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Situational Factors Arguments above suggest that at the individual level, there are so many “bad apples” at Enron that caused the organization’s collapse. Also, while internal locus of control people are more likely to take consequential approach in their prescriptive decision making process to reach the best solution for all parties, Enron executives chose to benefit themselves first off. However, at the same time, decision to go against the laws meant those leaders were gambling with their business, which is a high external locus of control behavior. It suggested that they have high internal locus of control, which meant they absolutely have the ability to control their own life. Actually, I believed they were the best in the arena. From my observation from the documentation, these smartest men were too confident about themselves. It’s hard to score those executives on Locus of Control. I personally think going against the laws is unacceptable in any circumstances, especially with those figurehead executives because they were the ones who set up such a bad culture for their organization. The fact that those ken lay, Jeff Skilling, Andrew Fastow, and other leaders decided to cross the legal line to cover up the company failures and to deceive investors lowered their stand in CMD even though they were actually considered extremely smart and successful businessmen. Psychological Approach – Cognitive Moral Development (Appendix 1) and Locus of Control Applying Kohlberg’s Cognitive Moral Development (CMD) to Enron key executives, I think they all were struggling in Conventional level, between stages Three and Four. Her morality won the situation she decided to follow her ethical self. Watkins could either be a team player and do nothing or a whistleblower and raise the questions. She knew deeply that Enron accounting activities were wrong and couldn’t stand the facts that the company was deceiving its investors. On the other hands, Sherron Watkins, the whistleblower, chose the consequential and virtual ethics approaches to resolve her dilemma. He put his duties as an employee first when considering options to solve his ethical issues. It seemed that Fastow chose the obligations and principles approach to justify for his actions. Take Andrew Fastow as an example, he might not start all the fraudulent financial activities in the first place however, he decided to do so in order to please the boss, when Ken Lay wanted to see neat financial disclosures. Prescriptive Reasoning Approach According to the documentation, those Enron people who faced ethical issues used different prescriptive reasoning approach to resolve their dilemma. Many investors may make their investing decisions based on those false data. The action obviously made Enron financial data look good, but at the same time deceived the company’s investors about the real performance. CFO Andrew Fastow created financial partnership to hide Enron debt, from which he allegedly collected $30 million in management fees. That brings in the ethical issue of conflicts of interest, one of key problems at Enron.
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Being said that, the corporation owes all stakeholders the obligations to meet their interests. While employees want secure jobs with high earnings ustomers want quality products with cheap prices, which may eventually result in the company and employees’ low income. All stakeholders have their own self-interests. The company’s stakeholders include primary groups of customers, employees, shareholders, owners, suppliers, etc. Stakeholders and Conflicts of Interest Modern corporations like Enron usually have multiple stakeholders with often conflicting interests and expectations. Enron filed for bankruptcy on December 2, 2001. The Smartest Guys In The RoomĪs the scandal was revealed, Enron shares dropped from over $90 to less than $. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company however, the investors knew nothing of this. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stocks.