1. What does this exercise demonstrate about the pitfalls of relying too heavily on one business? To encourage students to understand how local events can affect other businesses.

Situation The collapse of En ron affected literally hundreds of other businesses. While attention has been directed primarily at the demise of Arthur Andersen, many other businesses suffered as well. For examp le, Enron's headquarters were located in a large office building on the edge of Houston's downtown business district. Because of both Enron's rapid growth and the prosperity of its employees, numerous other service providers had set up shop nearby-a shoeshine stand, a coffee shop, a dry cleaner, and two restaurants. When Enron collapsed, the demand for services provided by these small businesses dropped sharply.

Larger businesses were also caught up in the ripple effect. Enron, for example, had bought the rights to name the new home of Houston's baseball team, the Astros, Enron Field. The Astros were forced to remove all Enron signage and seek a new sponsor. Continental Airlines dominates the air traffic market out of Houston, and Enron was one of Continental's largest corporate clients;

the end of business travel by Enron managers cost the airline considerable revenue.