Master of Business Administration

Lahore Business School

(Assignment - III)
Topic: Questions of “Enron, Ethics and Organizational Culture”.

Human Resource Management

Course Code: MGT02201
 

Submitted To: Sir Ahmed

Submitted By: Mubashar Iftikhar

Reg. #: MBA2Y02183005
Semester: Spring-2019
Submitted On: 29-April-2019
Q # 01. Based on what you read in this chapter, summarize in one page or less how you would
explain Enron’s ethical meltdown?
Answer:

The business of whole selling of natural gas and electricity done by Enron during the year
of 1990s and early 2000s was quite well. The nature of Enron’s business was to make money as
an intermediary between suppliers and customers without getting into all the details. They maintain
unusual accounting procedures, which show that they have no assets of their own. Though they
have some financial statement, but they are unusual and difficult to understand. For this reason the
financial performance looks better than the reality.

In 2001, enquiry was set up by order of the court when Enron was collapsing. As a result
of manipulation of top executive a large number of investors lost their investments in Enron. From
this case study, it can be predicted that ethical breakdown was happen.
Enron had morals, reporting system, financial matter and also training video on vision and
values. This looks apparently so ethical on its face but it has no such use. Experts said that it
happened because the lack of communication between the employers and employees and also for
making decisions individually.

Q # 02. It is said that when one securities analyst tried to confront Enron’s CEO about the
firm’s unusual accounting statements, the CEO publicly used vulgar language to describe
the analyst, and that Enron employees subsequently thought doing so was humorous if true,
what does that say about Enron’s ethical culture?
Answer:
If this is true then we must say that it’s a shame for all, the Enron organization and its
employees. Because no one is doing what is right and when someone is doing it in the right way
he is not getting the acceptance he deserved which a total ethical breakdown is for Enron in a
negative way.
Q # 03. This case and chapter had something to say about how organizational culture
influences ethical behavior. What role do you think culture played at Enron? Give five
specific examples of things Enron’s CEO could have done to create a healthy ethical culture?
Answer:
Enron followed a very unethical and irresponsible culture throughout the organization
especially in the financial statement and decision making factors, which made them suffered in the
end. So, the following five things could have made it a healthy ethical culture for Enron if the CEO
could have applied them in the right place at the right time.
These are:
 Maintain accountability for all of them who are working for Enron.
 Keep every financial statement updated and keep them in a proper way.
 Give all the employees the scope they need to express themselves and their ideas. Choose
the best innovative ideas and give reward for encouragement.
 Take decisions in a communicative way by discussing it with other employees but not
individually.
 Give each employee the respect he/she deserves because it will make them loyal towards
the organization.