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The Enron scandal, revealed in October 2001, eventually led to
the bankruptcy of the Enron
Corporation, an American energy company based in Houston, Texas,
and the de facto dissolution of
Arthur Andersen, which was one of the five largest audit and
accountancy partnerships in the world. In
addition to being the largest bankruptcy reorganization in
American history at that time, Enron was
attributed as the biggest audit failure.[1]
Enron was formed in 1985 by Kenneth Lay after merging Houston
Natural Gas and InterNorth. Several
years later, when Jeffrey Skilling was hired, he developed a
staff of executives that, by the use of
accounting loopholes, special purpose entities, and poor
financial reporting, were able to hide billions of
dollars in debt from failed deals and projects. Chief Financial
Officer Andrew Fastow and other
executives not only misled Enron's board of directors and audit
committee on high-risk accounting
practices, but also pressured Andersen to ignore the issues.
Enron shareholders filed a $40 billion lawsuit after the
company's stock price, which achieved a high of
US$90.75 per share in mid-2000, plummeted to less than $1 by the
end of November 2001.[2] The U.S.
Securities and Exchange Commission (SEC) began an investigation,
and rival Houston competitor Dynegy
offered to purchase the company at a very low price. The deal
failed, and on December 2, 2001, Enron
filed for bankruptcy under Chapter 11 of the United States
Bankruptcy Code. Enron's $63.4 billion in
assets made it the largest corporate bankruptcy in U.S. history
until WorldCom's bankruptcy the next
year.[3]Many executives at Enron were indicted for a variety of
charges and were later sentenced to prison.
Enron's auditor, Arthur Andersen, was found guilty in a United
States District Court of illegally destroying
documents relevant to the SEC investigation which voided its
license to audit public companies,
effectively closing the business. By the time the ruling was
overturned at the U.S. Supreme Court, the
company had lost the majority of its customers and had ceased
operating. Employees and shareholders
received limited returns in lawsuits, despite losing billions in
pensions and stock prices. As a
consequence of the scandal, new regulations and legislation were
enacted to expand the accuracy of
financial reporting for public companies.[4] One piece of
legislation, the Sarbanes-Oxley Act, increased
penalties for destroying, altering, or fabricating records in
federal investigations or for attempting to
defraud shareholders.[5] The act also increased the
accountability of auditing firms to remain unbiased
and independent of their clients.[4]
The International Business Machines Corporation (IBM)is an
American multinational technology and
consulting corporation, with headquarters in Armonk, New York,
United States. IBM manufactures and
markets computer hardware and software, and offers
infrastructure, hosting and consulting services in
areas ranging from mainframe computers to nanotechnology.[3]
The company was founded in 1911 as the Computing Tabulating
Recording Company (CTR) through a
merger of three companies: the Tabulating Machine Company, the
International Time Recording
Company, and the Computing Scale Company.[4][5] CTR adopted the
name International Business
Machines in 1924, using a name previously designated to CTR's
subsidiary in Canada and later South
America. Securities analysts nicknamed IBM Big Blue in
recognition of IBM's common use of blue in
products, packaging, and logo.[6]
In 2012, Fortune ranked IBM the No. 2 largest U.S. firm in terms
of number of employees (435,000
worldwide),[7] the No. 4 largest in terms of market
capitalization,[8] the No. 9 most profitable,[9] and
the No. 19 largest firm in terms of revenue.[10] Globally, the
company was ranked the No. 31 largest in
terms of revenue by Forbes for 2011.[11][12] Other rankings for
2011/2012 include No. 1 company for
leaders (Fortune), No. 1 green company worldwide (Newsweek), No.
2 best global brand (Interbrand),
No. 2 most respected company (Barron's), No. 5 most admired
company (Fortune), and No. 18 most
innovative company (Fast Company).[13]
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IBM has 12 research laboratories worldwide and, as of 2013, has
held the record for most patents
generated by a company for 20 consecutive years.[14] Its
employees have garnered five Nobel Prizes, six
Turing Awards, ten National Medals of Technology, and five
National Medals of Science.[15] Notable
inventions by IBM include the automated teller machine (ATM),
the floppy disk, the hard disk drive, the
magnetic stripe card, the relational database, the Universal
Product Code (UPC), the financial swap, the
RDBMS and SQL, SABRE airline reservation system, DRAM, and
Watson artificial intelligence.
The company has undergone several organizational changes since
its inception, acquiring companies
such as Kenexa (2012) and SPSS (2009) and organizations such as
PwC's consulting business (2002),
spinning off companies like Lexmark (1991), and selling off
product lines like its personal computer and
server businesses to Lenovo (2005, 2014). By late 2014, the
Reuters news agency referred to IBM as
"largely a computer services supplier".[16]
PricewaterhouseCoopers (trading as PwC) is a multinational
professional services network. It is the
world's second largest professional services network, as
measured by 2014 revenues, and is one of the
Big Four auditors, along with Deloitte, EY and KPMG.
PwC is a network of firms in 157 countries with more than
195,400 people. It had total revenues of
$34.0 billion in FY 2014, of which $15.1 billion was generated
by its Assurance practice, $8.8 billion by its
Tax practice and $10.0 billion by its Advisory practice.[5]The
firm was formed in 1998 by a merger between Coopers & Lybrand
and Price Waterhouse.[1] The
trading name was shortened to PwC in September 2010 as part of a
rebranding.[6]
As of 2013 PwC United States is the sixth-largest privately
owned organization in the United States.[7]
DEFINITION OF 'MARKET SHARE'
The percentage of an industry or market's total sales that is
earned by a particular company over a
specified time period. Market share is calculated by taking the
company's sales over the period and
dividing it by the total sales of the industry over the same
period. This metric is used to give a general
idea of the size of a company to its market and its
competitors.
Out of total purchases of a customer of a product or service,
what percentage goes to a companydefines its market share.
Definition: Out of total purchases of a customer of a product or
service, what percentage goes to a
company defines its market share. In other words, if consumers
as a whole buy 100 soaps, and 40 of
which are from one company, that company holds 40% market
share.
Description: There are various types of market share. Market
shares can be value or volume. Value
market share is based on the total share of a company out of
total segment sales. Volumes refer to the
actual numbers of units that a company sells out of total units
sold in the market. The value-volume
market share equation is not usually linear: a unit may have
high value and low numbers, which means
that value market share may be high, but volumes share may be
low. In industries like FMCG, where the
products are low value, high volume and there are lots of
freebies, comparing value market share is the
norm.
The significance of market share: Market share is a measure of
the consumers' preference for a product
over other similar products. A higher market share usually means
greater sales, lesser effort to sell more
and a strong barrier to entry for other competitors. A higher
market share also means that if the market
expands, the leader gains more than the others. By the same
token, a market leader - as defined by its
market share - also has to expand the market, for its own
growth.
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