BUSINESS FAILURE

Business Failure: Management's Role

Business Failure: Management's Role

Introduction

Thousands of jobs were lost. A downfall as stunning as Enron's failure was written all over. In some parts, this failure is partially characterized to the complex derived transactions that Enron entered. Today when people hear about Enron, immediately their mind relates it to corruption. It wasn't long enough that Enron was a very successful corporation. Rated by the top most analysts and supported by largest banks of the world, Enron has been working as advisor for the US government. Due to Enron's unbelievable success the company was receiving positive examination from the press and the financial analysts and this has increased company's competitive culture. A negative progress of the company may drive down the investors' concern and Enron's credit rating would eventually go down. Fearing this executives or the management of Enron tried to do what was right according to them and Enron resulted into a deceiving web of partnerships and employed different accounting methods to maintain the investment grade. (Goh, 1993)

In an organization like Enron, employees had brilliant self-image thinking themselves as the brightest as they did not make any failing business deals for the corporation. Enron's management started bending and molding the rules for their personal gains. Even though, the management of Enron thought that everything is going to work in future yet the partnership went highly vulnerable as the financial problems started to highlight. The partnership began to see a downfall with regularity and Enron soon became liable for millions of dollars which it had never thought of. They started lacking in the fulfillment of their promises due their financial status getting worse. All the problems were a result of leadership decision that had been driven by the company's culture.

Organizational structure and Management mechanism

Management is one of the major components which contribute to an organization's culture because leaders are able to reinforce, change or create a culture in an organization. According to some analysts, there are four major mechanisms in which a manager can influence the culture of organization: being a role model, attention, reactions to critical conditions and allotment of rewards. (DeFond, 2002)This assumption state that these five things can encourage and reinforce the cultural norms in an organization. These five mechanisms were used by Enron executives to support a culture that has the flexibility with morals.

Attention

This criterion is explained as those matters which get the attention of ...