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Enron Corp. Case #3

Enron Corp. Case #3. Group #4 Crystal Enloe Wes Johnson Johnny Van Horn Stacy Adkins Reanetta Walker Thilo Grabo Christian Gasse. Case Summary. Combined Energy Industry with Trading System 1999 $40.1 Billion to $100.8 Billion in 2000 $60 million loss

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Enron Corp. Case #3

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  1. Enron Corp. Case #3 Group #4 Crystal Enloe Wes Johnson Johnny Van Horn Stacy Adkins Reanetta Walker Thilo Grabo Christian Gasse

  2. Case Summary • Combined Energy Industry with Trading System • 1999 $40.1 Billion to $100.8 Billion in 2000 • $60 million loss • Industry Execs started looking at Enron to learn lessons • Enron tried to push too hard and had poor accounting and management practices

  3. Company Background Products/Services: • Wholesale Services • Energy Services • Broadband Services • Transportation Services

  4. Company Background • # of employees: 18,000 in 2000 • Sales in $: $100,789 million in 2000 $40,112 million in 1999 $31,260 million in 1998 • CEO: Stephen F. Cooper (Interim CEO and Restructuring Officer)

  5. Main Competitors • Duke Energy • El Paso • Williams Companies

  6. Did mistakes in the use or management of IT play a part in the failure of Enron? Why or Why not?

  7. Did mistakes in the use or management of IT play a part in the failure of Enron? Why or Why not? • Enron spread into too many directions and stretched their IT system beyond its design. At first, Enron had its IT as a business support system and then the company turned its IT into a profit center. If Enron would have stayed within its original business mission and used proper accounting, experts believe that it might still be a successful company today.

  8. What are several major lessons for the future use of information technology in business that you gained from this case?

  9. Lesson #1 • IT systems can be a double edged sword which can have harmful affects to your business if not managed and controlled properly. IT should not be allowed to overcome the strategic goals and objectives of your company which made you successful.

  10. Lesson #2 • IT should be used as intended to gain a competitive advantage and maintain the ever increasing changes in the global marketplace. The case cited as an example- IT systems were either mismanaged of used by unethical managers to create fraudulent misrepresentations of the true profits being generated by the operating function of the business. ENRON CORP created fictitious entities in the form of partnerships to overstate sales. Its IT was made into more of a false profit center and lost sight of its core mission. The result of GREED & MISMANAGEMENT from the top executives who are now facing criminal and civil prosecution.

  11. Lesson #3 • Dow Corning Corp’s CIO Charlie Lacefield stated IT innovation is critical for companies to compete in today’s global strategy but they should not stray from their “core business strategies” as ENRON did.

  12. Lesson #4 • FELD Group CEO said It’s creativity must be harness rather than having firms chasing after innovations just to keep pace with the rest of the world. IT’s uncontrolled advancement creates more problems then it solves.

  13. Lesson #5 • Another mistake companies made were pursuing complex B2B processes when they couldn’t integrate their internal data. Those resources should have been directed to improving internal processes.

  14. How would you apply one of these lessons in your present job situation or future business career? Give a specific example to illustrate your proposal.

  15. Lesson #4 Applied • The company should apply tighter management controls utilizing frequent meetings with the staff. • They should conduct an in-depth cost analysis to ensure that any IT projects are profitable and comply with the company’s core missions. • They should set up a system of feedback, with checks and balances and reports to upper management. • In order to ensure that the staff is complying with the guidelines they should set up a system of bonus and pay incentives.

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