Examining a Business Failure - Tyco

Topics: Ethics, Business ethics, Organizational studies Pages: 4 (1122 words) Published: November 22, 2010
Examining a Business Failure - Tyco
Examining a Business Failure - Tyco
This paper will describe how specific organizational behavior theories could have predicted the failure Tyco International (Tyco). This paper will discuss the contributions of leadership, management, and organizational structures to the organizational failure of Tyco. Organizational Behavior

Organizational behavior is a field of study, meaning that it is a distinct area of expertise with a common body of knowledge. Organizational behavior studies three determinants of behavior in organizations: individuals, groups, and structure. In addition, organizational behavior applies the knowledge gained about individuals, groups, and the effect of structure on behavior in order to make organizations work more effectively. Organizational behavior is concerned with the study of what people do in an organization and how their behavior affects the organization’s performance (Robbins & Judge, 2007). In the case of Tyco, the organizational behavior of the company in 2002 was unethical in nature. Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes disguised as bonuses) that were never approved by the Tyco board or repaid. Some of these "loans" were part of a "Key Employee Loan" program the company offered. They were accused of selling their company stock without telling investors, which is a requirement under SEC rules. Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco through their unapproved bonuses, loans, and extravagant "company" spending. Rumors of a $6,000 shower curtain, $2,000 trash can, and a $2 million dollar birthday party for Koslowski's wife in Italy are just a few examples of the misuse of company funds. As many as 40 Tyco executives took loans that were later "forgiven" as part of Tyco's loan-forgiveness...

References: Robbins, S. P. & Judge, T. A. (2007). Organizational Behavior, Twelfth Edition: Prentice Hall.
Obringer, L. (1998-2009). How Cooking the Books Works.   http://money.howstuffworks.com/ cooking-books9.htm: HowStuffWorks, Inc.
Staff Report (2008). Lessons of Tyco: Just Say No. http://www.vermontlaw.edu/x7845.xml: Vermont Law School.
Yukl, G. (2006) Leadership in Organizations, Sixth Edition: Pearson Prentice Hall.ming
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