Failure at Tyco International, Ltd.
LDR / 531
January 31, 2011
Failure at Tyco International, Ltd. Tyco International Ltd is a diverse manufacturer who grew tremendously in the 1990’s and early 2000’s. The company had big ambitions with an aggressive program of acquisitions during this period where they spent an estimated $62 billion to purchase more than 1,000 companies. However, unbeknownst to the shareholders of Tyco and the world, Tyco was led by a management team and CEO (L. Dennis Kozlowski) that did not use wise or truthful business practices and organizational behavior. In the following paper, I will examine the failure that occurred at Tyco, compare, and contrast contributions of leadership, management,
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Some would say that this company ran into some back luck; however, the executive management did not practice organizational behavior that best served the company, employee, and customers. The downturn of the economy triggered the cash crunch within the United States. This created a deal-making environment that executive management used to create shortcuts and more aggressive corporate bookkeeping. Sustaining these profit margins and growth was at an end. Albert Meyer, a short seller at investment research firm Tice Associates stated: “Tyco management ran out of help from their accountants. The days of pushing the envelope are over. Tyco realized that it just wasn’t going to be able to make its numbers without some massaging” (Caplan, 2002). By June 2005 Kozlowski and his top lieutenant, Mark H. Swartz, were charged with fraud, conspiracy and grand larceny. According to The New York Times (2010), “The Manhattan jury found the two men guilty of defrauding shareholders of more than $400 million” (Tyco International Ltd., para. 2). In the past, corporate crooks tended to act on their own; however, Kozlowski was able to get many of his executive staff involved in this financial trickery. He was able to persuade or involve lawyers, accountants, executives, and board of directors to help portray Tyco as a lean and profitable company. Kozlowski and his executive staff came to symbolize an era of corporate greed.
Organizational Structure &