Examining a Business Failure
The following paper will examine WorldCom and how the business failed. It will also compare and contrast the contributions of leaderships, management and the organizations structures to how the organization failed the way they did.
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.
Failure within a large organization
WorldCom was the number two long distance provider, in July of 2002 WorldCom file bankruptcy. This was the largest bankruptcy ever in U.S. history with a $41 billion dollar debt load, and more than $107 billion dollars in assets and equipment (Ramero and Atlas, 2002). Bernard John “Bernie” Ebbers the former CEO of WorldCom grew the company into one of the largest communications providers in the world. In light of his resignation from WorldCom in 2002 a Securities and Exchange Commission investigator found out that Ebbers and WorldCom admitted that he had inflated $3.8 billion and it also uncovered some $11 billion in fraudulent accounting practices that had fueled WorldCom’s rise. Ebbers entered the telecommunication industry providing long distance services in 1983 with a Jackson, Mississippi company formally known as LDDS. Ebbers grew the organization with a series of business acquisitions and later changed the name of the company from LDDS to WorldCom in 1995 (Ramero and Atlas, 2002). In 1998 he purchased the telecommunications company to MCI for $37 billion dollars and at that time was the number two long distance provider second to AT&T making WorldCom a telecommunications giant.
During this time the company submitted a bid to try and purchase the Sprint Corporation in a $120 billion deal, the deal did not go through because it was blocked by regulators due to a softening market for telecom services which would weaken the company’s performance. The Justice Department had identified several issues of concern with the merger, one “spotlighting the control the new company would have over both long-distance telephone and Internet backbone market” (Borland, John 2000).
Management failures with leadership
In 2002, there were an unprecedented number of corporate scandals. WorldCom’s succumb could be contributed to failed corporate governance accounting abuses, and outright greed just as with Enron, Tyco, and Global Crossing. With WorldCom; however, there was no one factor contributing to the failure of the organization. The collapse of the organization and the cause of having to file a Chapter 11 Bankruptcy were due of fraud, accounting misstatements, managerial issues after the mergers, board of directors failures, and the lack of checks and balances.
WorldCom executed some major accounting misrepresentation that fraudulently covered up the financial condition of the organization .“The primary reason behind WorldCom’s collapse, and having to file a Chapter 11 Bankruptcy was fraud, accounting misstatements, and failure on behalf of the board of directors. The driving force responsible for this fraud was the business strategy of Ebbers. Bernie Ebbers main goal on the 1990’s was to achieve substantial growth through business acquisitions and he decided to pay for this business acquisition binge by inappropriately using the valuable stock of WorldCom (Di Stefano, Theodore, 2005). WorldCom’s plan to achieve its apex when they obtained business acquisitions of MCI communications in 1998; a company with revenues that were more than doubled the revenues of WorldCom’s. Bernie Ebbers plan to and end by the early months of 2000 when the company was forced to abandon yet another proposed merger with Sprint Corporation due to antitrust objections (Di Stefano, Theodore, 2005). His previous greedy business practices, he felt as if he needed to demonstrate ever increasing revenue and income, was the only way to reach his objective was through financial misrepresentation. The problem with this the more you have to turn to this type of business practice it will eventually catch up with you. The major complication for Ebber’s situation was an industry-wide downturn in telecommunications. During this time Wall Street continuing expectations of double-digit growth of WorldCom. The organization has achieved so much in such a short period of time. WorldCom also needed time for their management to get use to their newly acquired companies and learn how to run and manage all of them effectively (Di Stefano, Theodore 2005).
Impact of the company’s structure
Since his overwhelming feeling if not being able to tell Wall Street that WorldCom needed time to consolidate and digest its acquisitions, if he had had the courage to tell them that he really needed help WorldCom would be alive today and he would not be facing a lifetime in prison. Bernie Ebbers decision as CEO was not in the best interest of either himself or WorldCom, the major factor driving this fraud was Ebbers’ very apparent desire to build and protect his personal financial condition. Ebbers’ fraudulent activities caught up with him because of the past and how he had to show higher amounts of net worth in order to avoid margin calls on his own WorldCom stock that he had pledge to secure loans.

Conclusion
In conclusion, this entire outcome could have been prevented if the company governance practices would have played a bigger part in overseeing these decisions. With WorldCom’s Board of Directors were clearly in place at the time that Bernie Ebbers was practicing unethical and fraudulent behavior, which resulted in the collapse of WorldCom. In all reality the Board of Directors could have taken more initiative in preventing this financial fraud by stepping in. As managers, leaders and even CEO’s make the wrong decisions everyday and there are many ways of preventing these mistakes if people set aside their own personal selfishness and focus on one common goal and that is honesty, respect and effective communication.

References:
Borland, John (2000) Sprint, WorldCom Call off $120 billion merger :Retrieved on May 31, 2010 from: http://news.cnet.com/2100-1033-243110.html
Romero and Atlas (2002) WorldCom’s Collapse: The Overviews; WorldCom Files For Bankruptcy; Largest Case. Retrieved on May 31, 2010 from: http://www.nytimes.com/2002/07/22/us/worldcom-s-collapse-the-overview-worldcom-files-for-bankruptcy-largest-us-case.html
Di Stefano, Theodore (2005) WorldCom’s Failure: Why Did It Happen? Retrieved on May 31, 2010 from: http://www.ecommercetimes.com/story/45542.html