Questions 1. What are the pressures that lead executives and managers to cook the books? The main pressures were coming from the economic recession and the aftermath of dot-com bubble collapse which then causes the industry conditions began to deteriorate in 2000. The competition among existing company and the new entrants were becoming more heightened; the company became overcapacity and the demand for telecommunication services reduced significantly. And the pressure to maintain a 42% of expense-to-revenue ratio (E/R ratio) had also becoming one of the forces that lead the executives and the manager to cook the books in order to make it looked good at the public’s eyes.
Mr. Wilson was responsible for accounting control of MSCC funds and didn’t share Mr. Lassiter’s vision of better automating the organization. Whereas Mr. Lassiter wanted to commit funds in order to progress, Mr. Wilson felt it better to alleviate costs and continue to maintain the current software by hiring a systems analyst, Simon Kovecki. In a combined effort, Mr. Wilson and Mr. Kovecki maintained and upgraded workstation software. However, as MSCC began to grow, the increase in firm members and MSCC staff brought to light Mr. Wilsons
With the economy in recession, high unemployment rates, and high interest rates proved very challenging for Welch to run GE. The challenges faced from inside the company were massive information and inefficient macro-business models. Amidst all the challenges, Welch took them on with a motto, which was to be “Better than the Best” (Bartlett & Wonzy, 2005). Welch took a stand to restructure the company and identified managers who would fit in areas that could assist to restructure the company, while other managers who did not bring value to the company were let go. By eliminating the sector level, about 123,450 jobs, and also eliminating addition of new jobs, Welch implemented lean and agile methodologies, as well as real-time-planning strategy.
Even though the leaders contended that conflicts between its auditing and consulting missions had no impact on the quality of its work but actually they do. The two roles rarely mix well--a fact Arthur Andersen himself warned about as far back as the Great Depression. The culture changed where the auditor was no longer the guy people respected in the '80s and '90s. Even as many of its partners and staff continued to uphold a high standard, others compromised in the interest of generating fees. Andersen's remaining leadership disputed that the firm emphasized the selling of services over audit quality, replacing partners who were strong auditors but didn't generate enough revenue.
Company was also likened by investors and investment banking firms due to its rising stock price and strategy of growing with mergers & acquisitions. However its reputation was not good among some of its customers due to services provided and inaccuracies in the billing systems coming from continuous mergers at WorldCom. Internally company’s reputation was not good among its employees, as they were constantly challenged to integrate the acquired company’s technology and culture in the existing WorldCom operations. Rapidity of mergers and acquisition mounted an internal pressure on WorldCom’s management as they tried to create a seamless communications network in company’s operations. Company faced an immediate pressure from external environment because of lawsuits filed by its large customers like Cherry Communications, this damaged company’s reputation.
This was the reason why Tesco's market value dropped down to 5 billion pounds. Since then the first change we have had is the new chief executive officer, Philip Clarke. He has been a great addition to our team and already has taken things in his hands and results are already starting to show. First we decided on lowering the prices for some of our products, the ones that you could say are our customer favourites. It did not however have the effect we had hoped for.
This led to a 4% drop in share prices. Secondly, it has reaffirmed its commitment to market research, and generating more information about its customers. (Jones, 2001) Disappointing Growth of Flagship Brands: There are two major factors that are contributing to the poor financial outlook. Firstly, the disappointing growth of the company’s flagship brands and products resulted in meagre profit growth. P&G have always been a leader in customer research, and this has helped it make small amendments adding value to these existing products.
During that time the Company experienced troubles and the revenue has fallen while debt taken on to finance mergers and infrastructure investment remained the same. Ultimately, the market value of the Company’s common stock plunged from about $125 billion in 2000 to less than $150 million as of July 1st 2002. Overall, more than $9 billion in false or unsupported accounting entries were made in WorldCom’s financial systems in order to achieve desired reported financial results. (WorldCom stock price) Quantification of Findings We have audited the accompanying balance sheets of WorldCom Corporation as of December 31, 1999 and December 31, 2000, and the related statements of income, cash flow, and stockholders’ equity for the period ended December 31, 1999 and December 31, 2000. During our review of the income statement we noticed that the Corporation mistakenly releases accruals and capitalize expenses that should be charged on expenses.
Sunflower Incorporated is experiencing some competitive and quality problems. An evaluations of the company branches indicated that some companies are making huge profits by offering substandard products while other are struggling to keep up with competition. Albanese, who was hired to solve this situation, proposed implementation of standardized pricing and purchasing decision across all regions. Though Albanese’s proposal was great, it was unable to achieve the desired outcome. This is because the proposal involved major changes to the organization purchasing and pricing processes and Albanese did not use the right strategies for managing the change process.
The firms stock has declined $2 per share over the last nine months but the firms profits have been rising. Shareholders normally receive what is called cash dividends and from the text the firm has never paid a dividend in 20 years. From what is written in the first paragraph, shareholders wealth is reducing during this time, and this shows that there is an agency problem. With the management team their actions show that pollution controls will show a profit maximization try, which means the managers are trying to maximize his or her salary, instead of the attempt to maximize shareholders wealth, the stock price. Evaluate the firms approach to pollution control.