Management

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?s shares traded for $64, and Ebbers was a billionaire (Moberg, 2003). During 2002, accounting scandals were brought to the public?s 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?s 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.