ENRON, ENERGY AND GLOBAL ENTREPRENEURSHIP.

Enron Corporation was created in 1985 as a result of a merger of four natural gas pipelines and one exploration and production (E&P) company. Enron today has five key businesses--wholesale trading, pipelines, new ventures, retail energy sales, and communications.

In 1988 wholesale energy sales represented 25% of $94 million in earnings, the pipelines 70%, and exploration and production 5%. By 1998, E&P still represented 5% of earnings, while wholesale energy sales grew to 60% of $783 million in earnings from 25% back in 1988. Enron is divesting its U.S. exploration and production operations.

Over the 1985 to 1998 period, natural gas demand grew while natural gas deregulation continued opening markets for new products and services. The non-regulated side of the U.S. gas business in the early 1990s and non-regulated electricity sales in the late 1990s spurred Enron's growth.

Enron, with a 46% market volume lead over its second-ranked competitor, markets and trades 23.7 trillion BTUs daily of energy, about 10% of all U.S. energy use. Enron's spending on IT systems to manage 23.7 trillion BTUs of contracts daily is over $100 million annually. These IT systems connect the most extensive U.S. and European energy networks in existence today. Sales and Marketing magazine in July 1998 ranked Enron in the top 10 of best U.S. sales forces based on three criteria: superior sales performance, reputation for customer service, and reputation for employee satisfaction.

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A key success factor for Enron's ability to develop and maintain its complex energy contracts and backroom portfolio supply position is diversity of its employee pool. Over 35 nationalities and 33 languages help put Enron's global profile into action.

Of its global team, 80% of employees have advanced degrees and 70% are multi-lingual. With its employee pool numbering over 18,000, Enron has about 8,000 employees, or 45%, in new unregulated businesses. Enron is an all-employee bonus, all-employee stock option company from the mailroom to the boardroom. Employees are highly motivated to meet and exceed their personal goals. As the monopoly model falls away in gas and power and as new counterparties are available as dealmakers, Enron's employees are actively creating new products and services to offer more choices to customers. In 1991, Enron offered six types of natural gas contracts and products; today it offers over 210.

In the U.S., the pace of deregulating gas and power markets varies by state. California, New Jersey, New York and Pennsylvania are among the most proactive states in offering competitive gas and power services to consumers. Other states such as Florida, Kentucky, Louisiana, Tennessee and Wisconsin are slower to evolve.

Enron is also proactive in introducing competition into the water utility business and in telecom wide bandwidth trading. By year-end 2000, Enron will have the first nationwide Internet data protocol-only, fiber-optic network. It has half the network west of the Mississippi already in place.

Enron was ranked tops in innovation by Fortune magazine in March 1999 and has achieved the rank for the fifth year running. Enron's vision is to become the world's leading energy company, its key values are respect, integrity, communication and excellence.

Compared to the S&P 500 last year, Enron earned 39.6% versus the S&P at 28.3%. Its peer group earned a negative 6.5%. Enron's total shareholder return is a compelling 606% over the past ten years versus the S&P at 391% and peer group at 208%. Today, Enron's annual revenues exceed $40 billion compared to $14 billion in 1988.

Enron can be said to have been in the right place at the right time, but it has created its own luck in a high-energy fashion by pursuing change inside and out. It has redefined the gas and power businesses and is at work on shaping its new ventures. Aiming for global entrepreneurial success, Enron is a growth engine internally driven by spirited, empowered employees.

REFERENCES

Enron Corp. (1998). Annual Report and Statistical Summary

Enron Corp. 1999-2020 Enron Energy Outlook

U.S. Department of Energy (Sept 1999). Monthly Energy Review

FT Publishers (January 1999). Megawatt Daily

FT Publishers (January 1999). Gas Daily

Sales & Marketing

Fortune. (March 1999)

Wall Street Journal. (January 1999)

Margaret Carson is director of competitive analysis for Enron Corp. in Houston, Texas. She joined Enron 1987 after 15 years with Chevron Corp. in Pittsburgh, New Orleans and Houston.