WorldCom Case Study

WorldCom Case Study

Introduction

Since the beginning of time, fraud and scam cases have emerged and have been reported the world, with specific emphasis on accounting and finances. It should be noted that a number of companies have been removed from the face of industry due to these fraud cases and scams, as the frauds in accounting prove to be the most disastrous and unbearable for the business world. The same situation occurred with WorldCom, that resulted in a failure mainly because of the actions and wrong decisions of a very few individuals, and would have been saved from bankruptcy otherwise. When the WorldCom scam was reported, more than seventeen thousand employees lost their jobs and the company was completely bankrupted, thus jeopardizing the services of thousands of costumers and also placing impact on millions of Social Security beneficiaries, along with a large number of other related departments.

Discussion

Summary of the Ethical Dilemmas

After going through the case of bankruptcy of WorldCom and getting completed idea about the causes and reasons behind bankruptcy of the organization, it can be concluded that there were a large number of ethical dilemmas and issues involved in the case. This includes the culture as well as finance related issues, which would be detailed and discussed in the following paragraphs:

To start with, the company had expand the business without making proper plans and arrangements, for instance, the organization had offices in the far flung and distant places, and had no representatives from those areas working in the organization. As a result, the company representatives had to receive calls from the far away areas that they knew nothing about and also had to deal with new people, without having any information about them. The ultimate result of the issue was creation of serious confusion between the clients and the company representatives, which did not only caused the ethical dilemma but also rendered them unable to deal with those people effectively.

Apart from the cultural issues, there were a number of financial ethical issues as well, including the decision to make profit under any circumstances, and the making of abrupt financial decisions, that proved to be disastrous for the organization (Kaplan and Kiron, 2004). The company was operating with normal conditions and under the normal circumstances, planning to expand at an incredible rate. In an attempt to get the most costumers and to meet eh demand of costumers, the CEO of the company entered long-term fixed rate leases for the network capacity, which implies that the organization would have to pay for the extra lines if it fails to get the desired number of users.

In 2002, against the expectations of the organization, industrial conditions began to deteriorate and all the companies in the industries had to reduce their rates in order to retain the previous costumers while getting new ones as well. World Com had to follow the same trait and as a result, in the period between 1999 and 2000, the company had released accruals worth of ...