Management Planning: Worldcom

Topics: Business ethics, Management, Corporate governance Pages: 4 (1267 words) Published: November 1, 2007
Organizations are responsible for the legal, ethical, and social issues that affect each stakeholder within the company. These factors continually impact the planning process performed at each level of management. An organization that neglects to establish and monitor plans can become disorganized and ultimately lose control of practices performed throughout the corporation. A prime example of poor planning due to disregard of legal, ethical, and social issues were the executives employed at WorldCom. Before 2002, WorldCom was one of the top telecommunication businesses in its industry because of many acquisitions obtained by the company. Due to the increased popularity of the internet and the acquirement of UUNet and MCI Communications, WorldCom share significantly increased. According to Moberg and Romar (as cited in Browning, 1997) "By 1997, WorldCom's stocks had risen from pennies per share to over $60 a share." WorldCom had become an attractive investment on Wall Street. However, the continual attainment of these business transactions created an overwhelming situation for WorldCom management (Moberg and Romar, 2003). The management at WorldCom poorly planned the financial integration of the additional companies which eventually led to the bankruptcy of the successful corporation. Legal Responsibilities

WorldCom failed to plan properly the combination of economic features of all gained companies into a single organization. The WorldCom management had a legal responsibility to ensure that accounting rules were followed and monetary interpretations were correctly documented. During the integration, WorldCom liberally applied accounting procedures (Moberg and Romar 2003). In addition, WorldCom high level management intentionally falsified financial reports and declared fraudulent stock data to the United States Securities and Exchange Commission. These acts were a violation of the Securities Act of 1933. The objectives of the Securities Act of 1933 are...
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