Worldcom Failure
WorldCom Failure in relation to its Organizational Behavior
LDR/531 - Organizational Leadership
October 7, 2010
WorldCom Failure in relation to its Organizational Behavior
INTRODUCTION
Year 2002 saw an unprecedented number of corporate scandals: Enron, Tyco, Global Crossing, etc. In many ways, WorldCom is just another case of failed corporate governance, accounting abuses, and outright greed. Many people may question if there is a secret to operating a successful business in modern times. Some may argue that success is based on being at the right place at the right time with the right idea and the right amount of money. Other may debate that success is based on hard work and ethics that are accompanied by many failed attempts before the right opportunity one comes along. Even though there may not be only one-way to organizational success, all should agree that many factors can contribute to its effectiveness. One significant factor is the study of the company’s organizational behavior. (Yukl, 2006) This paper will attempt to explore some aspects of the organizational behavior of WorldCom which may have led to its business failure.
HISTORICAL BACKGROUND
WorldCom was a company that was initially bound for success. It was founded in 1893 by a group of partners who was led by Bernard Ebbers. From its humble beginnings as an obscure long distance telephone company, WorldCom, through the execution of an aggressive strategy, evolved into the second-largest long distance telephone in the U.S. It grew exponentially from the beginning because it took advantage of huge business initiative to acquire smaller companies like MCI and CompuServe. It has the largest carrier of internet traffic and electronic commerce in the world. It also has a large customer base that included individual consumers and large corporate clients. Wall Street analyst steered investors to the company’s highly favored stock. Because of its reputation of a powerhouse, no one questioned its
LDR/531 - Organizational Leadership
October 7, 2010
WorldCom Failure in relation to its Organizational Behavior
INTRODUCTION
Year 2002 saw an unprecedented number of corporate scandals: Enron, Tyco, Global Crossing, etc. In many ways, WorldCom is just another case of failed corporate governance, accounting abuses, and outright greed. Many people may question if there is a secret to operating a successful business in modern times. Some may argue that success is based on being at the right place at the right time with the right idea and the right amount of money. Other may debate that success is based on hard work and ethics that are accompanied by many failed attempts before the right opportunity one comes along. Even though there may not be only one-way to organizational success, all should agree that many factors can contribute to its effectiveness. One significant factor is the study of the company’s organizational behavior. (Yukl, 2006) This paper will attempt to explore some aspects of the organizational behavior of WorldCom which may have led to its business failure.
HISTORICAL BACKGROUND
WorldCom was a company that was initially bound for success. It was founded in 1893 by a group of partners who was led by Bernard Ebbers. From its humble beginnings as an obscure long distance telephone company, WorldCom, through the execution of an aggressive strategy, evolved into the second-largest long distance telephone in the U.S. It grew exponentially from the beginning because it took advantage of huge business initiative to acquire smaller companies like MCI and CompuServe. It has the largest carrier of internet traffic and electronic commerce in the world. It also has a large customer base that included individual consumers and large corporate clients. Wall Street analyst steered investors to the company’s highly favored stock. Because of its reputation of a powerhouse, no one questioned its
References: Robbins, S. P., & Judge, T. A. (2007). Organizational Behavior (12th ed.). Upper Saddle River, NJ: Prentice-Hall, Inc., Pearson Education. Romar, E. J., & Calkins, M. (2006). WorldCom Case Study updates 2006. Retrieved from http://www.scu.edu/ethics/dialogue/candc/cases/worldcom-update.html Scharff, M. M. (2005, March). Understanding WorldCom’s accounting fraud. Retrieved from http://www.allbusiness.com/accounting-reporting/fraud/417988-1/html Yukl, G. (2006). Leadership in Organization. Upper Saddle River, NJ: Prentice-Hall, Inc., Pearson Education Company.