Enrons Greed for Fees

sources:
http://www.accounting-degree.org/scandals/
http://www.investopedia.com/updates/enron-scandal-summary/

1. impact of such poor decisions

With Enron focused on improving its company position in the market, its COO and
former CEO, Jeff Skilling and Ken Lay, manipulated the companys books; they kept off
huge amounts of debts, effectively affecting the amount shown in the equity portion of
their books. As a result of their fraudulent book tampering, Enrons shareholders lost $74
Billion and the company later filed for bankruptcy. Its two former officials were
sentenced to jail time with Lay dying before being jailed and Skilling serving time for 24
years.

2. considering strategic planning process, how do these decisions fit into the process
Being a McKinsey consultant who specialized in strategy, Skilling knew what he wanted
Enron to achieve; he had a clear vision of it. But despite having a clear vision, Skilling
did not work on management and the operations, letting both of these go to waste. His
vision of a huge trading enterprise remained that, a vision. He did not develop and
implement practical business plans; he launched Enron into a broadband venture without
proper planning. This resulted in Enron having insufficient funds to finance the project
and the company being unable to recover on these losses seeing as both Skilling and the
unprepared company had no experience in this field.
Skillings lack of interest in operational management meant that on his appointment at
COO, he made a poor situation much worse by making bad managerial appointments. His
focus on rapid growth incentivised by very generous compensation schemes, and with
inadequate spending controls, created a totally dysfunctional organisation. As a result of
this dysfunction, Skilling and Lay found themselves manipulating company books in an
attempt to cover up their mistakes and blow up the company as a company raking in
profits.
Wells Fargos Fake Accounts
sources:
http://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-
bank-fees/
http://money.cnn.com/2016/10/24/investing/wells-fargo-fake-accounts-angry-
customers/

1. impact of such poor decisions

In 2016, 5,300 Wells Fargo employees were fired for creating over 2 million fake
customer accounts in a money-making scheme. The employees decided to create fake
customer accounts to create ghost revenues for the bank and effectively, distort an
increase in their sales which led to an increase in their bonus pays and salaries. Such a
decision from the employees of committing fraud destroys company integrity and
reliability as their existing clients fell victim to erroneous bank charges. Such an act
would lead not only to existing clients losing trust in the bank and therefore, possibly
leaving, but it can lead to potential customers turning away to find other more reliable
banks in which to put their money. In an attempt to salvage their reputation, earn back
public trust, and ensure that integrity does not disappear from their company, 5,300
employees were fired.

2. considering strategic planning process, how do these decisions fit into the process
The employees saw an opportunity to increase bank sales and increase their revenues
through the creation of dummy accounts, effectively charging their customers for services
which the latter did not receive. From this opportunity, they conspired and formulated a
plan to create multiple savings accounts for fake people. The employees should have
been conditioned that while a company goal of high sales (and high bonuses) is desirable,
it is more vital to offer reliable service to not only ensure slow and steady revenue growth
but to ensure constant revenue inflow. Such a scandal has resulted in a shaky outlook for
future revenue.

3. how does the market respond to unethical decision making in a corporate environment,
why
Customers, naturally, were very angry. One customer specifically stating that "They lost
me as a banking customer and I have warned family and friends," is only one indication
on the possible outflux of customers from the bank's roster. A lawyer involved in the
lawsuit against the bank also stated, "How does a bank that is supposed to have robust
internal controls permit the creation of over a half-million dummy accounts? If I were a
Wells Fargo customer, and fortunately I am not, I'd think seriously about finding a new
bank." It has, in fact, been estimated that Wells Fargo fallout cost them $8 Billion in
revenue with 14% of their customers already expressing that they are actively finding
other banks. New bank account openings have also taken a dive, reducing by 30% from
their normal number of bank openings.

4. how does the situation affect a firm's SWOT?

On normal operations, the bank would assess itself as having a strength of strong internal
controls (especially considering that it is a bank and a bank is supposed to have strong
internal controls in order to fully deliver on the fact that the public trusts it with their
money). After the scandal, however, one could say that the bank's strength turned out to
be a weakness in that its internal controls were dismal. Another weakness of the bank is
the company culture; the kind of culture that makes it okay for employees to commit
fraud just to increase bank revenue and by extension, increase their salaries; the kind of
culture which gives the employees the guts to commit such fraud. This is an opportunity
for the bank to stamp out any fraudulent speck left in its offices, to tighten and better its
internal controls which could, in the future, mean a more secure place to invest your
money in. The threat born of the issue is the possible bankruptcy of the bank due to huge
losses of demand. Competition can swoop in to steal away Wells Fargo's customers as
these customers are now in a panic mode, wary of their current bank and looking for a
more stable and reliable bank.
Fox News Sexual Harassment Complaints
sources:
http://fortune.com/2016/07/19/megyn-kelly-roger-ailes-sexual-harassment/
https://www.nytimes.com/2017/04/19/business/media/bill-oreilly-fox-news-
allegations.html?_r=0

1. impact of such poor decisions

Filing a lawsuit against Fox News (now, former CEO) Roger Ailes, Gretchen Carlson
opened the floodgates for numerous sexual harassment complaints from other women
against the said CEO and against Fox News anchor Billy OReilly. This has resulted in
Ailes being asked to step down from the position of CEO and settling the lawsuit for $20
million, with OReilly also being dropped by Fox News. Such poor decisions on the part
of these two has seen 60 advertisers pull their ads from Fox News, stating that they do not
want their companies to be associated with people who do not uphold their values.
Companies that pulled advertising included Mercedes-Benz, BMW of North America,
Allstate Corp., Angies List, French pharmaceuticals maker Sanofi SA, direct marketer
Constant Contact, men's clothing company Untuckit and mutual fund operator T. Rowe
Price, for a total of an almost 50% drop in advertising due to these scandals.

2. considering strategic planning process, how do these decisions fit into the process
Company culture cannot be blamed in the ensuance of this issue as it is something which
can happen anywhere, and in any company; a situation brought about by societal
perception and working rather than any definitive company culture. OReilly, before the
allegations surfaced, was seen as an asset of Fox News, bringing in more viewers than
any other show on the channel. Inside the company, women expressed outrage and
questioned whether top executives were serious about maintaining a culture based on
trust and respect, as they had promised last summer when another sexual harassment
scandal led to the ouster of Roger E. Ailes as chairman of Fox News. Under public
pressure, Fox News finally let go of OReilly, sticking with their company culture of
trust and respect.
3. how does the market respond to unethical decision making in a corporate environment,
why
Following these allegations, Fox News lost millions of dollars worth of revenues from
advertisers pulling out their products and affiliations. The general public, however, has
turned to start praising the company for taking a stand against its CEO and against its star
anchor. Multiple people and the general public have expressed their surprise and praise
over the companys decision to drop the Ailes and OReilly, stating that so very rarely do
you see companies put womens rights above profits and workplace politics.

4. how does the situation affect a firm's SWOT?

The company can use these two cases to further build up their company culture and the
perception of the public eye of their company as a company which can be trusted, is
founded on respect, and embodies integrity. These three values would do well to build up
their reputation especially considering that they are a media empire focused on delivering
news (politics, social issues, and the like) to the public. It would strengthen the brand of
Fox News as a media company which stands by its beliefs and, by extension, deliver to
the public news from an objective point of view and to tackle social issues with integrity.
The company can capitalize on the decisions they have made to let go of Ailes and
OReilly, and the public praise, which came with it. This is also an opportunity for the
company to define its company policy on workplace ethics, effectively setting up an
example to all its employees that unethical happenings within the workplace will not go
unpunished, no matter your rank and your importance.