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Assignment on Strategy Purpose

   

Added on  2021-06-18

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Running head: ASSIGNMENT ON STRATEGY PURPOSEAssignment on strategy purposeName of the universityName of the studentAuthor note
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1ASSIGNMENT ON STRATEGY PURPOSEPart 1The company law has been changing over the years and the primary drivers of the changeare the financial scandals. The corporate governance of the company was proved as thefailure. It has been assumed that the failure of the corporate governance of the companywas the result of the serious disagreement between the senior level of management andthe board during the time that led to the bankruptcy of the company. However, the articleby Simon Deakin argues that this was not the only reason for which the company, Enronfailed. Rather the failure of the management and the board of the company in taking theresponsibility of the risk which was inherent in the business plan (Deakin andKonzelmann 2004). Particularly the uses of the forms related to the Special PurposeEntities and structured finance. The company drastically misused these above mentionedforms which were off-balance sheets of financing and their lack of willingness to correcttheir primary misreporting in the accounts of the company. Simon Deakin marks this asthe main drivers that led to the destruction of the market confidence in Enron; thedisagreement of the interest between the board and the management causing the failure ofthe company (Deakin and Konzelmann 2004.). From the above analysis, it can be stated that the corporate governance of thecompany should have been more of a role for Enron and other companies who areprogressive as well as aggressive kind of nature (McLean and Elkind 2013). Thecompany had a large number of directors outside the board which initially wasestablished as good practice, however, the outside directors had compromised with their
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2ASSIGNMENT ON STRATEGY PURPOSEindependence. The result was that it created major conflicts of interest among the boardand the management. The scandal had a major influence on the key stakeholders of the company (Deakin andKonzelmann 2004) The key stake holders who were involved in the process ofdevelopment of the strategy purpose are the executive management, employees of thecompany, stockholders and the third parties that were affiliated with the organizationssuch as Arthur Anderson which was the international accounting firm. The economy alsoto a large extent affected by the fall of the company. Enron’s executive managementclaimed that they did everything to protect the reputation of the company (Deakin andKonzelmann 2004). The employees of junior as well as the senior level lost their job afterthe scandal of the company. The employees not only lost their jobs they also had lost thesavings of the entire course of the employment in the company. The major negativeimpact was on Arthur Anderson as it completely dissolute. It deserves mention that thecompany secured its position in among the large five companies of accountancy andaudit. Undoubtedly, the shareholders of the company lost their whole investment becausethe stock of the company completely plummeted. The collapse of such a huge companyrocked the economy as well. The stakeholders had the possibilities to alleviate the issues which were hinderedin the strategic purpose of the company. Firstly, the government could have imposedmore strict rules and regulation in order to keep the company under control (Deakin andKonzelmann 2004). The company Arthur Anderson could have been more aware of thebusiness policy of Enron in order avoid such scam.
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