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Examining A Business Failure Essay

876 words - 4 pages

Examining a Business Failure
University of Phoenix
LDR/531 – Organizational Leadership

On July 19, 2002 WorldCom the number two long distance provider filed the largest bankruptcy ever in U.S. history with its $41 billion dollar debt load, and more than $107 billion dollars in assets. WorldCom’s profits began to decrease in 1999 when businesses reduced budgets on telecom services and equipment. Bernie Ebbers the former CEO of WorldCom resigned his position with the company when questions were brought up about $366 million dollars in personal loans from WorldCom. Bernie Ebbers entered the telecommunications industry providing long distance services in 1983 with a Jackson, Mississippi ...view middle of the document...

.." 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 Bernie Ebbers whom was WorldCom's CEO. During the 1990s, Bernie Ebbers stayed more focused on achieving substantial growth through business acquisitions and he decided to pay for this business acquisition binge by inappropriately using the valuable stock of WorldCom. To accomplish this purchasing spree, the company stock had to continuously increase financially. "...
WorldCom went after a series of extremely large business acquisitions. The plan achieved its apex when WorldCom obtained business acquisition of MCI Communications in the year of 1998; a company with revenues that were more than double the revenues of WorldCom’s. Ebbers' acquisition plan came to an end by early months of 2000 when the company was forced to abandon yet another proposed merger with Sprint due to antitrust objections ..."Bernie Ebbers felt that he needed to demonstrate ever-increasing revenue and income, and the one way to reach this objective was through financial misrepresentation. The problem is that the more one resorts to this sort of deception, the more complicated it becomes to continue it. Deception is just not sustainable in the long run. Complicating Ebbers' situation was an industry-wide downturn in telecommunications. During this time, Wall Street had continuing expectations of double-digit growth for WorldCom. After all, they had achieved so much in such a relatively short period of time. However, WorldCom needed time for its...

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