Question 2: Considering all the aspects of the case, what factor do you believe most contributed to the collapse of Enron? In your answer consider both internal and external factors.
Internal Factors
MANAGERIAL VALUES
Corruption and self-dealing at the most elevated amounts of administration were ostensibly the underlying driver of Enron's collapse. Evidence for the situation shows that top executives at the organization, including Lay, Skilling, Fastow, and Kopper, used their power of their position to get themselves a huge number of dollars as the organization was sliding towards destroy, without worrying about other stakeholders. They additionally accepted personal loans and perquisites from the organization and may have engaged with insider trading.
CORPORATE STRATEGY
A close reading of the case proposes that an inside opposing business strategy may have added to Enron's failure. On one hand, Skilling sought after what he called an "asset light" technique that tried to make Enron the main dealer, the mediator in business markets for an extensive variety of commodities. This procedure required that Enron keep up the most possible credit rating, so it could go about as a counter-party in these exchanges. Then again, Skilling additionally looked for fast development in various regions that required the obtaining of hard assets, for example, fiber optic capacity, power plants and water works. This development required the assumption of a lot of debts. Especially when some of Enron's new businesses floundered, the organization was under high pressure to cover its uncertain financial circumstance so as not to undermine its credit rating.
CORPORATE GOVERNANCE
Poor oversight by the board of directors, and specifically by its audit and committee, allowed untrustworthy conduct and poor business choices by top managers to go unchecked. Enron's board directors neglected to screen the performance of top executives, who risked the organization by a series of misguided investment, for example the broadband venture. The remuneration committee authorized outsized executive pay and stock option that may have made incentive to prop up the cost of the stock through false accounting. The board enabled the organization to accept huge obligations that couldn't be upheld by its income. The board voted to suspend the code of ethics to enable Fastow to run the SPEs which shows a transparent conflict of interest. The audit and compliance committee neglected to guarantee the precision of Enron's financial statements, prompting a progression of repetitions that devastated the market's certainty and prompted huge investor misfortunes.
COMPENSATION AND REWARD SYSTEMS
The pay rates, bonuses, and other remuneration of Enron's top executives were moderate. However, the activity of stock options expanded these