Tyco essay

Tyco International Inc.
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Tyco International Inc.
Introduction
Tyco International Inc.is a large conglomerate that operates globally in the manufacture of wide products variety such as healthcare products, security systems, electronic components, and fire products. Dennis Kozlowski assumed the leadership position of the CEO at the firm in the year 1992 from his former CFO and executive president’s position. During his term as the CEO, Kozlowski was very aggressive in gaining mergers and acquisitions. Kozlowski picked his crony as the members of the board of directors to compose the corporate governance of the firm. Some rumors started spreading out that the organization was producing some irregular accounting habits after a stock split in 1999 by Tyco leaders denied the claim (Kemmerer & Shawver, 2007). The business operations under Kozlowski as the CEO resulted in several mergers with Tyco International buying several businesses which made the profits for the company to exceed $30B.  The board of directors ordered investigations on the incorrect behaviors of their members in 2002 where the scandal was revealed. Unethical financial practices at Tyco International Inc. costed various stakeholders and almost caused the collapse of the organization.
Ethical issues arising from the Tyco International Inc. scandal
The ethical issue arising from the case of Tyco International case is unethical financial practices. Kozlowski received the money that was acquired illegally from Tyco. He held the most key position with trust from the shareholders and the board of directors but used this position in creating financial benefits for himself and his family. Kozlowski covered his misconducts by giving financial benefits to his junior members and other top executives who also got involved in unethical financial activities and covered up so that he could not be caught (Jonathan, 2017). The subordinate members recruited to support and cover up Kozlowski in his unethical business undertakings remained silent for the fear of losing their jobs or for financial benefits. Kozlowski actions demonstrate unethical financial practices that affected the company so severe that it almost collapsed.
Unethical financial practices were also manifested through unethical practices that were supposed to point out and stop the illegal financial transactions that were taking place in the firm. The PricewaterhouseCoopers Company was responsible for checking the financial reports for Tyco international but they failed to identify the illegal financial transactions that Kozlowski had done (Jonathan, 2017). This gave Kozlowski the confidence to continue with his unethical financial activities even more extensively that it continued affecting the shareholders. Lacking the constraining influence that the auditing firm could have had made the practice to become even more difficult to control.
In each of the ethical issues that Tyco encountered under Kozlowski, subordinates and some other senior executive members were engaged in ethical dilemmas of revealing the unethical financial undertakings of their boss and probably lose their job or keep silent where they would retain their jobs and get promotions. The parties to keep quiet and receive financial benefits while the shareholders continued to suffer the consequences (Benabou & Tirole, 2010). However, the decision of the board to replace Kozlowski with Edward Breen as the CEO after learning the truth saved the shareholders and the firm.
Stakeholders affected by Tyco International Inc. Scandal
The financial ethical violations that affected Tyco International Inc. affected the various stakeholders including the government, the employees, the public and the shareholders. The unethical financial transactions are not usually recorded in the accounting records for the firm for the purposes of taxation. The failure of the auditing firm to reveal the accounting ethics resulted in the future extension of the matter that the government lost a lot of money through failing to tax the huge amounts of stolen money (Thanos, 2015). The public was also affected by the scandal because they lost trust with the firm and all the products it manufactured. When the firm was almost collapsing, the public could not get the services/products efficiently as was the case before, hence suffering the ethical misconduct in the organization. The employees were affected by being subjected to the fear of losing their jobs if the company would collapse. Besides, they had to work extra harder to revive the company that was almost collapsing following the scandal. The shareholders were also put in a situation where they incurred a lot of losses as the CEO exploited their resources to his benefits and risked losing their investments if the company would collapse.
The decision made by the involved parties
The suspicion by part of the members of the board of directors made the decision to have investigations carried out on the organization. After the revelation that the CEO was involved in unethical financial practices, he was taken to court and resigned from the position of the CEO (Jerry, 2012). The CFO chair and other involved leaders were fired as well. The decision by the board to investigate and finally fire the corrupt leaders was ethical and was the reason the organization was in a position to stand again (Jared, 2003). The performance of the Tyco International started failing when the scandal was revealed in the year 2002 but soon Edward Breen replaced Kozlowski as the CEO where the company started to recover slowly.
A personal view on business ethics
My understanding of business ethics has been enforced by reading the case of Tyco International Inc. Scandal. The case has enabled me to understand how unethical business activities take place in real world practice. Reading the case has helped me to relate the concepts of business ethics I have learned throughout the lesson, giving me a deeper insight into the matter. Importantly, the lessons have enabled me to learn and understand clearly what business ethics means and the kind of transactions and conducts that reflect unethical financial practices. My knowledge and understanding were therefore enhanced by attending the lessons. For instance, I initially understood business ethics as only a matter of treating the customers in the wrong way or being dishonest to them. However, I have learned through the course that there are much more than this after attending the lesson and reading the case beyond dishonesty. However, the course has made me understand that ethics extend to conduct of the of the business leaders in ways that violate the business code of conduct. For instance, it can include illegal firing, financial frauds, being dishonest, conflict of interest and bribery among malpractices in a business setting (Ferrell, 2004). Therefore, the lessons have deepened my understanding of business ethics.
Conclusion
Financial ethical malpractices are very costly for the company and the shareholders. It is necessary for every stakeholder to do their part in ensuring the business runs ethically because everyone will be affected by the consequences of financial ethical malpractice. Tyco International Inc. unethical financial practices costed various stakeholders and almost caused the collapse of the business organization.