Enron Corporation

Enron Corporation

Enron Corporation

Q. 1: Describe how Enron could have been structured differently to avoid such activities.

Ans: Enron took an unwavering stance that the Dabhol documents were to be reviewed and cleared by more than 27 Maharashtra and central government agencies. Venturing into foreign markets is a risky business fraught with uncertainty. Enron's decision to continue with the project work was legally valid and, in essence, it had nothing to do with politics. However, the critical factor was that Enron had to give due consideration to the state government, who was its primary customer. The company had to negotiate the Power Purchase Agreement (PPA) with its customer and also maintain relations and build its image for its future deals in the country. Enron overlooked the fact that power and politics permeate deals with governments. India is known for its political instability, which is a strong environmental force that induced a sweeping change across the future of the project.

Enron's construction plans incorporated environmental concerns and the proposal received environmental clearance from India's Ministry of Environment and Forests in November 1994. Nevertheless, the company failed to gauge the gravity of the situation and adapt to the circumstances. There was more of a social concern from the local villagers, which, in turn, raised the fundamental rule of globalization: focus on the cultural differences. Enron should have learned to expect the unexpected.

Q. 2: Discuss whether Enron's officers acted within the scope of their authority.

Ans: The Enron controversy has brought out several issues, related to strategic management, which pose a threat to the very existence of the Dabhol Company. There are many more projects that are in the pipeline with the Indian government at different stages of finalization. If the present situation were to continue, there could be utter chaos on the policy front. On the one hand, government agencies will try to push forward every single project without any set standards and criteria essential to carry out rigorous and honest appraisal of projects. On the other hand, with no basis for carrying out a fruitful dialogue, the increasingly suspicious people's organizations will continue to resist each and every project, on every single ground, and with all possible might. In the ensuing confusion people and their interests will be the ultimate sufferers.

Q.3: Describe the corporate culture at Enron.

Ans: Parsons (1960) suggests that values, as the evaluative aspect of culture, constitute the core ...