PROBLEMS

The entire case has shown a decentralized corporate structure that result in problems

concerning accountability and a number of misconduct caused by the executive

employees or those who are in the high level positions. Predominantly, the root of these

incidents is the excessive power in the hands of the said employees.

The Tyco International Chief Executive Officer (CEO), L. Dennis Kozlowski was

arrested due to the execution of unethical acts such as the transfer of funds of the

company to his personal account, tax evasion import taxes, taking $242 million from

the program intended to help employees to buy stocks, granting $106 million to various

employees through loan forgiveness, stealing and fraudulent sales of the Tyco stocks

and concealing of information from the shareholders. In addition, the Tyco International

filed lawsuits against the other board of directors due to being accomplices of the CEO

and the conflict of interest; including the Chief Financial Officer (CFO) which is Mark

Swartz who falsified documents, Frank Walsh, Jerry Boggess the President of Tyco

Fire and Security Division for having bookkeeping issues and others.

Those are the major corporate misconducts of the executive officers that Tyco

International has faced. These are the results of the decentralized organization and it

makes the organizations ethical misconducts difficult to detect. Too much power or

authority is given to Kozlowski that enables him to restructure the organization of the

company and he, by himself, even handpicked few individuals to handle key positions in

the company. Another, given that hes the one who appoints; they have the capability of

concealing some information since the consent will be provided by those individuals.
 ANSWERS

Edward Breen replaced Kozlowski as the CEO. The new management team

reorganized the company by starting at the election of new members of Board of

Directors by the shareholders. The shareholders also voted for a board chair as an

independent person aside from the companys CEO. Furthermore, an agreement took

place stating that the future executive severance agreements should be subject first to

the shareholders approval.

The company created the Tyco Guide to Ethical Conduct which is available in a variety

of languages for its global employees. In addition to that, the companys Vice President

of Corporate Governance has helped the implementation of the Corporate Ethics

Program. He also created two ombudsman positions who mediate between the top

management and the employees and the confidential hotline - ConcernLINE for the

reports regarding misconduct.

The Tyco International gives importance to the presence of the employees in the

process and they are given the chance to contribute to the ethical programs. The

company also generated a new tracking system that led to the ethics awareness

training for its employees a hundred percent.

As a result of these rapid remedies, the company was able to recover quickly and it

restored the shareholders trust as well as their confidence.

 CONCLUSION

Tyco International appears to have a successful comeback. From reputation suffering

because of unethical conduct of its executive officers to having a systematized

organization and being involved to such ethical projects and programs.

Decentralized structure of organization might be helpful to small firms but cannot be in

big companies like in Tyco International. It entails too much power for the high or the top

level position, thus, the executive officers of the Tyco is given the power like

acquisitions of companies with just consent of co-executive officers. Nevertheless,

Edward Breen and Eric Pillmore are the major savior of the company with the help and

cooperation of its shareholders. The structure of the organization was improved,

resulting into a centralized one that contributes to its objectivity.

On the other hand, the new management makes sure that the relationship and the link

all throughout the lines of authority would be a compact one. The developed programs

and trainings are mostly regarding ethical matters and because of these, Tyco had won

Center for Corporate Change Award same with its officers with various awards.