Management Planning Paper
In 1983, in a coffee shop in Hattiesburg, Mississippi, Bernie Ebbers first helped create the
telecommunications business concept of WorldCom (Moberg, 2003). The company grew
quickly through acquisitions and mergers. In June 1999, the company shares traded for
$64, and Ebbers was a billionaire (Moberg, 2003). During 2002, accounting scandals were
brought to the public attention, along with SEC investigations for fraud charges against
Ebbers, and key senior management of WorldCom. The company went into bankruptcy,
which was the largest bankruptcy in US history (Beltran, 2002). This paper will first
explain the impact of legal, ethical, and social responsibilities issues have on WorldCom.
Second, this paper will explain three factors that influence WorldCom operational, tactical
and strategic planning.
Impact of legal, ethical and social responsibilities
A corporate social responsibility is where a business will maximize its positive effects on
society, and minimizes its negative effects. Social responsibilities can be categorized as
economic, legal, and ethical (Bateman & Snell, 2007). An organization has a responsibility
to its investors and stakeholders to provide accurate and honest information. WorldCom
revealed to the public, on June 25, 2002, that it had incorrectly accounted for 3.8 billion in
operating expenses (Beltran, 2002). According to WorldCom News, WorldCom did not
account for expenses when they were incurred, but they hid the expenses by pushing them
into the future, thus giving the appearance of spending less, therefore, making more
money. This apparent profitability pleased investors, who pushed the stock up to a high of
$64.51 in June 1999 (WorldCom News, 2002).
This scandal had a devastating consequence on the organization. Once the news of the
scandal spread to the public, the stock plummeted. WorldCom was valued at around $120
billion at its peak in the summer of 1999, and after the scandal, WorldComs market
capitalization had fallen to $280 million (Gaffin, 2002). The senior executives were
brought up on fraud charges, and the company was forced to file for Chapter 11 under
bankruptcy court. WorldCom, at one time, was the second largest long distance company
(Beltran, 2002), and as a result of the misrepresentation of financial statements, the
company went under investigation by the SEC for fraud. The fraud charges were not just
illegal, but unethical as well. These factors have dramatically impacted the management
planning process. The organization is forced to reorganize its planning in all areas to react
to the bankruptcy filing.
Three factors that influence Operational, Tactical and Strategic Planning
