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Many problems can occur in the corporate setting that can diminish the way that the company is able to function.

Limited Liability Companies

While every corporation could most likely identify their weakest point, there have been cases in corporate history where the management team has been so bad that it pervades every aspect of the overall business. One such case of the worst corporation team, in the author’s opinion, was that of Enron, a multifaceted business that went under in spectacular fashion in 2001. There were various management problems in many different departments that led to the bankruptcy, many of which will be explored in detail throughout this paper.

There were many different members of this team that were responsible for the fall of this once-powerful company. Since the downfall of Enron is generally attributed to “a botched expansion attempt, an accounting scandal, and the overweening ambition of its once widely admired top executives”, it is best to examine these particular areas (Bloomberg, 2001). The immediate contributing factor to the downturn of Enron was their failure in the area of energy. The individual that was responsible for this failure to expand was named Kenneth Lay, who joined the company in 1986 (Culp, 2003).

Perhaps one of the most fatal flaws that any business can exhibit is that of overextending the business. While horizontal integration of business assets can be beneficial, Enron decided to go completely vertical in their business endeavors with oil. As a result, they began to invest in a variety of different oil subsidiaries and natural gas companies such as Gasbank that allowed them to introduce a new energy model. Notably, Kenneth Lay allowed the corporation to go ahead and begin creating forwarded contracts on gas as well as offering “financing for gas and oil producers, acting as a sort of investment bank for the gas industry” (Culp, 2003). While these contracts and investment plans allowed Enron to make money in the short term, it also set Kenneth Lay and his department up for a tremendous failure. This failure rested solely on Lay as he continued to increase the amount of businesses that he was allowing to work with Enron, using their tremendous amount of resources for the purpose of expansion. By the time the year 1998 came, Enron had amassed a huge amount of holdings in electrical, oil, and gas, effectively spreading their holdings over a vast amount of different areas. As a result of the vagaries in a marketplace that was heading into a recession only two years later, Enron found itself at tremendous credit risk, which produced “significant losses in real income” and reliability problems (Culp, 2003). This set the stage for the outward expansion of Enron to become too great to sustain, and would eventually result in the collapse of the entire energy sector of Enron as the company began to fail.

However, overexpansion is only one aspect of the problem with Enron as there were several other members of this corporate team that led it along the path to ruin. Other members of the energy projects that were working with Lay allowed the company to slide into ruin without thinking about the long term implications of their actions. In particular, Andrew Fastow was one of the contributing players in the Enron Corporation who facilitated overexpansion but also delved into unethical business practices.  He worked directly under the CEO, Jeffrey Skilling, was “part of the team designated to find investors” for Enron in the late 1990s (Swartz & Watkins, 2003). When he found that there was a company called CalPERS that wanted to invest with Enron Energy Services, he pounced on the idea. However, CalPERS came with a stipulation that would require Enron to buy out their contract with another company so that they could pursue their work with them unimpeded (Swartz & Watkins, 2003). Rather than back away from the deal that cost Enron $383 Million, Fastow went through various channels in the company to obtain the financial resources that would be necessary to make the purchase. Through Fastow’s workings within the industry, he was able to appoint an individual to take control of the funds that were eventually used to buy out the CalPERS contract on behalf of Enron, even though it was in a highly unethical and almost illegal means (Swartz & Watkins, 2003). While this may have seemed like a good deal to go along with the work that had been put in by Kenneth Lay, the fact of the matter was that it made Enron appear to be in a much better position than it was in terms of its financial capabilities.

In essence, the energy team that was led by Kenneh Lay and Andrew Fastow partnered with a member of the corporate accounting team named Arthur Anderson so that they could ultimately hide the amount of money that was owed to the expanding interests. They kept large amounts of debts from appearing on the books at Enron, bolstering consumer confidence and giving their workers and investors false hope to invest in their company (Silverstein, 2013). The result of these energy partnerships by this particular corporate team and the relative disregard that they had for ethics led to the company suffering from what can only be described as a financial implosion. The massive debts that were brokered by Lay and Fastow had surprised the executives in the company when they were revealed, causing massive stock sell-offs and the workers for the company to not be able to sell their stock, resulting in millions of dollars simply vanishing for them.

There was a great deal that was wrong with Enron as a company, but the energy team at Enron, as the worst corporate team, deserves a great deal of blame. After all they did so much wrong that it prevented the company from failing in the face of the economic recession. The very first misstep that this team can be held accountable for was their complete disregard for the vagaries of business by becoming too involved in the other expansions to their business. When Enron was focused on providing gas and electric, it was one of the top-rated companies in this area of energy (Culp, 2013). It was not until they decided to get involved in energy conglomerations and complicated partnerships that Enron started to fail. Alexandre Silveira and Alain Maricano stated that among the chief problems that were had by the energy sector of Enron was “Overexpansion of the business: excessive growth of the company in the years immediately preceding the governance problems” (334). Not only did the team fail to realize that they were getting to be too large, but they did it in a corporate culture that was doomed to fail because of the lack of oversight and the willingness to take on projects that were ethically unsound for the sake of appearing more powerful than they were in reality.

Even though this corporate team is the worst in history, the only reason that they were able to make such a spectacular story of failure was because they were so successful. There were many things that the team did correctly before they took the fatal steps that led to the company’s demise. For starters, both Kenneth Lay and Andrew Fastow were part of the team that oversaw Enron gathering up power in the natural gas market, the original market of Enron. However, they were constantly faced with problems such as attempts to buy them out of their market or to absorb Enron. Throughout the early to middle 1990s, the energy department realized that “the key to the company’s survival was to make itself too big to devour” ( Eichenwald, 2002). They were highly successful in this respect and began a series of acquisitions in the marketplace that ensure the stability of the company. However, this positive evaluation of this corporate team has to be tempered with the understanding that by creating such a large corporation, it empowered the team to take the measures that ruined the company in years to come. Without their initial success, there would have been no means of establishing off-record corporations.

The idea of the lack of oversight playing such a vital role is impossible to overlook in this case because Kenneth Lay and Andrew Fastow were at such high levels in the corporate structure that it was not possible them to not realize what was happening. Kenneth Lay was the original CEO of the company. He knew that what he was doing was wrong and empowered himself and Fastow to drive the company ahead to preserve the appearance that the company was doing well. Moreover, they were directly implicated by the corporate accounting individual that was ultimately sent to jail along with them. The fact that two very experienced individuals took their company and crashed it out of sheer greed shows that this corporate team lacked all regard for their coworkers and associated. Ultimately, the ability of such a few individuals to sink an empire like Enron makes this corporate team the worst in terms of their business and overall ethical approaches to the company.


Bloomberg. (2001, December 9). Enron: running on empty. Retrieved from:

Culp, C. (2003). Corporate aftershock the public policy lessons from the collapse of 
Enron and        other major corporations. Hoboken, New Jersey: J. Wiley.

Eichenwald, K. (2002, January 13). Enron’s collapse; audacious climb to success ended
in         dizzying plunge. Retrieved from:       collapse-audacious-climb-to-success-ended-in-a-dizzying-plunge.html

Marciano, A., & Silveira, A. (2013). The Enron Scandal: A decade later: Lessons learned? 
In  The bright side of scandals: An introduction. Mu¨nchen: Accedo Verl.-Ges.

Silverstein, K. (2013, April 14). Enron, ethics, and today’s corporate values. Retrieved
from:        corporate-values/

Swartz, M., & Watkins, S. (2003). Power failure: The inside story of the collapse of 
Enron. New     York: Doubleday.

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By Hanna Robinson

Hanna has won numerous writing awards. She specializes in academic writing, copywriting, business plans and resumes. After graduating from the Comosun College's journalism program, she went on to work at community newspapers throughout Atlantic Canada, before embarking on her freelancing journey.

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