Worldcom Failure
Examining a Business Failure: WorldCom WorldCom was one of several large companies that failed because of inadequate organizational leadership, fraud, conspiracy, falsifying documents, and embezzlement. WorldCom has been classified as being “one of the biggest corporate scandals in Unites States history” (Zekany, 2004, p. 101). In 2001, the company’s financial condition began to decline due to the slowing telecommunications industry, which eventually put pressure on the company’s executive officers to increase profits (Jonesington, 2007, p. 1). Unfortunately, the executive officers made decisions to commit accounting fraud by falsifying documents to reflect a positive cash flow rather than a negative one. All the individuals involved pleaded guilty to fraud and conspiracy charges (Jonesington, 2007, p. 1). The reason for WorldCom’s failure is not because of poor industry financial conditions but rather because of the lack of leadership, management, and organizational structure to solve the company’s financial problems. The market conditions of the telecommunications industry dropped significantly to affect not only WorldCom but also other companies (Zekany, 2004, p. 103). If WorldCom made decisions with the benefit of the organization in mind, it would have seen improvements in the market and the company’s financial statements. Several organizational behavior theories relating to leadership, management, and organizational structure can explain the company’s failure. Different leadership and management styles affect the way individuals in an organization respond to decisions made and business operations. Finally, the proper organizational structure generates strategies and the implementation of strategies (Hrebiniak, 2008, p. 1).
Comparative Analysis of Leadership, Management and Organizational Structures During the period before WorldCom’s failure, Chief Executive Officer Bernie Ebbers and Chief Financial Officer Scott Sullivan had the reputation
Comparative Analysis of Leadership, Management and Organizational Structures During the period before WorldCom’s failure, Chief Executive Officer Bernie Ebbers and Chief Financial Officer Scott Sullivan had the reputation
References: Ghoshal, S., Lampel, J., Mintzberg, H., & Quinn, J.B. (2003). The Strategy Process. Retrieved June 3, 2010 from University of Phoenix. Hrebiniak, Lawrence. Making Strategy Work: Overcoming the Obstacles to Effective Execution. (2008). Retrieved on June 6, 2010 from http://www.iveybusinessjournal.com/article.asp?intArticle_ID=746 Johannsen, Murray (2010). How to Influence People. Retrieved on June 1, 2010 from http://www.legacee.com/Info/Leadership/Influence.html Jonesington, J. (2005). WorldCom 's Ex-boss Gets 25 years. British Broadcasting Corporation. Retrieved on June 2, 2010 from http://news.bbc.co.uk/1/hi/business/4680221.stm. Yukl, G. (2006). Leadership in organizations. Retrieved June 2, 2010 from University of Phoenix. Zekany, Kay E, Braun, Lucas W, & Warder, Zachary T. (2004). Behind Closed Doors at WorldCom: 2001. Issues in Accounting Education, 19(1), 101-117. Retrieved June 1, 2010, from ABI/INFORM Complete. (Document ID: 587307321).