EXTERNAL INFLUENCES

External Influences

External Influences

Objectives

Enron admitted it had previously inflated its profits by hiding debt. Consequently, their share price collapsed, which led to the company's credit rating being

It is very important that Marks and Spencer considers its environments when developing a business strategy.

Competitive forces determine the relative market power of competitors, the kind of competition they engage in, the factors that give some of them a competitive advantage, and the relative attractiveness of that market compared to others.

Customers expect Sainsbury's to be environmentally responsible, reduce operational impacts and provide customers with the opportunity to reduce theirs

Enron

Enron was founded in 1985 through the merger of Houston Natural Gas and Internorth, a natural gas company based in Omaha, Nebraska, quickly became the major energy and petrochemical commodities trader under the leadership of its chairman, Kenneth Lay (MacDonald 2005 95).

Enron incurred massive debt and no longer had exclusive rights to its pipelines. The Enron Bankruptcy clearly brings to light the extent to which the function of Audit has been discredited (Hatten and Hatten 2007 96). Arthur Anderson not only was hand in glove with the Management of the Enron, but also it was guilty of obstruction of justice as it shredded critical documents which would have brought the guilty party to justice.

As provided in the charter of the Audit and Compliance Committee, it was the Committee's responsibility to determine and "provide reasonable assurance that the Company's publicly reported financial statements are presented fairly and in conformity with generally accepted accounting principles (Ansoff 2008 348-647)." Materials from Audit Committee meetings indicate that its members were aware of such high-risk accounting methods being employed by Enron, but did not act on them (Deresky 2005 66). A more diligent Audit and Compliance Committee would have probed such comments like this and questioned the accounting techniques applied.

The Audit and Compliance Committee also failed to closely examine the nature of the transactions, as is outlined in their duties. Indeed the "annual reviews of the transactions by the Audit and Compliance Committee appear to have involved only brief presentations by Management and did not involve any meaningful examination of the nature or terms of the transactions," (Hoffmann 2001 234-301). Such complex and risky transactions with related-parties deserved close scrutiny, not the cursory review it received.

The Compensation Committee failed in its duty to monitor "Enron's compensation policies and plans for directors, officers, and employees," as was specified (David 2003 62). In fact, "neither the Board nor Senior Management asked Fastow for the amount of his compensation until October 2001, after media reports focused on Fastow's role in the fraud," (MacDonald 2005 314-429). This lack of oversight by the Compensation Committee was a major contributor to the financial failure of Enron, as both Fastow and Kopper received disproportionate compensation for their management of the partnerships at Enron's expense.

The Board of Enron also failed in its duty to ensure the objectivity and independence of Arthur Andersen as its auditor, providing yet another area in which the oversight of Enron's Board broke ...