Leadership, Management, and the Failure of Worldcom
There were many individuals who were very concerned about the transition into the year 2000, and the possibility of systems failing because of computer systems not able to handle the transition out of the 20th century. Transitioning into the 21st century, it was not computer systems that workers needed to worry about but rather the management of the company, and the tactics and behaviors that would ultimately lead to the downfall and closure of the company. One of the most famous was Enron, but another well known failure was that of WorldCom.
WorldCom was a big player in the telecommunications industry, being the largest telecom carrier of Internet traffic. In 2002, WorldCom joined the ranks of failed companies mostly because of the tactics that management and its accountants used to show that the company was earning more money than it was. This was partly in part because of the CEO Benard Ebbers and his appetite for money. One could have predicted that the company would fail because of the way the company organized its financial balance sheets, and showing more profits that it had. By overstating the profitability of the company, everything looked ideal on paper and to Wall Street, but investors were not able to gauge the actual performance of the company.
High-tech consultant Francis McInerney predicted the failure of WorldCom in 1997 when WorldCom purchased MCI. The MCI venture contributed a great deal of costs to WorldCom in maintaining or replacing its network architecture. The management of WorldCom was mainly interested in the short term financial gain and did not even think about the cost it would take to maintain the MCI structure. Ultimately the combination of high costs with MCI, and the financial methods used had a great deal to do with its failure.
The behavior of Bernard Ebbers, the Chief Financial Officer Scott Sullivan, and Controller David Meyers, showed that the management did not have a great deal of interest in how the company
WorldCom was a big player in the telecommunications industry, being the largest telecom carrier of Internet traffic. In 2002, WorldCom joined the ranks of failed companies mostly because of the tactics that management and its accountants used to show that the company was earning more money than it was. This was partly in part because of the CEO Benard Ebbers and his appetite for money. One could have predicted that the company would fail because of the way the company organized its financial balance sheets, and showing more profits that it had. By overstating the profitability of the company, everything looked ideal on paper and to Wall Street, but investors were not able to gauge the actual performance of the company.
High-tech consultant Francis McInerney predicted the failure of WorldCom in 1997 when WorldCom purchased MCI. The MCI venture contributed a great deal of costs to WorldCom in maintaining or replacing its network architecture. The management of WorldCom was mainly interested in the short term financial gain and did not even think about the cost it would take to maintain the MCI structure. Ultimately the combination of high costs with MCI, and the financial methods used had a great deal to do with its failure.
The behavior of Bernard Ebbers, the Chief Financial Officer Scott Sullivan, and Controller David Meyers, showed that the management did not have a great deal of interest in how the company
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