External and Internal Factors play a major role in how a company runs. Companies today are interdependent on not just our economy but global economy. Our world of business is ever changing and uncertain so companies need to have better planning, strong organization, excellent leadership, and ways of controlling internal and external pressures to achieve at a faster rate. This section looks at changes in management styles and the fall of Enron. According to Clinton, Macintosh, and Stein (2007)(p. )
Enron had in place a comprehensive, state-of-the-art and award-winning management control and governance system, and that during Richard Kinder’s term as president from 1986 to 1996, Enron operated with a highly effective management control system. This CEO held meetings once a week and covered vital company information with upper management. Each manager was responsible for and had to answer to strict guidelines on personnel, finance, and expenses of the Enron Corporation.
Enron had in place three groups and or procedures for checks and balances in the company. The first internal group they called the RAC, which stood for Risk Assessment and Control Group. This group was to watch all the deals that went on in the company, submit them to upper management, and once approved the deal would close. The second internal group was the Peer Review Committee that watched over the employees of the company. Their peers and their boss rated them and if they failed to achieve the goals of the company, they were terminated.
Peers were given evaluations frequently to see if they met company standards and given a period to correct actions. The third internal planning procedure was the company code of ethics. The company appointed a new leader by the name of Jeffrey Skilling in 1990. When he came on board, he made changes to the way the company was to run. In the beginning, he had strong resources, powerful connections, and a very sturdy organizational plan. However, lack of quality leadership caused its downfall in 2001.
According to Clinton, Macintosh, and stein (2007)(p. 5) the external factors for planning that the company had in place were outside auditors, a board of directors and a committee for compliance. A major external factor to consider here was the effect on Wall Street and how stocks fell the day Enron announced bankruptcy. All stockholders, and investors had a hard hit and a time of confusion as to what happened with Enron. This caused the United States to re-evaluate global business practices.