Week 5 Key Concept Exercise Governance And Strateg

Week 5 Key Concept ExerciseGovernance and Strategic PurposeStrategic purpose is about stating clearly what the organization intends to achieve from a particular innovation. On the other hand, corporate governance is a set of policies, practices and processes by which a company is directed and controlled. Following the deregulation of the natural gas industry, Enron rapidly shifted from a simple gas pipeline company to a Gas Bank and later different industries such electricity production, the paper industry and water among others. However, all the subsidiaries had different styles of leadership, different goals, and different corporate cultures. The over ambitious expansion strategy of the company, and lack of proper governance to ensure that the strategy was followed, led to the ultimate collapse of the once energy giant. The board of directors and the management was responsible for the process of developing Enron’s strategic purpose. However, the strategic purpose was singlehandedly defined by Jeffrey Skilling and rubberstamped by the board (Heath, & Norman, 2004). The board did not question the CEO’s decisions as long as it made enough profits. This is particularly evident in the Special Purpose Entities (SPE) deal. An SPE is a special entity that allows the company to