Tyco Case Notes - Tyco International: A Case of Corporate...

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Tyco International: A Case of Corporate Malfeasance CASE ASSIGNMENT Faced with the task of rebuilding investor and public confidence in Tyco, newly- appointed Edward Breen has invited an outside group to advise him as he takes steps to restore the company's viability and reputation. Called to assist your consulting firm in this project, you have been asked to study the Tyco situation and prepare a report with the following content: 1. What type of company did Kozlowski inherit in 1992? How did he change Tyco’s strategy, management structure, and systems? How did he use incentives to achieve his goals? 2. Was Tyco’s success under Kozlowski a fluke, fabricated, or finesse? Did he reinvent the conglomerate? 3. How did Kozlowski use investment bankers to justify his conglomerate strategy? Why did Kozlowski in 1996 propose to break up Tyco into individual units with separately traded stock? 4. Kozlowski certainly misused his authority in distributing bonuses, extending loans, and misreporting material items. How do you account for this behavior? 5. Tyco’s Board of Directors and senior executives had legal obligations to fulfill. How do you account for the board’s failure to carry out its fiduciary duties? Why did they disregard corporate and federal reporting rules? 6. As Tyco’s new CEO, Breen has to regain trust from shareholders, employees and the firm’s other stakeholders. What actions should he take immediately? Within the next year? Over the long term? What resources does he have at his disposal to enhance the reputation of the firm and turn it round? Be prepared to discuss your analysis and findings with your consulting team to formulate recommendations for Breen. Optional: Had these recommendations been in place prior to the Kozlowski management era, could the Tyco crisis have been prevented? What indicators in Kozlowski's character or reputation might have signaled or predicted his behavior? Optional: Instruct students to research articles that present Breen's post-scandal strategic actions. Discuss their effectiveness and compare his actual actions to the class’s recommendations. Optional: Instruct the students to visit the Tyco website. Discuss Breen's actions to develop an ethical organizational culture and evaluate the potential of his emphasis on ethical practices. Optional: See Appendix A. Discuss each of the ethical theories presented in the appendix. Keeping the Tyco case in mind, which of the theoretical concepts most appeals to your sense of corporate ethical obligation? 96
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Tyco International: A Case of Corporate Malfeasance STRATEGIC ACTIONS: STRATEGY FORMULATION 1. What type of company did Kozlowski inherit in 1992? How did he change Tyco’s strategy, management structure, and systems? How did he use incentives to achieve his goals? Tyco's original founders had assembled an operating company that could compete in
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Tyco Case Notes - Tyco International: A Case of Corporate...

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