Management Planning: Worldcom Essay

Organizations that behave ethically are more apt to earn the trust of their customers, employees, and stockholders. Then there are companies that hide the true value of the company from possible investors, customers, employees, and the public at large showing a lack of ethically behavior. This does not all the time included just one company, but a group effort to hide, steal, and mislead everyone for personnel gains. Everyone that deals with any organization expects the upmost ethically behavior on all levels.

Ethics and moral obligations are issues we all encounter at one time or another. In the professional setting, all people should act in a manner that would uphold the good of society. To be ethical, one has to determine their obligations, moral ideas, and moral philosophy (Boatright, p. 19, 2009). The case analysis involving Jacob Franklin was a perfect example of how an individual can face the dilemma of doing what is right or wrong. Businesses have their own code of ethics, and the employees within the business have to determine whether or not they will follow the company’s code of conduct. I will discuss several ethical issues in the case analysis including; failure to report information, remaining silent regarding faulty equipment,

Microsoft is the global leader in computer software, and well recognized in the field of corporate social responsibility and philanthropy. However, since 1990 the computing giant has been plagued by allegations of antitrust violations and monopolistic, non-competitive business practices. By answering the three questions posed in Part 5, Case 7 of Business Ethics: Ethical Decision Making and Cases; this review will address how such a legal and ethical dichotomy is possible, and how the issues relate to one another in terms of corporate reputation.

The stakeholders in this fraudulent case of WorldCom consist of Bernie Ebbers, Scott Sullivan, Buford Yates, David Myers, Cynthia Cooper, and Betty Vinson belong to the company. While the other stakeholders would consist of the creditors, Andersen (accounting firm), investors, and the public. This fraudulent act committed within WorldCom impacted every single stakeholder in a way. Either in a negative or positive way, most of the impact was caused with harm to everyone. The main individuals such as Ebbers, Sullivan, and Vinson all had major consequences as resulting with the fraud. Criminal trials were a major result with their fraudulent acts within WorldCom. Cooper was a lifesaver by most of the community. Aside from these individuals, the rest also got affected by the fraud. Investments conducted by the investors were all lost within the fraud process. The impact towards much of the image for Andersen was ruined. Many of the public lost their trust on the honesty and professionalism of Andersen and other certified public accounting firms. The entire employees from the top management to the smaller group of workers stayed unemployed and some with criminal punishment.

Business ethics since the beginning of this decade has been slowly eroding; if we are to believe what we see and hear in the media. Several times a day, one can view some derogatory piece of information concerning a business. However, it must also be considered that these companies are contributing to that stigma. There have been a variety of companies and individuals who have figured prominently in the media concerning their unethical behavior.

This leads into my second pressure, which deals with personal lives. Employees were receiving tremendous benefits due to the company’s great performance. However, if the company did not improve, people’s salaries would be cut or even worse, their jobs would be cut. That is why so many people were willing to engage in the fraud, because they felt WorldCom was supplying a salary and benefits that other companies would not be able to match. Betty Vinson was a prime example. She knew that releasing line accruals was wrong, but needed to

On March 15, 2005 former CEO of WorldCom, Bernard Ebbers sat in a federal courtroom waiting for the verdict. As the former CEO of WorldCom, Ebbers was accused of being personally responsible for the financial destruction of the communications giant. An internal investigation had uncovered $11 billion dollars in fraudulent accounting practices. Later a second report in 2003 found that during Ebber’s 2001 tenure as CEO, the company had over-reported earnings and understated expenses by an astonishing $74.5 billion dollars (Martin, 2005, para 3). This report included the mismanagement of funds, unethical lending practices among its top executives, and false bookkeeping which led to loss of tens of thousands of its employees.

WorldCom was the ultimate success story among telecommunications companies. Bernard Ebbers took the reigns as CEO in 1985 and turned the company into a highly profitable one, at least on the outside. In 2002, Ebbers resigned, WorldCom admitted fraud and the company declared bankruptcy (Noe, Hollenbeck, Gerhart, &Wright 2007). The company was at the heart of one of the biggest accounting frauds seen in the United States. The demise of this telecommunications monster can be accredited to many factors including their aggressive-defensive organizational culture based on power and the bullying tactics that they employed. However, this fiasco could have been prevented if WorldCom had designed a system of checks and balances that would have

In an industry overwhelmed with fraud and corruption, Martin Marietta was ready to revamp their reputation to become an ethical company. This concept catapulted a decade of creating, developing, and tweaking an ethics program. Martin Marietta's goal was to maintain a work place with "descent people doing quality work" (page 1). But with this idea came a series of difficult challenges the company needed to overcome. Martin Marietta arose to the challenge and executed an elaborate ethics program. The programs successes were hard to measure at best. A SWOT analysis was designed to reflect upon all aspects of the ethics program. A case study was used to discuss Martin Marietta's

The lack of critical information making its way down the chain allowed WorldCom to continue its clouded disservice to

Everyone is responsible for implementing and maintaining internal controls. Arthur Andersen, LLP is partly responsible for the internal controls since they need reviewing during an audit. WorldCom needs to establish relations with a reputable auditing firm and to hire an executive team who understands the important of workplace ethics. WorldCom management needs to communicate their expectations to employees and introduce fraud awareness training. Fraud awarness training includes an ethics hotline that employees can call into when an incident occurs. One of WorldCom’s weaknesses is its segregation of duties. WorldCom needs to establish an effective segregation of duties that combats the opportunity for fraud to be committed. Multiple employees need to be tasked within the same financial process to ensure that not one employee has two similar tasks. WorldCom never fully implemented its vacation policy, so it is in the company’s best interest to see that through. More employees taking vacation time will reduce the opportunity to commit fraudulent activities (Draz 2011).

Every organization also has a profession responsibility to conduct business honestly and ethically. Our readings reported, “Experts estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior” Kinicki and Kreitner (2009). The organization could avoid having ethical issues by meeting the

Securities regulations began when Congress enacted the Securities Act of 1933 in reaction to the 1929 Stock Market Crash—the infamous start of the Great Depression. The legislature created the 1933 Act to safeguard the economy from experiencing another event like the Great Depression. The objective of the Securities Act of 1933 was to “require that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities.” In other words, the Securities Act of 1933 required issuers to fully disclose all material information that a reasonable shareholder would require in order to make up his or her mind about a potential investment. The Act focuses on governing offerings by issuers and creating transparency between issuers and investors so that investors receive more protection than prior to the Act.

Nevertheless, the decisions should not be unethical that the reputation of the corporation is risking (Wheelmen, T. & Hunger, J. (2010)

WorldCom was once the second largest telecommunication company in the United States. Currently, the company is known for its enormous accounting scandal from 2002, which led to the company filing for bankruptcy protection. WorldCom executives were able to falsify the company’s accounting figures by inflating the company’s assets by almost $13-billion dollars. The fallout after the company filed for bankruptcy led to huge losses for investors, but also for employees and retailers. The scandal is one of the worst corporate accounting crimes in U.S. history, leading to some of its former executives held personally responsible. WorldCom executives instructed accountants to inflate assets by as much as $11 billion dollars, which led to 30,000 in layoffs and a loss of about $180 billion for its investors.