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declining organization is divided in to five stages by Jim Collins. By referring to each stage an organization gets an insight about the degree and relative stages of decline it has encountered. Planning to rectify the problems by referring to the decline stage can catalyze the process of rehabilitation and reestablishment of the organization. The following paper discusses the case of Enron Company that failed on account of its myopic business judgments and decision making.
How the Mighty Fall: And Why Some Companies Never Give In
How the mighty fall is an episodic research by Jim Collins that jots together the consideration of the huge organization through there making. Contemporary organizations as a matter of fact operate on an ongoing assumption. They cede into a market precisely to operate forever and operate profitably. But yet many a times mature organizations tend to take decisions that ultimately devastate them and push them through the phase of decline. Jim Collin has adapted the model of five stages to depict the decline of an organization in the contemporary settings are augmented by the following paper (Talbot & Jakeman 2007)
Five Stages of Decline Incorporated by Jim Collins
Rather than considering decline as the ultimate step where an organization dissolves, Jim Collins attempts to stratify the stages of decline. The beneficial outcome of this stratification is that the organizations can locate themselves along the penal of changes and deformation going through in the change process, the following graphs presents a visual implication of the five stages of decline:
The stages are namely
Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death
Introduction to the Specimen Organization
Eron's company originated on competitive landscape of USA back in the year 1985, as inter-state pipeline company incepted as a consequence of merger operation among Houston Natural Gas Omaha-based InterNorth. Kenneth Lay, the former chief executive officer of Houston Natural Gas, took the responsibilities as a CEO, and in the preceding years captured the designation of the chairman.
The product and service portfolio of Eron Company diversified with the passage of time and the company soon moved to new fields of operation. In the year 1999 the Eron Company initiated its "Broadband Service Unit" in addition to Eron Online, as the company's official website. The Eron Online service was soon pronounced to be the largest business and e-commerce site across the globe. Eventually it was noted that about 90% of the total profits of the Eron Company were through trades over Eron Online (Hiles 2011).
The organization experienced rapid growth by the year 2000, when -the annual revenues of the company reached $100 Billion U.S.. The Fortune 500 ranked to asset it the seventh largest company of U.S. And subsequently sixth largest company of the world. Through the duration of enormous growth and success the Company's Stock price peaked at $90 U.S..
The Key Business Considerations
The major agents' Eron Online Trading
The following key players are certainly important in the facilitation of the online transactions made on Amazon. In order to understand the need of government intervention in the ecommerce activities of Amazon of the private online entrepreneurs, the basic agents of the online transaction are needed to be discussed (Hamilton 2001)
The customer is an individual who purchases online and as per the statistics about 85% people across the globe use credit cards to make online purchases, whereas 95% people of USA use credit cards for making online sales.
The UCC ensures that the merchant has a valid merchant account based on their credit history, related personal loans, market standing and goodwill. Small and mediocre businesses as a matter of fact are unable to get their independent merchant accounts owing to the restriction of UCC on the banks to grant the merchant accounts without considering the credit score and history of a merchant.
The payment gateway proceeds the credit card information entered by the customer, abiding by the requirements as imposed by the UCC. The payment gateway processes the encrypted rather coded and secure consumer information to the payment authorization to the acquiring bank.
It is the bank of the payment gateway. It decodes the encrypted consumers' details and approaches the exact issuing authority of the cash payment (Wallace & Webber 2004).
The last resort for payment acquisition is the customer bank that gives the final signal that whether a payment can be executed or not. As this bank is the bank of the consumer so it gives the information about the available funds
Overview of Rise and Fall at Enron Company
The organizational wide decline was finally pronounced in the year 2001. It was when in August 2001 Jeffrey Skilling, who was considered to be the driving force behind the reengineering and the profitability of the organization and the Chief Executive Officer for 6 months announced this endeavor from the position of Chief executive Officer. In October Similar year Eron Company met up with a loss of $618 million, assumingly the company's first ever quarterly loss in four years.
Andrew Fastow the Chief Financial Officer was substituted and subsequently the U.S. Securities and Exchange Commission initiated an investigation, pertaining to the investment partnership led by Fastow. The investigation put through the alarming realities about the complex web partnership that was nominated to conceal the Eron Company's debt. Investors that were fluttered by the glowing success of the Eron Company faced huge losses as the stock price of Eron Company was collapsed from $90 U.S. To $1 U.S. (Broder 2006).
Finally December 2001 Eron filed the case for protection from bankruptcy, the case supposedly the biggest case of bankruptcy in the United States. With the failure of the organization about 5600 U.S. nationals lost their jobs.
In the following month the Justice Department in U.S. launched its ruthless investigation to get a track of company's dealings and consequences of Ken Lay's resignation as the chairman and the Chief Executive Officer
Consequently in January 2004, Fastow agreed to appeal bargain and ten-year sentence. He appealed the guilt over the court for his actions of conspiracy in the commitment of wire fraud and the other role as a conspirer as to commit securities fraud. Subsequently he agreed to cooperate with the federal prosecutors. The case further unfolded in February when Skilling entered the appeal of not being guilty of 40 charges including those of wire fraud, securities fraud, conspiracy, insider trading and making false statements on financial reports .
Associating Enron's Decline to Jim Collins Perspective
Stage 1: Hubris Born of Success
Market Size and Trends?
The PESTEL Analysis of the industry includes the Political Factors
The political factors are important to shape the decisions made by the industry because the political issue and polices of trading across the international borders are directly linked to it.
The environmental factors contributes to the share the industry is contributing in the well being of the environment. This factor is also translated as the internal and the external environmental analysis and the nature of competition the industry face. As the industry relies heftily on the production of FMCG and other gadgets so the fact remains the point of contention that weather the industry is paying due attention on the ecological standards and if the methods of production are well enough to save the environment from all hazardous consequences (Maina 2012).
The social factors are denoted by the Corporate Social Responsibility of the industry. A portion of the firms revenues are invested for the betterment of the society and its dwellers at large.
The decision making and the nature of competitiveness in the industry is closely associated with the technological factors. As the industry is an active manufacture and deals in pure innovation, technology up gradation is certainly important and necessary for the industry to survive profitably
The economic factors include the economy as well as the exchange rates. Since the recession hit most of the countries, the import and export of cars decreased. Also since most of the companies are exporting their cars the increase and decrease in dollar has a major impact on revenues of the company and eventually of the industry.
The legal factors are still important in this era of globalization because the technical expertise and the finished goods of the industry are usually exported to the other parts of the world. So compliance to the legal standards of the host country remains the key factor of shaping the decision making in the industry.
Stage 2: Undisciplined Pursuit of More
Ensure economies of scale as Eron Company Sector capitalizes on the fact that it offers value for money to its clients
Eron Company Sector should ensure that the product they offer has its own USP and is…[continue]
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