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The Management Failure of Tyco International
Tyco International was founded by Edward Breen in 1960 (Wikipedia, 2007). According to
Wikipedia, (2007), Tyco International operational headquarters is located in Princeton,
New Jersey, and employs 247,900 employees. Dennis Kozlowski became the CEO in
1992, leading with aggressiveness acquiring several other companies into the organization
(Wikipedia, 2007). In 1999, after a stock split, rumors began to spread about Tyco
accounting habits. It was said that Tyco was producing irregular financial accounts, but
was denied by Tyco leaders. Throughout the years of Kozlowski leadership, Tyco merged
and bought out several companies, making their profits grow beyond 30 billion dollars, but
doubled its long term debt by over 10 billion dollars (Wikipedia, 2007).
In the event of trying to pull things back together, Kozlowski caused the company more
harm. According to Kay, (2002), "The American-based conglomerate Tyco International
Ltd. is in deep crisis following a wave of revelations concerning the corrupt practices of
the company and its top management."“ As things worsened, Kozlowski resigned while the
stock was plummeting. A bankruptcy for Tyco International would mean that 240,000
employees would be out of work, which would have sent shockwaves through the
economy (Kay, 2002). Acquisitions and financial manipulations lead to huge profits for
Tyco over a long period of time.
Tyco faced bankruptcy because of failed tricks by its accounting department and
fraudulent activity by the company leaders. Kozlowski was accused of applying millions
of dollars to his personal life. His greed and misguidance cost the company billions of
dollars, him his freedom, and money in court that was unnecessary. Management has the
most important job in a company because the success is dependant upon their actions. An
untrusting CEO like Kozlowski made shareholders indignant.
Kozlowski management plan was to turn Tyco International into a large incorporated
company like GE. Only his plan came with his own benefits as well. No one can ever say
what drove Kozlowski to commit such heinous crimes and put so many people jobs in
harms way. By studying his actions, someone can see that it is easy for a rich person to be
corrupted in the eye of money also.
Kozlowski broke federal laws (tax aviation) and state laws during his time as CEO for
Tyco. He fraudulently transported money to New Hampshire to avoid paying taxes,stilling
money to purchase his apartment, and getting loans through the company. Kozlowski pled
not guilty to the charges in 2002 and a trial was scheduled for June 26th of the same year.
