Introduction:
Widely known as the champion of the energy industry, Enron is suddenly faced with a corporate crisis in the form of a scandal. This scandal involves not only Enron’s accounting practices but also its corporate governance and culture (Lawrence & Weber, 2008). This report will recommend some potential strategies for Enron to move forward from the scandal. To do this, we must incorporate stakeholder theory, which “argues that corporations serve a broad public purpose; to create value for society” (Lawrence & Weber, 2014, p 6.). This means that Enron must take responsibility for the scandal it created and take actions to regain its stakeholders’ confidence. To accomplish this, we will first identify and analyze Enron’s primary stakeholders, and then point out the key problems along with possible solutions. Finally, we will end the analysis with the best solutions that Enron should enact. Primary Stakeholders: The three most salient stakeholders are Enron’s shareholders, employees, and the government. We choose these three based on their interests, power, relevance, likelihood to form coalitions, and also due to the legitimacy and urgency of their claims.
The first important stakeholder is none other than Enron’s shareholders. The owners of Enron invested their money relying on Enron’s false financial statements, only to lose billions of dollars. They are likely to form coalitions and engage in shareholder activism. In fact, they have the legal power to carry out shareholder lawsuits. The legitimacy of their actions are appropriate because “if owners think that they or their company have been damaged by actions of company officers or director...Shareholder lawsuits may be initiated to check many abuses, including…failure to disclose material information in a timely manner” (Lawrence & Weber, 2014, p. 324). Because of this, shareholders pose