The Organizing Function of Management: Tyco

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The Organizing Function of Management: Tyco
Robert Black
MGT 330: Management: Theory, Practices, and Application
June 21, 2010
Instructor: Tonya T. Moore
University of Phoenix
The Organizing Function of Management: Tyco
Organizing is the second function of management, which follows planning. The organizing function of management can be described as the coordination and assembling of a company’s human, financial, physical, informational, and other resources needed to achieve the goals and objectives of the organization (Bateman & Snell, 2009). The organizing function is a continual process and is a vital factor in determining whether a company’s, like Tyco’s, strategy will succeed. The organizational structure of a company will influence how a company organizes said company’s resources in which the company’s Human resources Management will play a major role. The organizational structure of many global organizations begins at the top and proceeds downward through an organizational chart. Although this traditional model works well for some organizations it may not be a viable model for those diversified organizations, like Tyco, with multiple business sections (units). This paper will cover and focus on Tyco’s organizing function of management as it relates to the organization’s monetary and human capital resources and whether or not these organizational resources have been optimized for effectiveness and efficiency.

According to Robert M. Monczka, Robert B. Handfield, and Larry Giunipero (2009), Tyco International is a large conglomerate that has developed through frequent corporate acquisitions. Tyco for a period was acquiring four to five companies a week; however, the company was not devoting enough resources to assimilate those companies and integrating all of these segments and divisions became a challenge (Monczka, Handfield, & Giunipero, 2009). To meet this challenge Russ Davis, senior director of corporate sourcing, and Shelley Stewart developed a number of sourcing initiatives, which revealed that a number of Tyco’s companies experienced well-integrated sourcing teams; whereas, several did not. Consequently, each company had a number of divisions in which several had multiple locations. This indicated to Tyco management that they had to reconsider and redevelop how the company is organized and how Tyco will manage its monetary resources.

Tyco International has developed a custom-designed organizational strategy, which gives Tyco individual business units the flexibility each may need while centralizing certain functions or aspects (Monczka, Handfield, & Giunipero, 2009). According to the University of Utah (n.d.) Tyco is a divisional organizational structure with six distinct divisions. Tyco uses corporate cash resources to manage growth in which financial decisions are centralized with the company’s headquarters acts as a corporate banker. The president of each business unit within Tyco is responsible for his or her division strategy, which allows each division to focus on its own business strategy, in which corporate headquarters provides support. This allows the company to be more flexible and efficient; in other words, Tyco decentralizes strategic decisions, except when centralizing certain functions, such as monetary controls. This provides better monitoring and accountability of each division as well as fosters growth through multiple acquisitions in each division.

Tyco centralizes financial controls in which expenditures $100,000 and up require corporate approval (University of Utah, n.d.). Any excess cash generated by a division goes to the corporate account, which may not go back to the division. Each division must adhere to a budget as well as meet earning targets set for the division, which increases accountability within each division. All but two of Tyco’s divisions are unrelated and shared resources, including monetary are likely to be limited. Tyco emphasizes financial goals and poor...
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