Leadership

Examining a Business Failure Paper

LDR/531 Organizational Leadership

June 28, 2010

Introduction

The future of successful organizations is often determined by the quality and impact of the decision made by their leaders and professionals. Understanding how best to solve problems and make decisions is an essential to the upstanding of their business (Seminar Information, 2007). Many organizations fail because of the leader style that is being portrayed in that organization. Leaders and managers must decide and determine how value can be added to the organization. With this in mind, they must first focus on doing what is ethical so that the organization can be steered in the right direction. In this assignment, I will be focusing on WorldCom and will describe how specific organizational behavior theories could have predicted and explained the company’s failure. In addition, I will compare and contrast contributions of leadership, management and organizational structures to the failure.

History of WorldCom

WorldCom appeared to be a great success story. In 1983 partners led by former basketball coach Bernard Ebbers, sketched out their idea for a long distance company on a napkin in a coffee shop in Hattiesburg, MS. Their company LDDS (Long Distance Discount Service) began providing service as a long distance reseller in 1984. For 15 years it grew quickly through acquisitions and mergers. Bernard Ebbers was named CEO in 1985 and the company went public in Aug. 1989. Its $40 billion merger with MCI in 1998 was the largest in history at the time. The company was a favorite with investors and Wall Street analysts.

The stock ran up to a peak of $64.51 in June 1999. In that same year, the success began to unravel with the accumulation of debt and expenses, the fall of the stock market, long distance rates and revenue. WorldCom improperly booked $3.8 billion as capital expenditures, boosting cash flow and profit over the past 5 quarters. This disguised the actual...