Case 9: Enron; Questionable Accounting Leads to Collapse
Bruce Smith
Minnesota School of Business

BS430 Business Ethics
MR. Morris
November 25, 2012 1.

2. 1. How did the corporate culture of Enron contribute to its bankruptcy?
Effective leaders are good at getting followers to their common goals or objectives in the most effective and efficient way; unfortunately for Enron, in the end Ken Lay and Jeffery skilling were too focused on profits that nothing else mattered. In the beginnings of the company Ken and Jeff were very efficient in growing their company from a small oil and gas pipeline firm into one of the largest entities in its industry. As the company grew and so too did the demands of upper management. …show more content…

Ken Lay and Jeffery Skinner recognized the threat that their mounting debt posed and instead of restructuring their business model and making ethical decisions, they brought in expert in financial reporting and economic theory. The inflated profits that Fastow created artificially propped the company up long enough for senior executives to sell out and prepare for the inevitable downfall of the energy conglomerate. 4. In what other ways does this case relate to the concepts that we have learned in the chapters so far?
While reading chapter seven and reflecting on the concepts learned in other chapters I looked back to ethical decision making and chapter 5 multiple times. On of the sections from that chapter that I felt related to this case was business ethics evaluations and intentions. When I think about the Enron scandal, or any scandal for that matter, I often wonder how the individuals involved justify their actions. Chapter five gives a list of the top 6 justifications that individuals use to justify and finally eliminate the guilt associated with guilt; I think that every one of these was used at least once by every member involved in the Enron scandal: 1. I need the paycheck and can’t afford to quit right now 2. Those around me are doing it, so why shouldn’t I? They believe it’s okay 3. If I don’t do this, I might not be able to get a good reference from my boss