Free Essay

World Com

In: Business and Management

Submitted By bigsexy39
Words 1084
Pages 5
WorldCom
Tarrell King
University of Phoenix
Week 1 Assignment
August 18, 2009

Between 1991 and 1997, Bernie Ebbers, the CEO of WorldCom, spent $60 billion by successfully completing 65 acquisitions. The two most prominent acquisitions were the MFS Communications acquisition that enabled WorldCom to obtain UUNET. UUNET was a major supplier of Internet services to business. The second major acquisition was MCI Communications because they became WorldCom’s largest provider of business and consumer telephone service. From 1983 to 2002 WorldCom developed from a humble long distance telephone company to the second-largest long distance telephone company in the United States and one of the largest companies handling worldwide Internet data traffic, and finished as the largest bankruptcy of an organization in American history (Moberg, 2008). The purpose of WorldCom was to provide mission-critical communication services for tens of thousands of businesses internationally. WorldCom owned and operated 75 data centers on five continents. The organization owned and operated a global Internet Protocol backbone that provided connectivity in more than 2,600 cities and in more than 100 countries. Before the bankruptcy of the organization, WorldCom carried more international voice traffic than any other company and carried a significant amount of the world’s Internet traffic. Bernie Ebbers and the managers of his company were supposed oversee the activities of WorldCom and ensure that their business was working in integrity (Moberg, 2008). The role of the CEO and the manager’s of WorldCom were to lead the organization in interpersonal, informational, and decisional work ethics. The interpersonal behavior of managers includes motivating and directing employees and maintaining a network of outside contacts. The informational behavior of managers of WorldCom should have been to include transmitting information to outside organizations or the government on the organization’s plan, policies, actions, and results. The CEO and the managers of WorldCom were supposed to serve as the center for internal and external information. The decisional behavior of managers are responsible for handling corrective action, make or approve important business decisions, and representing the organization to the business world and in the community. In each level of behavior, communication at every level of the business will enable the company to grow effectively (University of Phoenix, 2007). Today WorldCom is governed by an elected board of directors and three regional boards, Americas Board, Asia/Pacific Board, and a Europe, Middle East, and Africa Board. However, during WorldCom’s reign from 1983 to 2002, WorldCom’s managerial roles and greed of the executives resulted in the demise of the organization. The board of directors authorized loans to Ebbers that exceeded $341 million. These loans approved by the board of directors were a direct conflict of interest and breach of fiduciary duty because Ebbers was only charged little more than two percent interest rate on the loan. Furthermore, 27 percent of the largest publicly traded companies had outstanding loans for other executive officers in 2000, a 17 percent increase since 1998 (Moberg, 2008). Ebbers was unconcerned with the responsibilities of his organization and paid little to no attention to detail of the day to day duties. His lack of concern for his company contributed to the managers and employees lackluster approach to their responsibilities. When WorldCom integrated with MCI customer service issues were rapidly presented because the company was not up to task of merging the two organizations. Senior management’s unresponsiveness to develop cooperate mindset to the various unites of WorldCom enabled the organization to freefall. WorldCom managers actively and purposefully pinched the amount of money customers owed the company and ignored credit department lists of customers who had not paid their bills. The end result was that the managers contributed to the amount of funds reserved to cover bad debts. Inter-unit struggles within the organization were allowed to undermine the development of a unified service delivery network that was being falsely represented by the company. WorldCom’s financial responsibility to its customers was questionable because the organization used a lax explanation of accounting rules when preparing financial statements. In WorldCom’s greediness to make it appear that the organization was profiting substantially, WorldCom would write down in one quarter millions of dollars in assets it acquired while it included in this charge against earnings the cost of company expenses expected in the future. These actions resulted in larger losses in the current quarter but smaller ones in the future quarters, enabling the profit picture to give the impression of improving. WorldCom was not alone in their ability to fraud their customers, Wall Street played an active role in ignoring the consolidation issues because the new acquisitions allowed management to focus on the behavior that everyone had become accustomed to, the continued rise in the share price, personal gain, and greed (Moberg, 2008). In May of 2002 Ebbers resigned from WorldCom and in June of 2002 the Chief Financial Officer, Scott D. Sullivan, was fired because he improperly accounted for $3.85 bill of expenses. In July of 2002 the company filed for bankruptcy protection after several disclosures regarding accounting irregularities and his personal loans amounting to over $366 million dollars from the company (Beltran, 2002). The company was demolished by the $41 billion debt and $24 billion debt in bonds. Compared to Enron’s bankruptcy scandal, WorldCom has more tangible assets that actually generate revenues and they have secured a $750 million commitment from its lenders (Atlas & Romero, 2002). The bankruptcy of WorldCom could have been avoided if the CEO, other executives, and the mangers of the company governed the organization with integrity. These individuals had the task of managing the company’s overall direction, motivation, representation to the community, and had the responsibility to make appropriate decisions that would act as correction action plans to sort out any disturbances. However, the leaders of WorldCom were careless and let their greed dictate their actions and the actions of the company as a whole which led to their financial ruin (University of Phoenix, 2007).

References
Atlas, R., Romero, S. (2002, July 22). WorldCom’s collaps: the overview; worldcom files for bankruptcy; largest U.S. case. The New York Times. Retrieved from http://nytimes.com.
Beltran, Luisa. (2002, July 22). WorldCom files larges bankruptcy ever. CNN Money. Retrieved from http://cnnmoney.com.
Moberg, D. (2008). WorldCom. Santa Clara University. Retrieved February 25, 2009, from http://www.scu.edu/ethics/dialogue/candc/cases/worldcom.html
University of Phoenix. (2007). Organizationa behavior. Availavle from the University of Phoenix eBook Collection Database.…...

Similar Documents

Premium Essay

Com 150

...WK 9 Expository Essay Final Project Bridget Sherman COM/150 September 9, 2012 Elliot Courtright Social Networks and Teens Essay As a single parent with a pre-teen, it is often hard to make the right decisions in knowing how to keep them safe. It is the hope that the information provided in this paper, will inform the reader of the pros and cons of what it is to have a teen using a social network. As parents, it is a never-ending duty to ensure the safety of the lives that have been given to them as parents. One must ask themselves is this environment a safe place to be in and who will their teen be interacting with. Frequently children in 4th-6th grade levels engage in social networking activities. In the process they post personal, potentially exploitable, information about themselves online. (Social Networking Statistics, 2012) Social networking sites provide many opportunities for adults, but leave adolescents vulnerable to predators, addiction, and lack of social interaction. The beginning of social networking started with a site call BBS (Bulletin Board System). This was a site that allowed user to use text only exchange. This was a popular thing in the 1980s and late 1990s. (Nickson, 2009) The Internet was still new at this stage and did not catch on until AOL (America Online) ventured around in the mid-1990s. Soon sites such as Yahoo and Amazon came alone catching the eyes of the young generation. In August......

Words: 1762 - Pages: 8

Premium Essay

World Com Fraud

...The accounting fraud at WorldCom was the result of corporate supremacy, individual liability, and an ultimate collapse of their system of in-house controls that can all be attributed to greed, manipulation and a lack of accountability for top executives. Bernie Ebbers, at the helm of it all, lacked focus, strategic direction, and led WorldCom with a consistently declining moral compass. It is thought that the ethical turn down of WorldCom’s top executives began with the U.S. Justice Department’s refusal to allow WorldCom’s 1999 attempted acquisition of Sprint. WorldCom senior management noted that large scale mergers no longer constituted feasible means of expansion and the company began to shift into an abyss of monumental proportions. Operating major departments in various locations, WorldCom had no real continuity among its corporate offices. Its attorneys, upon whom they should have relied on for principled and legal counsel, were essentially without influence. Policies were not written and employees were dared to challenge their superiors. An environment of fear was established and maintained by the dictatorship of senior management. From a financial standpoint, Ebbers and Scott Sullivan, the CFO, allowed salaries and bonuses above budgeted allowances and mismanaged compensation guidelines. Furthermore, WorldCom struggled to maintain its year 2000, first quarter 42% E/R ratio amidst revenue and pricing pressure brought on by a deteriorating industry and increased...

Words: 719 - Pages: 3

Premium Essay

Coms

...None Coms 2 Professor Reams 2/7/2013 Reading Response for Chapters 1-2 The one concept that I feel that I can apply best to my life is what Wayne Brockriede describes some arguers as rapist, seducer, and lover. In my own words rapist arguers are just people who attack and do not let people get their words out or their point across. These kinds of arguers are people who feel that what they are saying is right and cannot be wrong no matter what. The seducer is someone similar to the rapist but just in a smoother, sneakier way. He will listen to your side but he will not take it into consideration. The rapist is more about power than about reasoning. The seducer wants you to see things his way and he will do that by trying to sweet talk you or seeming to be extremely nice. His tactics are the same as the rapist but just are delivered differently. The seducer is about power but not as much as the rapist. Now the lover, he is absolutely different from the rapist and the seducer. The lover wants your opinion and will actually make it into consideration. The lover considers you as an equal and not as someone who is lesser than he is. They do not mind their views being changed unlike the rapist and the seducer. The lover is all about sharing the power; he is all about equality in arguing. I have experience this when my friends and I argue about something. We all have been the rapist, the seducer, and the lover in are arguments. We argue about everything and anything every day.......

Words: 534 - Pages: 3

Premium Essay

Com/156

...Melissa Dolan Final Paper COM/156 – University Composition and Communication II Instructor: Mrs. Anne Thomson Communication has always been considered a learned skill. Most individuals are born with the ability to talk. Not all individuals can communicate unless special efforts are developed and refined. Often the ability to communicate verbally is taken for granted. Why is it easier for some to communicate so well, while others may fail at it? Disabilities can impair an individual’s ability communicate effectively. There are many things that need to be taken into considerations for effective communication. The need to improve communication when dealing with the public who suffer with verbal barriers is on the rise. Think back, what could have done differently when communicating with an individual who had a disability. Specifically someone who had a disability that caused an issue with effective verbal communication. How could we have reacted in the past when approached or placed in a position that called for communication with someone with a verbal barrier? To make it work, we must work together. Where does the improvement start for the future? It all begins with communication that is between parents. Parents that have children with or without children who verbal barriers; are at the beginning where improvements can begin. The ability to interact and communicate effectively starts with in the home. By parents understanding one another’s lifestyles, can and will...

Words: 1414 - Pages: 6

Free Essay

Coms 240

...Véronique Lemay REALITY THROUGH SOCIETIES COMS 240 Communication Theory Synthesis Paper presented to Eric Powell Tutorial Section 1 November 11th, 2013 Through my quest of assessing how communication helps construct reality in societies, I have selected two influential authors in order to assemble correlated concepts and theories to present this synthesis. Firstly, known as a controversial figure of media expansion, Marshall McLuhan expressed his debatable idea of “The Medium is the Message” in his book “Understand Media” written in 1964, as he explained that the media themselves are the very emphasis we should look upon to the contrary of the content they convey. Secondly, James Carey, sharp critic of McLuhan, was best known for identifying the space partiality of modern civilization and was described by Lance Strate (2007) as excellent at “uncovering interrelationships among ideas, perspectives and school of thoughts” (p.177). With this intention, I will compare and contrast how Marshall Mcluhan and James Carey differ in their conception of how communication shapes reality, arguing that Marshall McLuhan concept of the message extracted from the medium constructing reality is superior to James Carey’s theory because his concept of the “medium being the message” emphasizes difference between how and which information is transmitted. To illustrate how Marshall McLuhan’s theory is stronger in terms of constructing reality, this synthesis will discuss how symbols...

Words: 2073 - Pages: 9

Free Essay

Accounting Fraud at World Com

...WorldCom where being talked by lamplight and bundling as Enron is a lot of in topic of accounting fraud. However, the volume of information that can be obtained in Japanese is far less compared with Enron. The fact relevance makes the description of the case a base. WorldCom is a huge telecommunication company that exists in the United States before. The company that Mr. Bernard Ebbers founded in 1983 accomplishes the rapid growth repeating M&A with tremendous force. Long-distance telecom carrier and MCI in the fourth place in the U.S. at that time are purchased in 1996. At that time, this was the maximum M&A play in the history of all Americans. The stop of the United States Department of Justice hangs from the fear of the Antimonopoly Law collision though having seen shadow at height of the power of WorldCom schemes the purchase of Sprint of a major carrier for 1999 years. Time is done similarly, and it cracks to the recession ripple the telecom industry in the United States. The expansionary course is corrected through necessity, and the strategy of WorldCom starts straying. There was a business objective "ROE42% defending to the last" (so high!) in WorldCom. However, the maintenance becomes difficult, and comes to begin the fraudulent accounting procedure gradually as for the fold of the recession. Worldcom's scheme of a/c fraud is very simple, 1) counted as assets for rental fee of networking but it should be cost 2) padded up about earnings using Accrual......

Words: 1021 - Pages: 5

Premium Essay

Worlds Com

...Woldcom’s Whitleblower: 1-which of Kohlberg’s six stages of moral development would you say that Cynthia cooper had reached? Explain. She has reached the universal ethical orientation in which the meaning of right is explained by the decision of conscience in accord with self-chosen ethical principles appealing the logical comprehensiveness and universality. This stage is also concerned of universal principal of justice, equality of human rights will respect for the dignity of human beings as individuals persons. 2- Do her actions and motives support of undermine carol Gilligan’s views? What would you say is unique about her or what she did? Carol said that there are male and female approaches to the morality. The morality of women is primarily a matter of caring and responsibility, their moral development is progress toward better ways of caring and being responsible. Women move from a preconventional stage of caring for oneself to another conventional one of caring for others to neglect of oneself, to a postconventional stage achieving a balance of caring of oneself and others also. On June 20, 2002 The Cynthia cooper courageously met with the audit committee of WorldCom’s board of directors and she told them what had been done by the Scott Sullivan, David Myers and Arthur Andersen. The first two who were arrested and second shut down for shredding evidence of other accounting frauds at other firms. What I find very unique about her is her honesty and putting all......

Words: 494 - Pages: 2

Premium Essay

World Com

...that after the turndown of the Sprint merger, “Ebbers appeared to lack a strategic sense of direction, and the Company began drifting.”b Corporate Culture WorldCom’s growth through acquisitions led to a hodgepodge of people and cultures. One accountant recalled, “We had offices in places we never knew about. We’d get calls from people we didn’t even know existed.” WorldCom’s finance department at the Mississippi corporate headquarters maintained the corporate general ledger, which consolidated information from the incompatible legacy accounting systems of more than 60 acquired companies. WorldCom’s headquarters for its network operations, which managed one of the largest Internet carrier businesses in the world, was based in Texas. The human resources department was in Florida, and the legal department in Washington, D.C. None of the company’s senior lawyers was located in Jackson. [Ebbers] did not include the Company’s lawyers in his inner circle and appears to have dealt with them only when he felt it necessary. He let them know his displeasure with them personally when they gave advice— however justified—that he did not like. In sum, Ebbers created a culture in which the legal function was less influential and less welcome than in a healthy corporate environment.c A former manager added, “Each department had its own rules and management style. Nobody was on the same page. In fact, when I started in 1995, there were no written......

Words: 9061 - Pages: 37

Premium Essay

Enron, World Com, & Tyco Scandals

...Case Paper 4 Danielle Long Indiana Institute of Technology Enron, World Com, & Tyco Scandals Three of the biggest frauds in American history, were committed by the companies Enron, World Com and Tyco. All three CEO/CFO’ks of these companies’ indulged in malicious intend to create a better financial standing within the company and for themselves. All of them were ethically wrong, regardless of the details. These individuals violated many different ethical principles which lead them all to be charged with criminal offenses and jail time. Enron used an accounting method known as “mark to market.” With this practice, the price or value of a security was recorded on a daily basis to calculate the profits and losses. Using this method allowed Enron to count projected earnings from long-term energy contracts as current income. This was money that might not be collected for many years. It is a thought that this was used to inflate revenue numbers by manipulating projections for future revenue. Sherron Watkins, an Eron VP, wrote an anonymous letter suggesting that the CEO had left the company because of improprieties and other illegal actions. She questioned the accounting methods and specifically citied certain transactions. Once Enron’s stock began to fall below a certain point, the results started to show on the financial statements. Finally in November of 2001 Enron officials admitted to overstating company earnings and filed for bankruptcy. This......

Words: 947 - Pages: 4

Premium Essay

Com 285

...Com/285 Business Communication Paper University of Phoenix Danny Jackson Vanessa Washington August 29, 2011 What role does business communication play in your day to day activities at work? Communication plays a vital role in the business organization, is principle minus communication you can’t consider the existence of human life in the real world everything in life would challenging to accomplish. Followings are the key roles of business communication. Communication improves civilized society: Communication is what has enabled you to develop the civilized society. Communication is one activity that humans clearly do better than the other forms of life on earth, and it largely explain our dominant role. It contributes to the development of each and every employee. Communication organizes works: Communication has enabled us to organize the all sort of activities to work in groups and through organization. Communication overcomes barriers: Barriers to our existence that we could not have conquered individually can be overcome through communication with group of people. Communication helps functioning of the organization: Staffing, planning, controlling, reporting, producing, selling, servicing and the like functions are done through communication. The organization cannot function if the persons involved fail to communicate. How does it help you manage your daily activities? Communication at work helps you work around your colleagues relaxed and develops......

Words: 677 - Pages: 3

Premium Essay

Into the World

...Into the World Essay – DRAFT ESSAY QUESTION: Individuals venturing into new experience may encounter obstacles, but may also gain significant rewards. Do you agree with this perspective? Discuss this view with reference to your prescribed text and at least ONE other related text of your choosing. The concept of ‘Into the World’ invariably involves the transitions of individuals into new phases of life, worlds and experiences in order to attain growth, maturation and emotional development. During this transition individuals may encounter obstacles, but also gain personal rewards resulting in growth and maturity. The prescribed text, novel ‘The Story of Tom Brennan’ written by JC Burke and two related texts, film ‘The Black Balloon’ produced by Tristram Miall and ‘The Road Not Taken’ written by Robert Frost, clearly display these misadventures and the rewards achieved once overcoming them. In difficult times individuals have must leave behind their old life and the safety it once provided in order to fully accept and enjoy their new life. In the novel ‘The Story of Tom Brennan’, Tom’s family is forced to leave the comfort of their hometown Mumbilli and move to Coghill due the selfish actions of his brother Daniel. Symbolism throughout this novel highlights the suffering of Tom and his family. “My father closed the door…for the last time”, this symbolic act and the secrecy in the way the Brennan family leave Mumbilli reveals the families remorse about the situation,......

Words: 1059 - Pages: 5

Premium Essay

World Com

...Home Page» Business and Management World Com In: Business and Management World Com 9-104-071 REV: SEPTEMBER 14, 2007 ROBERT S. KAPLAN DAVID KIRON Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late. — Richard Thornburgh, former U.S. attorney general1 On July 21, 2002, WorldCom Group, a telecommunications company with more than $30 billion in revenues, $104 billion in assets, and 60,000 employees, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Between 1999 and 2002, WorldCom had overstated its pretax income by at least $7 billion, a deliberate miscalculation that was, at the time, the largest in history. The company subsequently wrote down about $82 billion (more than 75%) of its reported assets.2 WorldCom’s stock, once valued at $180 billion, became nearly worthless. Seventeen thousand employees lost their jobs; many left the company with worthless retirement accounts. The company’s bankruptcy also jeopardized service to WorldCom’s 20 million retail customers and on government contracts affecting 80 million Social Security beneficiaries, air traffic control for the Federal Aviation Association, network......

Words: 317 - Pages: 2

Premium Essay

World Com

...on the company's competitors and the telecommunications industry as a whole. These show that the fall of WorldCom altered the fortunes of a number of telecommunications industry participants, none more so than AT&T Corporation. The CNBC news show, "The Big Lie: Inside the Rise and Fraud of WorldCom," exposed the extent of the WorldCom fraud on several key participants, including the then-chairmen of AT&T and Sprint (Faber, 2003). The so-called "big lie" was promoted through a spreadsheet developed by Tom Stluka, a capacity planner at WorldCom, that modeled in Excel format the amount of traffic WorldCom could expect in a best-case scenario of Internet growth. In essence, "Stluka's model suggested that in the best of all possible worlds Internet traffic would double every 100 days" (Faber, 2003). In working with the model, Stluka simply assigned variables with various parameters to "whatever we think is appropriate"(Faber, 2003). This was innocent enough, had it remained an exercise. A problem emerged when the exercise was extended and integrated into corporate strategy, when it was adopted and implemented by WorldCom and then by the telecommunications industry. Within a year, "other companies were touting it" and the model was given credibility it should not have been accorded (Faber, 2003). As Stluka explains, "there were a lot of people who were saying 10X growth, doubling every three to four months, doubling every 100 days, 1,000 percent, that kind of thing"......

Words: 1991 - Pages: 8

Free Essay

World Com

...Name: University: Course: Date: ORGANIZATION OF WORLDCOM WorldCom is accredited as the United States giant in the world of business. The company started its operations under the name of Long Distance Discount Services Inc. (LDDS) back in 1983. Six years later, it merged with Advantage Companies Inc. thereby going public under the name of LDDS WorldCom. This was later transformed to WorldCom. The company experienced rapid growth through the 1990s and when it purchased MCI in 1998, it was approaching the top. There were plans by the management to have the largest merger by communications companies but the US department of justice and the European Union foresaw an eminent period of monopoly, they stopped the move. Some companies were therefore left out in the merger of 2000. The company however experienced the biggest bankruptcy and accountancy fraud in corporate history. WorldCom was compelled to change its name MCI, one of the companies it had purchased. On 14th February 2005, Verizons agreed to acquire MCI, formerly WorldCom. (http://www.usatoday.com/money/industries/telecom/2002-07-21-worldcom-chronology_x.htm) WorldCom since then has been operating under the banner of Verizon Business. The planning function of the management is guided by some key principles: The ethics principles ensure he privacy and security of customers’ data. At all levels transparency in financial accounting must be practiced to avoid another scandal. Innovation is...

Words: 1144 - Pages: 5

Premium Essay

Com 530

...Organizational Behavior and Communication Sandra Janet Ham COM/530 August-06, 2012 University of Phoenix Organizational Behavior and Communication Starbucks opened its first store in 1971 with two things in mind: share excellent coffee with their friends and help make the world a little better (Starbucks Corporation, 2012). Their mission is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks Corporation, 2012). Starbucks’ culture is around coffee, coffee lovers, their stores, the employees (who they call partners), shareholders and, their product. Also they believe in the importance of caring for the planet and work very hard to reduce their environmental footprint through recycle and green construction. Finally they believe in getting involved in their communities (where their stores are located) and volunteer hours each year to the communities. According with Robbins and Judge (2011) one of the functions of communications is to facilitate decision making and Starbucks Corporation took a tough one using the “formal channel” (Robbins & Judge, 2011). Following their principles on how they lived, communicated first to their employees about its layoffs in 2008 closing 600 the United States stores and eliminating about 7 percent of the company’s workforce worldwide (Schade, 2008). According with their philosophy on how they treat their employees with dignity and respect, they are aligned with their culture and......

Words: 839 - Pages: 4