Business, law, and ethics - Essay Example

ETHICS, LAW AND BUSINESS The case study presents a scenario of the success of the World Com Telecommunication Company which began as a small long distance telephone company. The success of the business was facilitated by the proper managerial techniques that were applied by Bernie Ebbers who worked in partnerships with other business stakeholders. The success of the business in the early 1990’s was later facilitated by the various mergers and buying of shares with Companies such as the AT&T, which was later, renamed the Long Distance Discount Services, the MCI, and the ACI.

However, the Company began experiencing several challenges that eventually led to its failure and an ultimate bankruptcy in 2002.The first challenge that was experienced by the Company occurred when the Chief Executive Officer, Bernie Ebbers employed Sullivan who was later promoted to the post of a Chief Financial Officer. Sullivan apparently did not possess proper inter-personal skills and his appointment created irritations among the divisional managers. This was also confirmed by the occurrence of conflicting ideas between Sullivan and Sidgmore.

The failure of the Company was later propagated by the series of law suits that were experienced when some of the customers complained for fraud and over-charging of the services offered by the Company. The Company had to pay fine in order to compensate these customers hence undergoing massive reduction of profits.Moreover, was blocked on its bid to acquire the shares of Sprint in the year 2000; this was blocked by the regulatory authorities (Justice Department) hence leading to a fall of the share price of the Company.

Many people speculated that the World Com Company was at a brink of failing and soon could start selling its shares.Huge amounts of loans were also given to Bernie Ebbers that amounted to 341 million USD; an audit by an external Company also indicated that Ebbers had used some large amount of the Company’s money to perform his personal activities hence exposing the Company to a financial crisis. Ways in Which the Company would have avoided the crisesTo begin with, it is evident that the World Com Company did not undertake frequent financial audit hence giving the accountants ample time to conduct fraud and embezzlement of funds; this should have been the first step undertaken to promote transparency in finance department.

Auditing would have led to the determination of such problems at an early age hence leading to formulation of effective solutions.Additionally, it is apparent that the top management team, specifically, the Chief Executive Officer, Bernie Ebbers, did not adhere to the Company ethics as well as the laid down procedures of using Company financial resources. From the case study, it is evident that the Chief Executive Officer was given loans using the Company’s money on the basis of his position in the Company and his shares in the Company without following the ethics and regulations of the Company regarding such acts.

Consequently, the relationship between the CEO, Ebbers and the CFO, Sullivan, seemed to have made the two parties forget about their responsibilities in the Company; thereby making the CEO trust the CFO to an extent that the CFO’s responsibilities were not supervised. This should have been a strategy to ensure that the employees perform their duties in accordance to the Company’s demands.Work CitedB, Holmes. Cases in Corporate Governace. New Jersy: Wiley, 2002. Print.