Enron Collapse Case Study Analysis


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Background and Facts

Enron Collapse an office products retailer for small and average sized businesses has recently been involved in preparing for a merging with its competitor Home Deport, which has influenced efficiency degrees in departmentswith the senior manager associated with legal issues presented by the government Trade Compensation. With the Advertising and marketing Head advancing the information of his departure from the business in one year, Jeannie Lewis, the existing head of operations has been asked to take the function in the future. With difficulties in the form of a possible cultural adjustment and also reduced worker morale, the company requires a total reengineering initiative at the advertising and marketing department.

Problem Declaration

The possible social modification at the marketing division of Enron Collapse is increasing uncertainty in the workplace leading to numerous challenges for the Jeannie Lewis who would certainly be replacing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a major duty in impacting calculated decisions because Stapes Inc. had to abandon its plans of combining with Office Deport after the Federal Trade Payment's intervention at the same time. Offered the fact that the shop has a worldwide existence with branches in UK, USA, Canada as well as Germany, political factors in each of these nations might have the ability to influence performance or calculated objectives. Federal Profession Compensation's antitrust fit against the merging used up beneficial time of the company's elderly administration recommending that 'political' factors can have major implications for a worldwide business.

Economic Factors: Economic factors such as the introduction of small companies in the worldwide scenario recommend that Enron Collapse is prospering in an environment where there is prospective growth of organisations. In addition to this, truth that store clients are mostly looking for workplace materials for home offices suggests that the market has a climbing trend of entrepreneurs as well as home based organisations.

Social factors: Social patterns in the economic climate show that customers are trying to find convenience as well as attractive prices. Market research demonstrates how the client for Enron Collapse lacks recognition about discovering solutions which can supply a mix of comfort as well as inexpensive.

Technological factors: Innovation plays an essential role in Enron Collapse's company method especially as the company is piloting Innovation centers which would certainly supply innovation sales and also assistance in the form of memory upgrades, peripheral setups. (Recap of PARASITE in appendix 2).

OB Issues as well as Effects.

Numerous underlying Organizational Actions issues can be seen in Enron Collapse's case as highlighted in this section.

Uneasiness concerning social change: There is apprehension concerning a cultural adjustment that would occur once Todd Krasnow leaves from his setting as the Exec Vice President of Advertising with most of the employee already showing unhappiness over this possible relocation. This anticipated adjustment has actually created tension in the office which has actually been coupled with the past tension of preparing the company for a prospective merger with Residence Deport.

Difficult Job Setting for Newcomers: There is lack of personnel that can match the stressful atmosphere of a hectic company. Not just does this bring about problem in locating the best individuals, it places anxiety on brand-new hires as can not hold up against the speed and pressure that the company expects them to birth.

Double Coverage Lines: Novices locate this business culture troublesome as well as difficult to deal with especially as populated line connections are indicated to be weak in general as well as objective setup as well as efficiency assessment is still done by the strong line supervisor. This indicates that newbies can shed clearness about their respective roles as well as objectives particularly as populated line reporting does not maintain them in direct interaction with the strong line managers.

Bitterness From Cross Departmental Hiring: Krasnow's choice to make Lewis his successor rather than Bridget Coles although it had actually been speculated that the last would certainly take Krasnow's position came as a blow to her morale. Lewis might have been capable as well as proper for the job however the reality that Kransnow's departure would make Coles a straight record to Lewis might have been the reason for Coles' resignation from services.

Anxiety & Work Instability: Fear and also insecurity can be determined as 2 major problems that Lewis would certainly be handling particularly as the merger has actually now be cancelled and 2 elderly execs of the advertising division would certainly be leaving. The entire duty of the department would be falling on Lewis's shoulders who would certainly not just be in charge of brining about a social change yet would certainly also have to prove herself in her brand-new duty.

Inappropriate Management Style of Leader: Lewis's management style and its incompatibility with the advertising division's role can likewise be seen as an OB obstacle particularly as she has actually been used to managing concerns in the operations department where workers are educated to focus on processes as well as get them. The advertising division on the other hand can be seen as a team of individuals who are made use of to being supported by Krasnow who focused a lot more on output than procedures.

Interdepartmental Disputes: Interdepartmental disagreements in between three departments, advertising and marketing, merchandizing as well as procedures specifically over the allocation of the advertising mix can be recognized as an additional OB issue. Although the advertising and marketing division does not share the very same vision as the various other 2 divisions regarding the aloocation of the advertising mix twoards promotions and also advertsing, the merchandizing and operations divisions do not agree over the advertising mix allowance amongst each other either.

Disintegration in Advertising And Marketing Division: Disintegration between the marketing and advertising departments can be identified as an additional OB problem which might need more focus. The fact that the advertising and marketing sections in the advertising division are separated is avoiding both divisions from obtaining from each other's experience and also expertise. Integration of advertising and marketing with merchandising and procedures would certainly end up being harder if the advertising and marketing division itself is degenerated which can be an additional prospective OB concern.

Enron Collapse Analysis

Various theories have been used to describe the conditions to get further quality regarding the circumstance handy.

McGregor's Concept X & Y: According to Douglas McGregor's Theory X, many supervisors believe that staffs are passive and also lazy, have little passion as well as stand up to change. The scenario at Enron Collapse is not completely complying with Concept X, it can be seen that new hires are locating this setting instead difficult which might eventually lead to a higher inclination of the administration towards Theory X. Even while evaluating Lewis's management design, concept X might have been ideal in the procedures department to some level but the Advertising and marketing department would need dependence on Concept Y in order to obtain the creativity and also originality from the teams.

Tuckman's Teamwork Theory: Regarding Lewis's problem concerning bringing consistency between the marketing and advertising division is worried, this would at first result in conflict as gone over by Bruce Tuckman in his 'Teamwork Theory'. (Tuckman, 1965). According to Tuckman's concept displayed in appendix 3, throughout the preliminary phase of group advancement, individuals may not bond, as they are active locating their area in the group. By combining the marketing and advertising department's job, there may coincide preliminary disconnect which might lead to the 2nd stage of 'storming' where the teams test one another. Nevertheless, it is just throughout the third stage or 'norming' when they would certainly come together to share ideas prior to the group can produce synergy in the 4th stage 'executing'.

Bridges' Shift Version: As per William Bridge's theory (appendix 4), individuals are quite awkward with modification, which is noticeable by the situation at Enron Collapse The circumstance can be seen as a typical course of life if is studied as per Bridge's concept where he describes that people go through three stages of shift when they experience modification. 'Ending, losing and also Letting go', The Neutral Area as well as 'The New Beginning' (Bridges, 2004). When people are presented with modification, they go into stage one and so there may be feelings like despair, uncertainty, disappointment, rage, worry, rejection and disorientation.The circumstance at the advertising and marketing division of Enron Collapse is similar so Lewis can get comfortable with the idea that it is not remarkable actions. In the 2nd phase, there might be a need to link the void between the brand-new and also old culture so Lewis might have to face this challenge as soon as Krasnow leaves. There may be reduced spirits and also low performance at this stage which should not be taken as a setback. It is during this phase that Lewis will certainly need to give support to the department to ensure that they can find a sense of direction. It can be seen exactly how Krasnow has actually already made this shift much easier by making Lewis obtain associated with the department a year prior to his real separation. According to Bridges' Version, phase three will produce visibility to knowing, High energy and also dedication as individuals will certainly embrace the adjustment (Bridges, 2004).

Abraham Maslow in his Theory of 'Requirements Pecking order' (appendix 5) has talks about the value of 'security needs as being a reduced level requirement of a human for setting off motivation. As seen in the pyramid shared in appendix 3, we can see just how 'the demand to feel safe and secure and also out of threat' is at the second degree of demands. Prior to an employee can be made to create psychologically, he requires to have his 'Physiological 'and also 'Safety and security' needs met.

SWOT Analysis for Enron Collapse Case Study

Effects of Analysis.

The OB analysis has actually looked at numerous concepts to comprehend just how to deal with the present situation at hand. The adhering to three options have been recommended to help Lewis manage the business obstacles in the advertising department. Each of these alternatives has actually been proposed for relieving the transition required to bring the advertising division according to the demands of the market as well as for making the cultural change that would adhere to when the current leader leaves.

Combination of marketing and advertising functions. Dividing Adverting as well as Production features. Integration of Marketing with Workflow.

Examination of Alternatives.

Judith Shapiro who has actually earlier been interviewed by Lewis throughout the earlier merger days has competence in business-to-business marketing along with agency and retail advertising and marketing experience. When Krasnow leaves, Lewis can hire Shapiro as an EVP for advertising and marketing to manage both advertising and advertising functions.

The advantage of this strategy is that it will certainly incorporate the two features while decreasing the demand for working with an added resource for marketing. In addition to this, Lewis would certainly be heading the advertising division and also in any case her replacement would be needed for the present role that she is performing. The negative aspect of this choice is that outside hiring may bring about animosity from internal workers who may be considering the placement of EVP after Lewis takes over Krasnow's position.

Dividing Adverting and Production: Given the affordable pressures and high quality job called for from the ad agency, it is recommended that Lewis ought to permit the production device to be a separate feature from the marketing system. Because the majority of ad agency had these two features as separate systems, it makes even more feeling to follow the norm. Both functions might be able to concentrate on their core triggers much more effectively. Nevertheless, the downside of this approach would be that added expenses would need to be borne for setting up separate manufacturing features. Along with this, a manufacturing head may have to be employed which can increase overheads for the organization.

Combination of Marketing with Procedures: Considering that Lewis is already caring for the advertising and marketing and procedures divisions all at once; it makes sense to incorporate the two features because she has been effectively taking care of both ends. The truth that both departments currently have major distinctions over allotment of sources suggests that this combination might have the ability to cause consistency particularly as Lewis would certainly be heading both ends.However there are various drawbacks of this action specifically as it would certainly place excessive worry over Lewis's shoulders. The reality that Lewis has to adapt her monitoring design for the marketing division suggests that these 2 departments would certainly be culturally varied. Lewis may not be able to apply one type of management design to both divisions which can result in inadequacy in either one of the two functions.


An analysis of the three options indicates that integration of marketing and also procedures would not be a feasible move as a result of the vast distinctions between the two departments despite the fact that currently Lewis is handling both. While splitting up of the production function might have been a beneficial move for the advertising division, the fact that it would certainly mean placing a 3rd feature under Lewis's wing suggests this need to be stayed clear of as well. The combination of the advertising and marketing division is the very best option in terms of getting the optimum arise from the division. An activity plan for this option is reviewed below.

Action Plan.

Lewis will take over the role of EVP Advertising and marketing after Krasnow leaves.

Advertising and Marketing functions would certainly be combined.

Judith Shapiro will be employed to take Lewis's location as SVP of advertising and marketing.

Manufacturing feature will certainly stay component of advertising under marketing function.

Lewis will certainly divide herself from operations.

A democratic management design with employee empowerment will be used in marketing division.

Open door plan and also focus on cross departmental interaction will be focused on removing disharmony.

Contingency strategy.

If the combination does not work out as prepared, a backup plan would follow which would certainly divide the production function from the advertising feature to reduce the lots on the SVP of advertising and marketing. In case Judith Shapiro does not get worked with, Lewis will certainly be heading the advertising and marketing division without an SVP. Because case the production function will most definitely be divided by placing it under an SVP manufacturing.