Examining a Business Failure - Tyco

Topics: Corporate governance, U.S. Securities and Exchange Commission, Management Pages: 3 (1005 words) Published: September 26, 2010
Examining a Business Failure: Tyco International Ltd. ®
LDR 531
August 23, 2010

Examining a Business Failure: Tyco International Ltd. ®
Many have heard the proverb, “A chain is only as strong as its weakest link.” This can be directly applied to business organizations through analysis of the three strongest and/or weakest links: managers, leaders and the organizational structure. These three areas provide the central core to any organization and are often linked to dramatic failures and consequences when weaknesses arise. In this paper, the student will discuss the 2002 failure of Tyco International Ltd. ® (Tyco) in which the Securities and Exchange Commission (SEC) filed a lawsuit claiming fraud, reporting violations, recordkeeping violations, and foreign antibribery violations (U.S. Securities and Exchange Commission, 2010). Tyco International Ltd. ®

Founded in 1960, Tyco International (Tyco) was initially formed as a research laboratory used to conduct studies for the United States government. Throughout the first years of Tyco’s infancy, its focus changed from government projects to private, commercial research, and it was offered publically in 1964. In 1965, Tyco began the on-going acquisition of organizations to fill gaps in its supply chain and production lines (Tyco International Ltd. ®, 2010). After fifty years in operation, Tyco has had its share of successes and failures. Unfortunately for Tyco, however, one of its failures became perhaps the most negatively publicized and investigated corporate scandal in recent history. Overview: Business Failure

In 2002, the Securities and Exchange Commission (SEC) filed a lawsuit against Tyco based upon the use of unacceptable accounting practices that resulted in the overstatement of Tyco’s operating income by as much as one billion dollars (U.S. Securities and Exchange Commission, 2010). As a result, the Chief Executive Officer (CEO), Kozlowski, the Chief Finance Officer (CFO), Swartz,...

References: Mintzberg, H., Lampel, J., Quinn, J.B., & Ghoshal, S. (2003). The strategy process: Concepts, contexts, cases (4th ed.). Upper Saddle River, NJ: Prentice Hall.
Tyco International Ltd. ® (2010). About Tyco. Retrieved August 23, 2010, from http://www.tyco.com/wps/wcm/connect/tyco+who+we+are/Who+We+Are/Overview/.
U.S. Securities and Exchange Commission. (2010). SEC Complaint: Tyco International Ltd. Retrieved August 22, 2010, from http://www.sec.gov/litigation/complaints/2006/comp19657.pdf.
Yukl, G. (2006). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Pearson Education.
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