Ethics

The underlying purpose of any investment is to make profits. In realization of this, some people have claimed that bluffing is a crucial practice for maximization of profits. However, in a competitive market economy like the current one, morality and ethical values are a major building block to the sustainable survival of any company. The downfall of WorldCom was evidently a direct result of its unethical practices.

According to investigation reports, the WorldCom company managements unethical practices are more than just accounting frauds. By giving false reports on their internet traffic, the company gave a competitive disadvantage to its competitors forcing them to magnify their capital investments erroneously to sustainable their market competition share.

WorldCom Leadership and Management
An investigation into the failure of WorldCom has revealed the existence of a culture where its top management was not to be doubted. The teamwork culture once well established in the company turned into a groupthink attitude, compromising individual reasoning. Personal greed is a real threat to the long term sustainability of any business. Indeed, this is why organizations have hierarchical management systems for ensuring checks and balances of power and influence in the decision making process.

Decision making by directors in any organization requires accurate information on executive activities. However, in the case of WorldCom, it has been established that directors mainly relied on Ebbers and Sullivan information thus compromising their chances of identifying and correcting financial fraud activities. This culture of not doubted top management opened the company to undetected corruption of financial reports and self-created investor confidence. Therefore, the culture of discouraging individual opinion influence and ensuring that all conform to leadership and management approaches was a key factor to the failure of WorldCom.

Entrenched Culture
Investigations into the WorldCom scandals have revealed the existence of an assumed culture of fraudulent practices in most levels of the organization. According to existing evidence, the top management particularly the CEO regularly submitted corrupted Securities and Exchange Commission (SEC) reports (Boudreau, 2008). It has also been established that other executives were bound to realize financial expectations by all means. These strategies by the organizations led to ignorance of morals and ethics, resulting into propagation of fraudulent behaviors in the organization. True to available information, many employees were aware and even took part in executing andor hiding accounting irregularities.

In one particular instance, the company auditors, Arthur Anderson, neither identified nor showed persistent rectified accounting irregularities. Poor company ideologies can also be cited as a contributing factor in promoting fraudulent conduct in the organization. Seeking to negate the importance of establishing a corporate code of conduct, the companys CEO brushed it as a waste of time. Such a claim has the implication of a company bound by individual opinions and influence rather than principles of corporate ethics.

An organization should not bear responsibility for financial problems of its employees. However, WorldCom ignored this fact when its directors lent 415 million of company finances for settling personal debts of its CEO.  The reasoning behind this action was that Ebbers could conduct a massive sell of the company stock thus compromising the companys stock market value (Boudreau, 2008).  Just to be noted is that such claims were never proved thus can amount to misuse of power and influence by Ebbers to benefit unfairly from the company resources.

Organizational Structure
The sustainable growth of an investment is highly dependent on its strategic plans. Strategic plans do not only act as a guiding tool for the sustainable development but through their constant review ensures a sustained competitive advantage for an organization. WorldCom management however failed in successfully executing its merger and acquisition policies. Mergers are by nature costly and involving. This is because they increase the management complexity of an organization. Still, individual business can turn out to be a financial burden on others thus risking the closure of the whole organization.

Over the 1991 to 1997 business period, WorldCom Company had contacted 11 mergers and acquisitions. However, according to recent findings, such acquisitions were not accompanied by implementation of proper integration policies. Indeed, the company continued operating with its traditional policies, a factor which brought conflict in management. As an example, investigations have shown evidence of poorly coordinated billing systems and repetitive systems among the separately acquired businesses.

Impact of WorldCom unethical behavior in the business industry
The financial scandals of WorldCom have compromised investor confidence. Indeed, this has questioned the extent to which we can trust audit reports as a tool for influence investment decisions.  The financial scandals by WorldCom led to the loss of an estimated 11 billion of investor security shares. This does not only compromise the moral and ethical integrity of the public accounting institution but also that of the company and National Security Exchange managements. Still, as a result of the unethical practices in WorldCom, most of its management has been charged for fraudulent activities and misuse of power. In a move to restore public confidence in the company, the new CEO of WorldCom has engaged much in reduces costs particularly line and manpower costs, a move which has led to loss of jobs in the organization. The new management has also engaged in formulating moral and ethical policies for the organization. Indeed, available information has it that the company has contacted training of ethical behavior to an estimated 50,000 employees.

Following the downfall of WorldCom and other corporations in 2002, the federal government enacted the Sarbanes Oxley Act of 2002 into law. In summary, the law seeks to ensure accountability financial report processing in corporations. The law created a public company accounting oversight board responsible for ensuring the independence of public accounting firms through registering, supervising auditors and formulating ethical audit procedures. For ensuring accuracy and authenticity of financial reports, the law makes it mandatory for senior executives in a corporation to bear full responsibility on the accuracy of financial reports.

Conclusion
The downfall of WorldCom Company was no doubt a direct result of an entrenched culture of unethical practices by its management. The company had evidently developed a culture were management was not to be doubted thus compromising effective decision making process in the organization. Being a fast growing company, its management neglected the principles of engaging in sustainable mergers and acquisition, a factor which resulted in conflicting systems in the organization. All these have resulted into reduced investor and customer confidence.