Tyco Case Study

                                                Tyco Case Study

1. How have Tyco’s strategy, structure, and decision-making processes evolved over time? How did Tyco pursue the goal of becoming a ‘$100 billion company’?

Tyco under the Kozlowski reign started acquiring numerous companies while also diversifying its market share (and companies under its wing) into 4 sections – Electronics, Healthcare, Fire and Security and Engineered Products & Services. They also became more decentralized (to the point where HQ was not allowed to interfere with most operations) during Kozlowski's time, performed a reverse merger and lowered their tax rate. Managers were also give monetary incentives to surpass growth quotas. In short, extreme and rapid growth was the key to being a $100 billion company.

1. Why did Tyco run into trouble under Kozlowski’s leadership? What is your assessment of Tyco’s corporate governance during this period?

Tyco's coporate governance was lax, given how it was incredibly decentralized. The rate of growth for them was speculated by a lot to be unsubstantial and could lead to shady accounting practices. In addition, the CIT merger deal was viewed as out of place plus when someone received $10 million for assisting with the merger, it cost Tyco a lot of PR. Ultimately, it was a lack of consistent management, with Kozlowski flipping between dividing and not dividing the business, that caused Tyco's stock price to fall 80% in 2002.

1. What is your assessment of the changes in Tyco introduced by Ed Breen? What is your assessment of Tyco’s corporate governance under his leadership?

Breen's tactic was focusing more on operations than acquisitions and wiping the slate clean (by basically removing everyone in power that was attached to the Kozlowski era of management)  In addition, he also implemented clear decision-making procedures and rules with the board. On the financial side, restructuring helped avoid filing for Chapter 11 bankrupcy. In short, the corporate governance under Breen's leadership is one of basically righting the ship and going in the exact opposite direction Kozlowski was doing.