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Business Ethics
Budiman Kusmanto
Maria Anastasia Rosalin
Suryadi Kusmanto
Tyco International
Presented for
Business Ethics Tyco International
Case Study
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Company BackgroundABOUT Tyco International
Founded in 1960 by Arthur J. Rosenberg
Focusing as investment holding company
on solid- state science and energy
conversion
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 ascompanys CEO
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 was
sentenced 25 years in prison In 2007, Tyco improved ethical standard
company with Edward Breen as CEO
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Business Ethics Tyco International
Case Study
Historical Facts
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Tyco Timeline
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Case Study
Kozlowski Rise and Fall
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)
What now?
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Relationship Chart
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Case Study
loan forgiveness
program
private stock fund receive $20 mil for
CIT acquisition without
boards knowledge
receive $750k for
supplying Cessna
aircraft
used $2.5 mil in Tyco
fund for home purchase
accepted cashand stock
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What makes TycoBeing Un-Ethical
Theft of more $150 million from the
company
Interest-free or very low interest loans
for employees (sometimes disguised asbonuses)
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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Case Study
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What makes TycoWent Wrong
Wrong and unethical decisions
Lack of control (hedonism)
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Case Study
Leadership
Lack of internal control system
Weak organizational culture
(larceny / theft and conspiracy)
Management
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Ethical POV
Teleology Egoism Utilitarism
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Deontology Relativist Virtue Ethics
Justice
Ethical Philosophies
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Ethical POV
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Business Ethics Tyco International
Case Study
Leadership Style And Corporate Culture
Coercive Afflictive
Authoritative ExactingApathetic
Caring IntegrativeHigh
High
Low
Low
Democratic
Pacesetting Coaching
6 Leadership Styles* Concern for Performance
* Daniel Goleman
Concern for People
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Tycos actionNow and AfterChange! Change! Change!
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.
Edward Breen took the reins at Tyco and
turn a catastrophic mess into a bright
future.
Presence ofStrong Leader
Tyco has given award for making a drastic
changes of replacing board members in
the present of management s scandal.
BoardReplacement
Committed to contribute to a sustainablecompetitive advantage in the market by
integrating minorities to support their growth.
SupplierDiversity
Tyco has published Tyco Guide to EthicalConduct to issue forward and bring out
the companys core values.
Tycos Guide to Ethical Conduct
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Case Study
www.tyco.com
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ConclusionWhat 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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Case Study
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THANK YOU
Presented for
Business Ethics Tyco International
Case Study
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