Affected due to this as the organization was unable

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affected due to this as the organization was unable to maintain its profitability and started losing investors’ trust (Calof, 2014). One of the most important reasons to fail was that the top management continued to merge and acquire the companies that were practically non-performing at that time, for example the San Francisco based bay networks and many other similar organizations. The reality behind this was that the top management defied the analysts’ recommendations and continued to spend on organizations that were small companies and were non-performing. Another major reason that led to the downfall of the company was that managers were demanding higher amount of compensation and allowances despite the fact that increase situation of uncertainty was in place in the market and internally within Nortel cooperation. The reports presented by the analysts suggest that the compensation of the Chief Executive Officer of the company was higher than what other CEO’s were being offered by other companies (Fogarty, 2008). Another reason for failure was the board of directors that were not performing as per noblesse oblige properly and were focused on their income and financial disparities in that accounting books rather than gaining the confidence of their investors and shareholders. There was no aspect of corporate citizenship that was being practiced within the company. There were many irregularities in the reporting of the accounting books that was against the code of conduct and ethical practices of the company which eventually resulted in the fall of Nortel cooperation as they later on resulted in the realization of heavy losses. Eventually, all the stakeholders were adversely impacted as the Nortel corporation failed to perform because they were all focusing on short-term goals and objectives rather than long-term benefits and survival of the organization (Calof, 2014).
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NORTEL CASE STUDY 6 What mechanisms should be put in place to better align managers with the interests of shareholders? It is important that the top management must use the ethical standards and practice in order to develop and successfully grow the business. The ideal mechanism for Nortel organization was that they should involve ethical business practices and fulfilled their responsibility as corporate citizenship in their code of conduct. Over the period of time, there have been different ethical theories that emphasize the significance of ethical management practices so that the interests of shareholders and other investors are protected. The main reason behind the implementation of strict ethics measures is that the top management can protect the interests of shareholders, work towards strategic philantrophy and also evaluate the selfish interests of the managers and employees that can harm the long-term interests and goodwill of the company.
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