Worldcom Failure

Topics: Management, Leadership, Corporate governance Pages: 4 (1203 words) Published: August 1, 2011
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...
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