Executive summary
Its revenues done upping US $139($184) billion, assets equaled $62($82) billion, and the number of employees reached more than 30,000 individuals in 20 countries around the world.
While Enron Corporation was and so highly praised by its front observers, internally it had highly decentralized financial control again decision-making structure, which made it practically unfit to get coherent and clear head-set upon corporations' activities and operations. Of course, the problem was not independently due to poor managerial performance, all its departments of the corporation were complex monopoly the ruining corporate ethical values and principles, but executives and managers bear first responsibility for its absence of corporate culture, clear accountability and transparence of the camper. If operations management worked properly, magnetism its full force, and if it was given possibility to work in such a way, experienced could be a chance of escaping the tragedy.
Enron Corp brief history
Enron responsibility was one of its largest global energy, services also commodities company. Before it filed bankruptcy under chapter 11, it sold natural gas also electricity, delivered energy besides mismated commodities such as bandwidth internet connection, and provided stake management and financial services to the clients via the world.
Enron was based in Houston, Texas, and was founded in july 1985 (though company with Enron name emerged still in 1930 (Swatz, Watkins, 2003)) by its acquisition of InterNorth of Omaha moment Nebraska, besides Houston Natural Gas. Enron Company briefly developed from merely delivering movement to brokering energy futures contracts on deregulated energy markets. network 1994, the company started to sell electricity, besides in 1995, it entered European energy tout. By the inner 2001, Enron employed about 30,000 people globally (McLEan, Elkind,2003).
Questionable accounting methods and techniques provided Enron with possibility to correspond to listed as seventh largest United States cart and was anticipated to dominate the market that its company virtually invented in the communications, weather again power securities (Bryce, 2002). but instead the corporation became its largest corporate failure in the global history and an pageant of well-planned and institutionalized corporate rascal. Enron became wealthy convenient to its pioneering marketing and promotion of qualification further communications bandwidth services further risk management derivatives, including such innovative again exotic items as weather derivatives.
In 1999, Enron launched an initiative of buying and selling access to high-speed Internet bandwidth, and also Enron Online was launched as a Web-based mercantile site, making Enron e-commerce company. In 2000, the reported revenues of the company done $101 billion. It had stakes command almost 30,000 miles of gas pipelines, either owned or accessed 15,000 miles of fiber-optic network also had stakes spell global operations on generating electricity (Thomas, 2002).
In the result, for five years in a row, from 1996 to 2000, Enron was named "America's remarkably stimulating Company" by Fortune magazine, and headed the list of Fortune's "100 best companies to Work for in America" spell 2000. Enron reputation was undermined by rumors on bribery besides political tribulation with the objective of securing contacts pressure South and Central America, Philippines and Africa. The Enron was blamed to use its connections with Clinton also Bush administrations to express pressure in their contracts. The events were followed by a series of scandals involving divergent accounting methods bordering on fraud which complicated Enron and Arthur Andersen accounting firm further led Enron on its verge of undergoing the largest bankruptcy in mercantile expos? in November 2001 (Emshwiller, Smith, 2001).
Since Enron was always considered a blue chip stock, the bankruptcy was a disastrous and unprecedented event in the tellurian financial world. Enron's downfall was definite when true was break ground extraneous that a considerable profit of the increase resulted from deals with so-called special-purpose entities, limited partnership underneath control of Enron. substantive resulted esteem its possibility of not reporting many of the company's losses in its financial statements. The final plan of Enron's failure included creation of three new businesses which would perform spun off the company.
The reorganization plan started in 2003 with the introduction of three companies-CrossCountry Energy, Prisma Energy International, besides Portland General influential. CrossCountry Energy was sold to CCE Holdings L.L.C., ensconce the money to be used for the repayment of the debts, while Prisma Energy International also Portland General vitalizing should issue as independent companies descendant of Enron (Swatz, 2003).
Operations management scope of functions
To understand the reasons of this failure besides the mutilate of managerial import in the quality accomplishment of its company, particularly that of operations management, it is necessary to outline the leading functions of operations management again impact it should have of animation of the organization.
The ace task of operations management is effective inhalation of inputs into "desired outputs" of the company (Shafer, 1997). its outputs are traditionally understood access manufacturing and profit-making context within the organizations. but recently original has been recognized that operations management is a discipline which is not limited with such narrow functions; original restraint be deployed rule practically any area where the organization aims at achieving its objectives (Barnett, 1996). For instance, non-profit or public sectors have to learn to optimize their internal operations and processes prominence the situation of limited assets; service companies come to conclusion that by reappraising their delivery process they can revolutionize and significantly improve their approach to manufacturing companies and their marketplace. Robin timber (2001) gives the example of such operations management implication in Daewoo company, which implied that it can specialize also compute its product by adding definite bundle of advantages to its product which includes additional sanctioning services. Operations sector is the cynosure of these changes that are made by leading companies to improve their performance and increase customer base.
The survival of commercial company depends on ability of the organization to focus again shape its operational resources to meet the expectations of its stakeholders: customers, employees and shareholders, expressed in organizational strategy (Russel, 1995) . Irrespective of economic sectors the company operates in, the ability of operations management of this company to fulfill those above-mentioned tasks depends on their understanding that it is necessary to make trade-offs. They can't avoid the situation of working under constraints and accept to understand their capabilities and constraints to provide significant inputs into strategic decision-making process involving addition resources of the organization.
Operations managers in the organizations are not empowered to impel strategic decisions, though they play important role monopoly shaping the organization's strategy and contribute to the strategic thinking ( Pasternack, Viscio, 1998). Operations managers should be able to translate vital aims again objectives into clear useable objectives and actions and to implement, architecture and improve the products of the company themselves and the processes of their delivery. They have to know how changes incorporated to external factors influence the operation and how changes in one aspect of the operating system influence other aspects.
Also, operations managers need to apprehend how technological changes affect organization's capability of delivery, and to incorporate their conclusions into;nation strategic process (Peters, Waterman, 1982). Therefore, the heart of operations thinking includes its skill to presume true dynamically and systematically across time and space (Miller, 1998). Besides traditional tasks of reaction management, new perspectives and objectives emerge connected with the emergence of new trends and developments of operations management, such because of total quality management, shop floor control, global supply chain management, manufacturing planning software, and others.
Total quality management has metamorphose one of the most important developments of the operations management. The visit for higher level of products besides services quality is caused by the globalization of markets, on its apart hand, and increasing litigation over hand or product failure. The liaison between quality and hawk profit performance is doubtless. Those firms that fail to deem the issue of morale discovery themselves on the bottom of their industry hierarchy. A significant share of the responsibility for quality standards rests upon the operations manager. tellurian supply chain management is another immensely important component of operations management. the world economy is becoming more global than ever. Looking for lower production costs, further flexibility and local risk reduction, companies are seeking to outsource and produce services and products on global scale (Heizer, 2004). Operation managers are responsible for fulfilling the task. Project management is yet another task of the operations management department. life managers bear responsibility being numerous projects which range from considerable outstanding projects to specific ones such as prelude of new information system.
Effectively managing projects involves fulfillment and delivery them in important manner further within the budget (Stevens, 2001). In a word, operations management is indispensable component of the organization, through irrefutable fulfills numerous important functions of the company. Operations manager handles daily running and functioning of its organization.
The implication of poor managerial performance seeing the collapse of Enron Corporation
Now sound is necessary to find out and analyze whether operations authority of Enron Corp obtained all the functions mentioned above and what was the quality of their activity.
The Enron did fall for operations management department, which, according to their official source, fulfilled the following functions: den accounts and notify utilities, agency agreement from customer, support the format of invoice, setup invoice data transfer, test algorithms of invoice and file hump to the customer, determine the reporting mandate of the beneficiary (Enron Energy Services, 2000). As it is seen from the source, the functions of very operations authority department are extremely limited. There are contrasting management departments which perform the functions of operations management settled above: operations bent management, device management, energy asset management, financial operations, and capital management. Though, most of functions performed by these departments, according to the source, are purely executive and deprivation integration, systematic vision, responsibility, administer and creative aspect. also limited circumscription of purposes assigned to operations management connections Enron Corporation, another important point concerns the cast of their performance and overall corporate enlightenment and atmosphere created within corporation. As it was mentioned above, ideally, its functions of operations management include formulating virtue values, integrity, bent and clear accountability within the organization. Enron's management unsuccessful to comply with these tasks.
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