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Examining a Business Failure
When starting a business, no organization plans to fail or succumb to the many perils that exist in maintaining a successful business. There is significant preparation and contingency planning to ensure a business continually generates revenue and does so without compromising any ethic standards or principles. “Businesses failures can be categorized into two categories; catastrophic failure and general lack of success.” Catastrophic failures result from economic factors and are cited as the reason of failure by 75% of the businesses that fail; whereas, 88.7% are a result of management mistakes (Holland, 1998). WorldCom was unfortunately one of the businesses that went from prominence to demise. This paper will examine WorldCom and the contributing factors which led to the organizations failure.
WorldCom began as a small long distance telecommunication company and progressed into one of the largest telecommunications in the world and the second largest long distance company. It began as a small company in Jackson, MS by Bernie Ebbers and grew to become a darling of the new economy and of Wall Street. Their growth and success was primarily related to the numerous acquisitions over the course of time. These acquisitions were also the cause of the $41 billion in debt the company accumulated. The organization attempted to obtain relief from this debt by filing Chapter 11 bankruptcy but when the problems surfaced, banks refused to provide more money unless it was secured with WorldCom assets.
Once viewed as a success story, the organization began to witness a decline beginning in 1999, a decrease in its stock share and went from success to failure. On July 19, 2002 WorldCom the number two long distance provider filed the largest bankruptcy ever in U.S. history with its $41 billion dollar debt load, and more than $107 billion dollars in assets.... [continues]
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