SlideShare a Scribd company logo
Marketing and Human
Resource Management
GROUP 3
CASE STUDY - Enron
INTRODUCTION
⊚ Enron Corporation is an American energy, commodities and services company. In its initial years, the company
was simply a natural gas provider. Now it is one of the world’s leading electricity, natural gas, paper and
communication companies which claimed revenue of nearly $101 billion in the year 2000. Enron trades in
Products like Petrochemical, Plastics, Power, Pulp, Stamp, Paper, Steel, and provides services like Weather
Forecasting, Risk Management.
⊚ The top level management of Enron includes founder and Chairman Kenneth Lay, CEO Jeffrey Skilling, COO
Andrew Fastow and former CFO Rebecca Mark-Jusbasche.
⊚ The auditor of Enron is accounting firm named Arthur Andersen.
2
CURRENT LOGO AND TAGLINE
Logo (designed by Paul Rand)
used from 1996 to 2001.
LOGO WITH TAGLINE
4
PARTNERS IN NATION BUILDING
NEW LOGO AND TAGLINE
MANAGEMENT
5
The past management of Enron has not been the ideal management and has allegedly colluded with auditors of
the company to perpetrate fraudulent transactions and opening of shell companies such as special purpose
entities formed by Enron.
Former CFO of company misrepresented the financial positions of the company leading to loss in confidence in
the company by regulators, creditors, investors and employees.
For regaining trusts of shareholder and other creditors and for getting position in market company shall make
following alterations in the management :-
6
NEW PANEL OF BOARD OF DIRECTORS:- A new panel of Board of Directors should be appointed who is
responsible for protecting shareholders' interests, establishing policies for management and oversight of the
corporation. The Board shall consist of Independent directors to ensure the integrity of BoD.
NEW EXECUTIVES:- As old elected executives were not up to the mark and had not taken responsibilities
properly hence, shall be replaced. New executives like CEO, COO, CFO, CTO will bring faith and confidence in
stakeholder of the company and shall promptly replace old executives who were engaged in misconduct.
NEW STRATEGIES:- Subsequent to this, once the new management has taken up its responsibilities and the
facets of old management that have not been up to mark are replaced, we should look at the strategies that
have been employed till the date. New vision, mission and objectives shall be drafted to replace old ones.
With a fresh management, obsolete corporate levels strategies shall be changed. A new strategic approach
shall be devised by the new management keeping in view the present internal and external environment.
FILLING LOOPHOLES:- Management shall identify earlier loopholes which resulted the misconduct
and shall work on filling loopholes which would prevent future chaos in internal and external
management of the company.
7
TURNAROUND STRATEGY:- A fresh management with new ideas shall go for new strategies like
• Corporate debt restructuring
• Call in outstanding debts
• Get cash flow in order
• Revising business plan and budget
8
A vision is a big picture of “what” the
organization wants to achieve in future.
To make green energy products
accessible and affordable to more and
more people, ultimately accelerating the
advent of clean transport and clean
energy production.
:VISION:
Vision of Enron company is to -
To create sustainable energy resources
for society and create a world free of
pollution due to use of fossil fuels.
Enron aims to make the dream of net
zero emissions future come true
:MISSION:
Accelerating the world transition to
Green energy sources and move
towards a zero – emissions future
Ensuring that world is provided with
clean energy sources and help
countries in achieving their
sustainable development targets.
Building a healthy and transparent
relationship with shareholders of
the company.
Creating a global joint in
sustainable development by
Partnering with Government
Agencies
A Mission is about what the organization does to achieve the vision
Mission of Enron company is to -
MARKETING AND EXPANSION
10
MARKETING of products and services will help company to rebuild company’s brand image and will
help create a positive impact.
Company getting into RENEWABLE ENERGY will definitely affect image of company.
Stakeholders will take the decision of going into renewable energy sector in a positive manner and company can get
new investors. Company will become trustable.
Introducing the idea of tackling climate change will also help stakeholders see the good initiatives taken by the
company and help push the idea of Enron being at the forefront of the battle against climate change. Significant
goodwill will be generated in minds of people, especially those concerned about climate change.
11
Contributing towards CORPORATE SOCIAL RESPONSIBILITY
- promotion of education in backward areas.
- eradicating poverty and hunger problems in poor countries.
- contribution towards development of poor countries.
Enron will also COLLABORATE with other climate change activists and hold PUBLIC EVENTS, WEBINARS, DEBATES AND
INFOGRAPHICS SHOWS about its initiatives in tackling climate change crisis, so that people become aware of
company’s steps in fighting climate change and it will help generate a GOODWILL in minds of people.
Moreover, the product mix of Enron will be modified and instead of Natural Gas and Petroleum, the company will
shift its focus towards RENEWABLE SOURCES of energy such as – Solar power, Hydroelectric Energy and Biomass
Energy.
The company will provide services such as ROOFTOP SOLAR PANELS INSTALLATION, HYDROELECTRIC TURBINES
INSTALLATION and CREATING BIOMASS DOMES.
The company will collaborate with leading manufacturers in the industry to help them regulate the emissions from
their factories and achieve NET ZERO EMISSIONS targets.
FINANCIAL STRATEGY
12
• As the existing players in the green energy market are less but are big in the size, the company can easily enter the
market.
• So by explaining and satisfying banks about their vision and mission and their way of performing the activities to
achieve the goals and objectives, company can obtain fresh funding from the banks.
Finance Strategy is an approach for the planned development of the Finance function based on a clearly defined vision, strategy and roadmap. As
our company Enron faced problem of fraud/scandal, it is quite difficult to regain its rights and potential. So Enron is again entering the
market with a fresh vision, mission and objective of entering into green and renewable energy resources.
BANK LOANS
13
GOVERNMENT LOAN
VENTURE CAPITAL
• Company can raise loans form government as per Bankruptcy Code Section 363, which allows a company to sell assets under
a court-approved sale. company entering into new industry with unique and fresh ideas government can help the company in
financing.
Venture capitals are professionally managed funds who invest in companies that have huge potential. They usually invest in a business
against equity and exit when there is an IPO or an acquisition. By gaining the trust of the venture capital investor and satisfying them
by providing the vision, mission and objective company can get a funds for there business continuation and growth.
14
-.
INTERNAL CONTROLS
The Sarbanes-Oxley Act requires public companies to strengthen audit committees, perform internal controls tests, make
directors and officers personally liable for the accuracy of financial statements, and strengthen disclosure. The Sarbanes-
Oxley Act also establishes stricter criminal penalties for securities fraud and changes how public accounting firms
operate. A brief description of changes made by Enron to ensure the security of investors is as follows:
Evaluation of Internal Controls
Enron will follow an set of internal control procedures designed to ensure accurate financial disclosure. The
officers of Enron will evaluate the effectiveness of the company internal controls as of a date within 90
days prior to the report and present in the report, their conclusions about the effectiveness of the internal
controls based on their evaluation as of that date.
15
DISCLOSURES IN PERIODIC REPORTS OF OFF-BALANCE SHEET ITEMS
INFLUENCE ON CONDUCT OF AUDITS
Enron will make disclosure of all material off-balance sheet items such as research and
development partnerships, joint ventures, operating leases etc.
Under Enron, it shall be unlawful, the contravention of such rules or regulations as the
Commission shall prescribe as necessary in the public interest or for the protection of investors, or
for any officer or director to take any action to fraudulently influence, coerce, manipulate, or
mislead any independent public or certified accountant engaged in the performance of an audit of
the financial statements.
16
CRIMINAL PENALTIES
Whoever knowingly alters, destroys, conceals, or makes a false entry in any record or document with
the intent to impede, obstruct, or influence the investigation or proper administration of any matter
within the jurisdiction of any department or agency of the United States, shall be fined under this
title, and/or imprisoned for up to 20 years.
CIVIL ACTION TO PROTECT AGAINST RETALIATION IN FRAUD CASES
Enron prohibits any officer, employee, contractor, subcontractor, or agent from retaliating against an
employee for disclosing reasonably perceived potential or actual violations of conduct given by Section
806. This involves actions like discharging, demoting, suspending, threatening, harassing, or in any
other manner discriminating against a whistleblower.
AUDITING ENVIRONMENT
Company needs some significant changes in it to match the pace of new initiatives taken by Enron and meet the
dynamic nature of the company, as the current Audit firm engaged with Enron - Arthur Andersen, has allegedly
applied reckless standards in its audit due to conflict of interest that aroused due to significant consulting fees
generated by having Enron as its client. .
Thus, Enron shall make significant changes to its Audit environment to ensure that the true and fair view of the
financial position of Enron is reported to its various stakeholders.
18
To form a NEW AUDIT COMMITTEE that
has required expertise on the matters faced by
Enron and can help guide the auditors of Enron in
proper conduct of the Statutory and Internal
audit.
There should be a clause in ARTICLES OF
ASSOCIATION of the company that requires the
Audit committee to hold regular meetings at specific
intervals to discuss at length, the matters related to
financial statements of Enron.
A new audit firm shall be engaged with, which is a
REPUTED FIGUREin the AUDIT AND
ACCOUNTANCY INDUSTRY, periodically within the
time frame decided by the Board of Directors in
consultation with the audit committee.
STRONG INTERNAL CONTROLS shall be placed over
preparation and presentation of financial statements, and
rigorous internal audits shall be conducted to test their
adequacy and effectiveness.
19

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Presentation on Case Study on Enron.pptx

  • 1. Marketing and Human Resource Management GROUP 3 CASE STUDY - Enron
  • 2. INTRODUCTION ⊚ Enron Corporation is an American energy, commodities and services company. In its initial years, the company was simply a natural gas provider. Now it is one of the world’s leading electricity, natural gas, paper and communication companies which claimed revenue of nearly $101 billion in the year 2000. Enron trades in Products like Petrochemical, Plastics, Power, Pulp, Stamp, Paper, Steel, and provides services like Weather Forecasting, Risk Management. ⊚ The top level management of Enron includes founder and Chairman Kenneth Lay, CEO Jeffrey Skilling, COO Andrew Fastow and former CFO Rebecca Mark-Jusbasche. ⊚ The auditor of Enron is accounting firm named Arthur Andersen. 2
  • 3. CURRENT LOGO AND TAGLINE Logo (designed by Paul Rand) used from 1996 to 2001. LOGO WITH TAGLINE
  • 4. 4 PARTNERS IN NATION BUILDING NEW LOGO AND TAGLINE
  • 5. MANAGEMENT 5 The past management of Enron has not been the ideal management and has allegedly colluded with auditors of the company to perpetrate fraudulent transactions and opening of shell companies such as special purpose entities formed by Enron. Former CFO of company misrepresented the financial positions of the company leading to loss in confidence in the company by regulators, creditors, investors and employees. For regaining trusts of shareholder and other creditors and for getting position in market company shall make following alterations in the management :-
  • 6. 6 NEW PANEL OF BOARD OF DIRECTORS:- A new panel of Board of Directors should be appointed who is responsible for protecting shareholders' interests, establishing policies for management and oversight of the corporation. The Board shall consist of Independent directors to ensure the integrity of BoD. NEW EXECUTIVES:- As old elected executives were not up to the mark and had not taken responsibilities properly hence, shall be replaced. New executives like CEO, COO, CFO, CTO will bring faith and confidence in stakeholder of the company and shall promptly replace old executives who were engaged in misconduct. NEW STRATEGIES:- Subsequent to this, once the new management has taken up its responsibilities and the facets of old management that have not been up to mark are replaced, we should look at the strategies that have been employed till the date. New vision, mission and objectives shall be drafted to replace old ones. With a fresh management, obsolete corporate levels strategies shall be changed. A new strategic approach shall be devised by the new management keeping in view the present internal and external environment.
  • 7. FILLING LOOPHOLES:- Management shall identify earlier loopholes which resulted the misconduct and shall work on filling loopholes which would prevent future chaos in internal and external management of the company. 7 TURNAROUND STRATEGY:- A fresh management with new ideas shall go for new strategies like • Corporate debt restructuring • Call in outstanding debts • Get cash flow in order • Revising business plan and budget
  • 8. 8 A vision is a big picture of “what” the organization wants to achieve in future. To make green energy products accessible and affordable to more and more people, ultimately accelerating the advent of clean transport and clean energy production. :VISION: Vision of Enron company is to - To create sustainable energy resources for society and create a world free of pollution due to use of fossil fuels. Enron aims to make the dream of net zero emissions future come true
  • 9. :MISSION: Accelerating the world transition to Green energy sources and move towards a zero – emissions future Ensuring that world is provided with clean energy sources and help countries in achieving their sustainable development targets. Building a healthy and transparent relationship with shareholders of the company. Creating a global joint in sustainable development by Partnering with Government Agencies A Mission is about what the organization does to achieve the vision Mission of Enron company is to -
  • 10. MARKETING AND EXPANSION 10 MARKETING of products and services will help company to rebuild company’s brand image and will help create a positive impact. Company getting into RENEWABLE ENERGY will definitely affect image of company. Stakeholders will take the decision of going into renewable energy sector in a positive manner and company can get new investors. Company will become trustable. Introducing the idea of tackling climate change will also help stakeholders see the good initiatives taken by the company and help push the idea of Enron being at the forefront of the battle against climate change. Significant goodwill will be generated in minds of people, especially those concerned about climate change.
  • 11. 11 Contributing towards CORPORATE SOCIAL RESPONSIBILITY - promotion of education in backward areas. - eradicating poverty and hunger problems in poor countries. - contribution towards development of poor countries. Enron will also COLLABORATE with other climate change activists and hold PUBLIC EVENTS, WEBINARS, DEBATES AND INFOGRAPHICS SHOWS about its initiatives in tackling climate change crisis, so that people become aware of company’s steps in fighting climate change and it will help generate a GOODWILL in minds of people. Moreover, the product mix of Enron will be modified and instead of Natural Gas and Petroleum, the company will shift its focus towards RENEWABLE SOURCES of energy such as – Solar power, Hydroelectric Energy and Biomass Energy. The company will provide services such as ROOFTOP SOLAR PANELS INSTALLATION, HYDROELECTRIC TURBINES INSTALLATION and CREATING BIOMASS DOMES. The company will collaborate with leading manufacturers in the industry to help them regulate the emissions from their factories and achieve NET ZERO EMISSIONS targets.
  • 12. FINANCIAL STRATEGY 12 • As the existing players in the green energy market are less but are big in the size, the company can easily enter the market. • So by explaining and satisfying banks about their vision and mission and their way of performing the activities to achieve the goals and objectives, company can obtain fresh funding from the banks. Finance Strategy is an approach for the planned development of the Finance function based on a clearly defined vision, strategy and roadmap. As our company Enron faced problem of fraud/scandal, it is quite difficult to regain its rights and potential. So Enron is again entering the market with a fresh vision, mission and objective of entering into green and renewable energy resources. BANK LOANS
  • 13. 13 GOVERNMENT LOAN VENTURE CAPITAL • Company can raise loans form government as per Bankruptcy Code Section 363, which allows a company to sell assets under a court-approved sale. company entering into new industry with unique and fresh ideas government can help the company in financing. Venture capitals are professionally managed funds who invest in companies that have huge potential. They usually invest in a business against equity and exit when there is an IPO or an acquisition. By gaining the trust of the venture capital investor and satisfying them by providing the vision, mission and objective company can get a funds for there business continuation and growth.
  • 14. 14 -. INTERNAL CONTROLS The Sarbanes-Oxley Act requires public companies to strengthen audit committees, perform internal controls tests, make directors and officers personally liable for the accuracy of financial statements, and strengthen disclosure. The Sarbanes- Oxley Act also establishes stricter criminal penalties for securities fraud and changes how public accounting firms operate. A brief description of changes made by Enron to ensure the security of investors is as follows: Evaluation of Internal Controls Enron will follow an set of internal control procedures designed to ensure accurate financial disclosure. The officers of Enron will evaluate the effectiveness of the company internal controls as of a date within 90 days prior to the report and present in the report, their conclusions about the effectiveness of the internal controls based on their evaluation as of that date.
  • 15. 15 DISCLOSURES IN PERIODIC REPORTS OF OFF-BALANCE SHEET ITEMS INFLUENCE ON CONDUCT OF AUDITS Enron will make disclosure of all material off-balance sheet items such as research and development partnerships, joint ventures, operating leases etc. Under Enron, it shall be unlawful, the contravention of such rules or regulations as the Commission shall prescribe as necessary in the public interest or for the protection of investors, or for any officer or director to take any action to fraudulently influence, coerce, manipulate, or mislead any independent public or certified accountant engaged in the performance of an audit of the financial statements.
  • 16. 16 CRIMINAL PENALTIES Whoever knowingly alters, destroys, conceals, or makes a false entry in any record or document with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States, shall be fined under this title, and/or imprisoned for up to 20 years. CIVIL ACTION TO PROTECT AGAINST RETALIATION IN FRAUD CASES Enron prohibits any officer, employee, contractor, subcontractor, or agent from retaliating against an employee for disclosing reasonably perceived potential or actual violations of conduct given by Section 806. This involves actions like discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower.
  • 17. AUDITING ENVIRONMENT Company needs some significant changes in it to match the pace of new initiatives taken by Enron and meet the dynamic nature of the company, as the current Audit firm engaged with Enron - Arthur Andersen, has allegedly applied reckless standards in its audit due to conflict of interest that aroused due to significant consulting fees generated by having Enron as its client. . Thus, Enron shall make significant changes to its Audit environment to ensure that the true and fair view of the financial position of Enron is reported to its various stakeholders.
  • 18. 18 To form a NEW AUDIT COMMITTEE that has required expertise on the matters faced by Enron and can help guide the auditors of Enron in proper conduct of the Statutory and Internal audit. There should be a clause in ARTICLES OF ASSOCIATION of the company that requires the Audit committee to hold regular meetings at specific intervals to discuss at length, the matters related to financial statements of Enron. A new audit firm shall be engaged with, which is a REPUTED FIGUREin the AUDIT AND ACCOUNTANCY INDUSTRY, periodically within the time frame decided by the Board of Directors in consultation with the audit committee. STRONG INTERNAL CONTROLS shall be placed over preparation and presentation of financial statements, and rigorous internal audits shall be conducted to test their adequacy and effectiveness.
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