WorldCom Business Failure


WorldCom Business Failure

WorldCom developed through the implementation of an aggressive acquisition strategy and grew into the largest telecommunication company in the Unites States.  Therefore, the company spent 60 billion dollars to purchase 65 companies between 1991 through 1997 however, the company created 41billion dollars in debts.  The company drop from been the largest telecommunication company in the Unites States because of issues with the company organizational structure and the invulnerability behavior among the executive staff.  

Organizational Structure

WorldCom’s organizational structure was to increase the value of the company and increase the shareholders and stakeholders values as well.  However, the company had to deal with “the challenges of integrating new and old organizations into a single smoothly functioning business” (Moberg & Romar, n.d.).  The mergers and acquisitions of several companies specifically MCI and the unacceptable accounting practices contributed to the failure of the company organizational structure.

WorldCom Failure

WorldCom’s failure was the company inability to integrate the 11 companies they acquired in six years.  Therefore, “the complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, good will and a host of other financially important factors” (Moberg & Romar, n.d.).

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After the failure of WorldCom, the company declares bankruptcy in 2002 and the organization combine loss was equal to $73.7 billion (figure one depict the settlements in WorldCom’s security class action suits).  The organizational behaviors or the “impact that individuals, groups, and structure have on behavior within organizations” (Robbins & Judge, 2011) of the company contribute to the failure of WorldCom, because senior management failed to develop a cooperative mentality within the different entities of WorldCom.  The company closed several of MCI service centers to open 12 additional centers however, the additional centers were duplicates and ineffective.

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