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Unethical Practices in Business: The Tyco International Business Case, Essay Example

Pages: 1

Words: 1264

Essay

Background of the Issue

            Utilizing authority, power and position, likely, this particular aspect of business management has become one of the most controversial points of the legal issue that Tyco International has been involved with in 2002. Tyco International Ltd is basically noted to be among the most popular organizations providing products of different types from healthcare selections to security products. Being a huge company offering a large selection of different products distributed in several different industries around the globe, it could be realized how the company is able to gain high rates of profit through the years.

Such as a rate of profit earned from both the local and international market that the company serves specifically allow the company a relative rate of growth that it needs. Considerably though, such growth also appears to be rather inviting to opportunists who want to gain more from what they are already earning. In the case of Tyco’s management operation, it could be realized that the individuals occupying the higher positions have become interested in earning more for themselves. Three managers of the company were then investigated for fraud. Former CEO Dennis Kozlowski, former CFO Mark Schwartz and former legal counsel Mark Belnick were all considered to have been accused of a high-caliber type of company fraud, which involves stealing from the company’s net profit. The manipulation of the funds of the business has been used by these three individuals to gain more for themselves.

During the beginning of the investigation, it appeared that the three individuals who are being accused held control of the finances and accounting operations of the business. As a result, they knew how to move around and about with the financial assets of the organization. Notably, this allowed them to gain loans that have low interest rates. The said loans are even scheduled for a lot easier terms of payment. As the investigators seek several anomalies on the company’s financial records, it appeared that the loans the individuals scheduled for themselves are at some point even impractical as it involved jewelry purchase, property accumulations and expensive art collections. Perhaps just to note that everything has been reported, such items were then priced at a much higher rate allowing for the release of a relatively high amount of money. These loans were also found out to have never been approved nor were they replenished accordingly. Apart from the loans, Kozlowski and Schwartz were also found out to have been releasing bonuses to themselves every now and again. All these particular acts of stealing from the company costs around $600 million, which the three individuals are being sued for.

Implications of the Case

            For companies like that of Tyco International, having competent heads who would be able to handle the challenges of the changing market is a necessity. Growth is an unavoidable situation for organizations that serve the international market. It is undeniable that the individuals who have taken higher positions in the company are given such high regard as well as highly regarded trust, which they are expected to specifically accept with full distinction of loyalty. However, when instances of personal opportunities present themselves, individuals handling the high ground of chances of gaining more for themselves are then tempted to take the chance and take more for themselves.

This is a common consideration that organizations should pay attention to; understandably, it is hard to avoid such instances especially when the high officials see the growth rate of the company. Human error distinctively views such condition as a rather fitting opportunity that would allow them to gain more while the company losses ‘but little amount’ of money from what they are actually earning. However, with the existence of the negative implications of greed, the desire to ‘have more’ becomes escalated and the relatively ‘small amount’ of gain that is taken from stealing becomes concentrated on manipulating resources and records to make sure one gains a lot more than usual. This is what happened with the three officials of Tyco International.

The same case occurs in a lot of other organizations around the globe. This is the reason why there are instances when a sense of hierarchical development on the distinction of individuals placed at the higher positions of command are to be regularly evaluated and motivated for a more honest and loyal work. Providing them good incentives of earning is also considered to be a good source of confidence. Notably though, not all individuals placed in such positions are given the chance to take the higher ground of doing their jobs on a proper manner. Most often than not, the more negative way of dealing with matters and having more to spare for themselves present a rather more lucrative condition of living.

No one, however, is higher than the law. In this case presented, the three individuals accused of the unethical practices had to pay so much for what they have done. After three years of being accused and investigated upon, it could be realized that the judgment released on the three persons serving at least 25 years of imprisonment is rather justifiable. However, the parole of at least 3 million is rather small for the amount of what they have relatively stolen from the company. Nevertheless, whether or not the sentence is served by the individuals, paying for what they have evasively taken from the company should not be a matter of choice but a matter of responsibility they should take full consideration of.

Conclusion

            Board members and officials of internationally operating organizations are considered to have a high sense of control over the financial and non-financial assets of the company. Avoiding the instances of developing negative attitude towards the sense of gaining more for themselves is often a matter that the administrators should seriously give attention to. Most often than not, when such negative motives are not controlled or suppressed as needed, the resulting situations are rather highly devastating to the being of the whole company especially when it comes to the reputation of the business in the scope of its international name.

The people working for it also becomes highly affected by the situation. The Tyco International case presents a rather classic indication on how highly regarded organizations fail to become more indicative in assuring that their internal operations are fully given attention to. Such failure to give attention to the financial and organizational strength of the business caused Tyco to undergo such a scandalous situation in the face of the international market. although the situation did not affect so much of its reputation on providing quality products to its customers, its current and prospective investors have began questioning its capacity to administer the operational integrity of the business. This is the reason why it could be learned from this case that the implicative source of confidence that investors and other stakeholders have on a specific organization is based on how it administers its basic operations as well as that of the people who are given the power to manipulate the assets that it owns in the first place. From this point of consideration, organizations would be more able to protect their assets and the matters that are used to establish their strength and position in the industry that they are involved with.

References:

Tyco Fraud Information. http://www.tycofraudinfocenter.com/information.php. (Retrieved on July 7, 2013).

Hill and Michaels. (2002). ‘Paw taste condemns Kozlowski: Report says Tyco bought $15,000 dog umbrella stand for chief’s apartment’. Financial Times.

Standard and Poor’s Corporation (2007). Standard and Poor’s 500 Guide. New York: McGraw-Hill.

Tyco International Ltd. Securities Class Action Settlement. http://www.tycoclasssettlement.com/faq.php3. (Retrieved on July 7, 2013).

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