Jacob Ryan
3 posts
Aug 13, 2021
2:32 AM
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The company Enron was into energy, services, and commodities and was well into establishing itself as a major corporation in the energy sector when a major scandal shook its foundations. Since then, the topic of the Enron case study solution has been of great interest to both marketing and business students. A case study of Enron can help us understand how the company achieved so much success in a short period of time and what went wrong.
This is why in this article, I have discussed a brief case study or analysis of Enron. Read on to find out more about the Enron case analysis and an in-depth review.
Enron: Background history
Enron was founded in 1985 by a person named Kenneth Lay. The company resulted from a merger between a company called Internorth and Lay’s own personal brand Houston Natural Gas. The company had an employee strength of 29,000 and, by 1990, had established itself as a major communication, natural gas, electricity, and paper company. Also read: Adidas case study SWOT analysis
At its peak, the company was earning a revenue of $101 billion. However, the company filed for bankruptcy in 2001. Down below, the following points will help you to write your own Enron case study solution.
Enron’s business fundamentals
Around the 1990s, the company had established itself as a major shareholder in the American stock market. When stocks were booming, individual share prices of Enron’s stocks hit a whole new high and investors relied heavily on the company’s reputation, and stocks were bought in surplus.
Enron was also hailed for innovation and appeared in top magazines as one of the leading companies in the world for six consecutive years in a row. All this made Enron seem lucrative to potential investors, and when the company finally changed its accounting method from a traditional historical method of calculating to a Mark To Market scheme, it started the company’s freefall.
Enron scandals
During 2001, fraud allegations shook the foundations of a company that was expected to reach a new high in the 21st century. Shareholders alleged that the company hid its actual debts and showed increased profits in its statement. More allegations of fraud and corruption were thrown at the CEO, who finally resigned and filed for bankruptcy. The Enron bankruptcy was one of the largest cases of bankruptcy in US history.
During the course of the allegations, the individual share prices of Enron plummeted from around $100 to just a couple of pennies. The company was also found guilty by a court for destroying documents that would provide significant light on the company’s annual audits. Thus, a once booming company with attractive share prices fell to the dust in a couple of months. Relevant reference: case study business law
Aftermath of the scandal
When the CEO resigned and filed for bankruptcy, the court ordered a new board of directors to take over the company. The company was renamed Enron Creditors Recovery Corporation. The sole aim of the newly formed company was to liquidate as many assets of the company as possible to pay off creditors. The company sold its last subsidiary in 2006 called Prisma Energy to pay off its debts. Also read: help with nursing case study
Summary
I hope this article helped you understand how to write a case study for Enron. Different brands have different histories in the market and understanding major brands and their past can help you become better at analyzing different brands and writing their case studies.
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