Arthur Andersen's Management

Management planning is a skill that is undervalued when planning goes well but whose true value becomes evident when planning is insufficient and things go awry. A good example of the latter is the debacle at Enron involving the giant accounting firm Arthur Andersen. While Enron's underhanded tactics shocked the world when the truth came out, much of what Enron did was accomplished in complicity with Arthur Anderson, without whose help Enron could not so easily have concealed its enormous debts and avoided paying federal income tax over many years. At least partly as a result of Arthur Anderson's duplicitous handling of Enron's accounting, both firms ended up going out of business, and tens of thousands of employees lost their jobs ("Lou Dobbs Tonight," 2005). This paper will examine Arthur Andersen's planning function; the impact on it of such factors as legal issues, ethics, and corporate social responsibility; and factors that influenced the company's strategic, tactical, operational, and contingency planning.

The planning function of management is one of four basic functions(the others being organizing, leading, and controlling(considered integral to managing a company (McNamara, n.d.). Planning, according to business consultant Carter McNamara (n.d.), is "identifying where you want to go, why you want to go there, how you will get there, what you need in order to get there and how you will know i

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s out that "not a single executive of Arthur Andersen has ever been convicted of any crime...[but that] the firm was destroyed, 85,000 innocent people lost their jobs because the Justice Department decided to indict a firm instead of individuals" ("Lou Dobbs Tonight," 2005). Impact of Legal Issues, Ethics, and Corporate Social Responsibility on Management Planning Any firm's legal issues, ethics, and corporate social responsibility exert an impact on its management planning, but this is especially evident in the case of Arthur Andersen. Following the lawsuit over its Enron activities, the firm faced other lawsuits for similar legal issues, but the decision in the Enron case forced it to close its doors before it could amend its management planning. Its ethics were clearly faulty, or it would not have engaged in wrongdoing, and its corporate social responsibility was also lax, or it would not have agreed to help Enron conceal its guilt in manipulating power grids in trading ploys(an approach that ended up costing some people their lives when the electricity went out and that continued to cost lives years later as deregulated utilities looted the power grid system, cutting the power during heat waves (Freeman,

Category: Business - A