Business Ethics

Tyco International
Budiman Kusmanto Maria Anastasia Rosalin Suryadi Kusmanto

Presented for Business Ethics Tyco International Case Study

Company Background
ABOUT Tyco International Historical Facts
Founded in 1960 by Arthur J. Rosenberg Focusing as investment holding company on solid- state science and energy conversion From 1990 2002, Tyco has acquired more than 1000 companies with over than $62 billion value From 1994 2002, Tyco has completed 100 deals with average value of $800 million In 2002, Dennis Kozlowski resigned as company CEO In 2005, Dennis Kozlowski sentenced 25 years in prison was

Acquisition of more than 16 companies from 1968 1982

Diversify its business segment in 1982 to three business sectors (fire protection, electronic, and packaging)

In 1992 Dennis Kozlowski appointed as companys CEO

In 2007, Tyco improved ethical standard company with Edward Breen as CEO

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Presented for Business Ethics Tyco International Case Study

Tyco Timeline
Kozlowski Rise and Fall
What now?

Tyco earnings grew 25% each year

During 1999, Tycos stock price grew 65% Debt to Equity ratio nearly double from 25% to 47% in one year (2001)

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Presented for Business Ethics Tyco International Case Study

Relationship Chart

accepted cash and stock

loan forgiveness program

private stock fund

receive $750k for supplying Cessna aircraft

receive $20 mil for used $2.5 mil in Tyco CIT acquisition without fund for home purchase boards knowledge

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Presented for Business Ethics Tyco International Case Study

What makes Tyco

Being Un-Ethical
Theft of more $150 million from the company Interest-free or very low interest loans for employees (sometimes disguised as bonuses) Selling companys stock without telling investors Concealed their illegal actions from eyes of shareholders and board members (falsifying business record) Extravagant company spending Tax evasion Bribery

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Presented for Business Ethics Tyco International Case Study

What makes Tyco

Went Wrong Leadership
Wrong and unethical decisions Lack of control (hedonism)

Management
Lack of internal control system Weak organizational culture (larceny / theft and conspiracy)

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Presented for Business Ethics Tyco International Case Study

Ethical POV
Ethical Framework
Perception

Locus of control (internal & external)

Corporate culture

Motivational to influence people behavior

Presented for Business Ethics Tyco International Case Study

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Ethical POV
Ethical Philosophies
Teleology Egoism Utilitarism

Deontology

Relativist

Virtue Ethics

Justice

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Presented for Business Ethics Tyco International Case Study

Ethical POV
Leadership Style And Corporate Culture 6 Leadership Styles*
Coercive Authoritative Pacesetting Afflictive Democratic Coaching
High

Concern for Performance

Caring Apathetic
Low

Integrative Exacting
High

Low

Concern for People

* Daniel Goleman 9 of 11
Presented for Business Ethics Tyco International Case Study

Now and After

Change! Change! Change!

Tycos action

www.tyco.com

It is a known fact that after Tyco received many negative image from its predecessor from scandalous fraud, lavish spending, and falsifying book record. However Tyco havent give up on their belief to become the company that everyone including stockholders could trust, from their new slogan A vital part of your world, Tyco has given its best effort to change.

Presence of Strong Leader

Edward Breen took the reins at Tyco and turn a catastrophic mess into a bright future.

Board Replacement
Tyco has given award for making a drastic changes of replacing board members in the present of management s scandal.

Tycos Guide to Ethical Conduct

Tyco has published Tyco Guide to Ethical Conduct to issue forward and bring out the companys core values.

Supplier Diversity
Committed to contribute to a sustainable competitive advantage in the market by integrating minorities to support their growth.

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Presented for Business Ethics Tyco International Case Study

Conclusion
What We Learn
Ethical Leaders are role models for the organizationals value An organizations structure is important to the study of business ethics because the various roles and job descriptions that comprise that structure may create opportunities for unethical behavior Kozlowski was an example of a charismatic leader that went wrong way to fulfill his ambitions and personal interest which cause stockholders, employees and company to suffer.

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Presented for Business Ethics Tyco International Case Study

THANK YOU

Presented for Business Ethics Tyco International Case Study