Enron Case Study

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Enron Introduction

The influence of macro and micro elements of an organisation results in change of business initiative and operational process for effective performance. The growth of a particular organisation is intermittently depended upon the impact of influential external factors. In this assignment, Enron case study has been acquired to showcase the effect of internal strengths and threats faced in competitive business environment. This has also identified some of the important external factors that align the business opportunities with profitable income of Enron. A table with specific information about Enron has been provided along with their operational business website link, USP, product range which are targeted by Enron.

Fill in the blanks

Company Name

ENRON CORPORATIONS

Type of industry

Energy

Headquarters

Omaha, Nebraska

Sales/Revenue

$101 billion

Area served

USA, INDIA, Caribbean and Brazil

Number of stores

4

Competition

Dynergy

USP

Gas pipeline and energy services

Target Group

Residential properties

Products

Natural gas pipeline

Website

http://www.enron.com/

Table 1: Enron Company information

(Source: enron.com, 2019)

Enron SWOT Analysis

Strengths

  • Enron is popularised as the largest gas pipeline and energy service organisation
  • Enron has occupied more than $101 billion (enron.com, 2019)
  • Enron awareness campaign for safe use of energy
  • The value of Enron share is increased by 50% (fortune.com, 2015)

Weakness

  • Lack of transparency in business while conducting accounting information
  • Enron has suffered loss of more than $74 billion due to charges of fraudulent activities (edition.cnn.com, 2019)
  • The scandal has resulted in loss of employee trust.

Opportunities

  • Enron can utilise online opportunity to book clients
  • Enron can explore regions other than UK and USA to set up gas pipeline

Threats

  • Lack of internal trust
  • Heavy competition from Dynergy and British Gas

Table 2: SWOT of Enron

(Source: Edition.cnn.com, 2019)

Enron Analysis

The popularity of Enron can be considered major criteria for the company to exploit business opportunities in USA and UK. As per the case study of Enron, it can be pointed out that awareness campaign of Enron allows them to not only impose a positive impression on client base but also helps in acquiring major aspect of profitable revenue from market opportunities. According to the views of Prajogo (2016), increase in company share results with market returns and sustainable performance. As per the case study of Enron, improvement in share value margin equipped them to remain at influential position in energy market.

It is also profitable for them to provide relevant supply of gas with increased consumer base. However, Georgescu and Popescul (2015) has cautioned about the negative effects from scandals and impartial mode of business. The statement of author resonates with transparency scandal that cost Enron a significant amount of monetary revenue to negative down slope of business process. As per the case study of Enron, lack of meaningful accounting of client details have led to filing of bankruptcy and also lowered their business dominance in the region.

On the other hand, online opportunity of business is a widespread phenomenon of modern business environment that could be one of the key drivers for Enron to engage with international consumer base. It could be helpful for Enron to understand the demand of international consumers and ensure gas pipeline can be explored with necessary efficiency. It could further allow Enron to book international client that can take up franchise for Enron as a means of expanding business operation in UK and other regions of Europe. However, Kolk (2016) has stated the need of employee trust on business initiative for acquiring higher revenue. As per the case study of Enron, despite its influential income, scandal has disoriented employee trust from management. This particular aspect can either derail the professional service of Enron or result in loss of potential clients. 

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Enron PESTLE Analysis

Area

Factors

Impact

Political

  • Stabilised politics in regional areas
  • International trade problem from BREXIT

Moderate

Economical

  • Sudden increase at bank charges by 0.75% (bankofengland.co.uk, 2019)
  • Profitable export option from 13% increase (wits.worldbank.org, 2019)

Positive

Social

  • Increase in diversified population of citizens
  • Stagnancy in employment rate by 76% (tradingeconomics.com, 2019)

Positive

Technological

  • Improvement of technical infrastructure
  • Online exploitation of business opportunities

Positive

Legal

  • Implication of Sale of Goods Act, 1979 (legislation.gov.uk, 2019)

Moderate

Environmental

  • Sustainable method of business

Moderate

Table 3: PESTLE

(Source: Tradingeconomics.com, 2019)

Enron Analysis

The political region of UK has acquired internal stability which could be utilised by Enron as a means of expanding their operational base in UK. As per the case study of Enron, the energy services in UK are being dominated by British Gas. It can be overcome by Enron through the support of stabilised government initiative. However, trade regulations with EU can act as a restriction for Enron to offer energy services in those regions or else they would have to incur heavy tax from respective country in EU. It has been highlighted by Komljenovic et al. (2016) that provision of export activities can act as an advantageous platform for companies to achieve higher revenues. As per the case study of Enron, increase in export from UK to regions other than EU can provide them profitability as well as popularity of brand.

On the other hand, increase in interest charges can act on the opposite of increasing slope Enron’s profit. However, Prajogo (2016) has highlighted the relevance of social diversity as it increases the sale of company products. As per the case study of Enron, it is advisable that they explore regions in UK with varieties of ethnic population so that their energy service demand can be mitigated. In order to experience better sales margin, increase in employment rate can have a positive effect on sales revenue. More people are expected to acquire services from Enron due to their better financial situation.

On the contrary, online possibility is a tremendous opportunity for Enron to not only find clients in UK but also review the market demand from online services. As per the case study of Enron, improvement of their technical infrastructure with ICT can help in interconnectivity of department. It can resolve the queries of clients within a shorter span of time. The legality of business is a responsible approach for organisations to state their authenticity within business environment. As per the case study of Enron, amending the procedural information from Sale of Goods Act can help them to overcome the negative publicity acquired during scandal.

Reference List

bankofengland.co.uk (2019). HOMEPAGE. Available at: https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate [Accessed 8 August 2019]

edition.cnn.com (2019). HOMEPAGE. Available at: https://edition.cnn.com/2013/07/02/us/enron-fast-facts/index.html [Accessed 9 August 2019]

enron.com (2019). HOMEPAGE. Available at: http://www.enron.com/ [Accessed 11 August 2019]

fortune.com (2015). Is Enron Overpriced? (Fortune, 2001). Fortune [Online]. Available at: https://fortune.com/2015/12/30/is-enron-overpriced-fortune-2001/ [Accessed 10 August 2019]

Georgescu, M. and Popescul, D., (2015). Social Media–the new paradigm of collaboration and communication for business environment. Procedia Economics and Finance20, pp.277-282.

Kolk, A., (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business51(1), pp.23-34.

Komljenovic, D., Loiselle, G. and Kumral, M., (2017). Organization: A new focus on mine safety improvement in a complex operational and business environment. International Journal of Mining Science and Technology27(4), pp.617-625.

legislation.gov.uk (2019). Sale of Goods Act 1979. Available at: http://www.legislation.gov.uk/ukpga/1979/54/pdfs/ukpga_19790054_en.pdf [Accessed 8 August 2019]

Prajogo, D.I., (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics171, pp.241-249.

tradingeconomics.com (2019). United Kingdom Employment Rate. Available at: https://tradingeconomics.com/united-kingdom/employment-rate [Accessed 7 August 2019]

wits.worldbank.org (2019). United Kingdom trade statistics. Available at: https://wits.worldbank.org/CountryProfile/en/GBR [Accessed 8 August 2019]

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