrecht, W.S. and D. Searcy, Top 10 reasons why fraud is increasing in the U.S. Strategic Finance 82(11): 58-61, 2001. Perrow, Charles, Complex Organizations: A Critical Essay, Forseman & Co., Glenville, Illinois, 3rd ed., 1986. Pfeffer, Jeffrey, The External Control of Organizations: A Resource Dependence Perspective, Stanford University Press, 2003. Pfeffer, Jeffrey, Power: Why some people have it-and others do not. New York, NY: HarperCollins, 2011. Pfeffer, Jeffrey, Resources, Allies and the New Golden Rule, from Managing with Power, Boston: Harvard Business School Press, 1990. Pp. 83-110. Weber, Max, Bureaucracy, in Hans Gerth and C. Wright Mills (Eds.), From Max Weber: Essays in Sociology, New York: Oxford University Press, 1946. Pp. 196-244.