Case Study Of Nortel

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Nortel was a telecommunications company in Canada that’s success was noticed by everyone world wide and many investors including a large role in the U.S. Nortel was the prime example of economic success in Canada and was praised for their stock exchange value compared to the other larger firms of the world. Their downfall was quicker than their rise that was led by a series of unwise acquisitions, scandal, fraud, greed and unethical business tactics hidden all from the public for too long. Multiple unethical business factors were described to be the result for Nortel’s downfall. Board Structure Nortel’s board structure is one of the factors that was said to have led to their failures. Stakeholders elect a board of director’s member and their sole job is to look out for the interests of the owners. It has always been advised to have an “Independent board of directors” that have no shares invested in the company as opposed to non-executive board members. Nortel’s board was independent but ran into issues with the number of people on their board, their financial knowledge of the company, and having too many responsibilities for each member. There had been 12 members on their board which compared to other firms was large. Having too many members on a board may cause disagreements of the company’s ethics. The more people in a room running a company may have many opinions and suggestions for which route the company should move to. All these members of an independent board are responsible in monitoring the finances of a firm. A member’s action sequence may motivate other board members in persuading them on the direction they want the firm to go. With so many people on a board laziness may take in effect and expect others to do the wor... ... middle of paper ... ...uct. Employees are sometimes faced with managers that are unethical and do not want to be categorized as a whistleblower so they stay quiet but they need to be reassured that there are ethical regulators looking out for them and the company. Prioritizing these decisions may help a company thrive and survive longer than the Nortel. This case study has been a prime example of our course and ways to prevent and a business from going under. We have learned from Nortel’s failure and others like Enron that ethical leadership and business practices are what make a company survive. Business ethics is the heart and soul of how a business is run and standing by the right principles encourages employees and the public you serve to follow along. Cheating your way to the top make quick and profitable but the result is after the long run is even quicker failure to the bottom.

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