Essay Preview: Tyco
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Are there any magical solutions or potions that can transform any company into a successful organization overall? No, (at least I have not heard of any) but in my opinion a great deal of achievement lies in the planning function of management. Successful implementation of managements plans is also just as important as the plan itself. Both planning and implementation of those plans create victories for any company in my opinion. Unlike many companies that have made headlines with corporate scandals, Tyco International has managed to overcome their tragedy by restructuring and planning. With their new Ceo, Edward Breen, Tyco has planned new goals and strategies. Implementing these goals is now the responsibility of the whole company. I will explain in brief: their planning function of management; the impact that legal issues, ethics, and corporate social responsibility has had on planning; and the three factors that have influenced strategic, tactical, operational, and contingency planning.
Tycos managerial success stems from a long history of planning strategies and implementation of those strategies. In 1960, Tyco was founded by Arthur Rosenburg, Ph.D. and had begun a long journey of growth through acquisitions of various businesses. By 1968, Tyco had acquired 16 companies. Tycos history in brief:
It has always been Tycos policy to acquire profitable companies and to operate them at continually increasing profitability for the benefit of its shareholders. For that reason, after Tycos 1973-1982 period of rapid growth, management focused on strengthening the company from within. To do so, Tyco organized its subsidiaries into three business segments (Fire Protection, Electronics and Packaging), and created an operating plan that focused on strengthening market leadership and being the high-quality, low-cost producer within its markets. The plans objectives were:
To achieve significant market share in each of its principal product lines;
Establishment of each product line as the leader and high-value producer in its field;
To maintain, throughout all Tyco business segments and product lines, a reputation for product quality, reliability, and customer service.
Tyco accomplished this by:
Decentralizing company operations into a more cost-effective, independent profit center operating system;
Selling unprofitable units and existing business, and divesting itself of companies not fully owned by Tyco;
Reducing administrative overhead by consolidating under Tyco Corporate appropriate business functions like: taxes, legal, financial reporting, insurance and human resources;
Reducing subsidiary operating costs by providing them with opportunities to take advantage of Tycos global corporate economies of scale through such activities like inter-company purchasing of raw materials.
In 1986, Tyco returned its focus to sharply accelerating growth. During this period, it reorganized its subsidiaries into what became the basis for the current business segments: Electrical and Electronic Components, Healthcare and Specialty Products, Fire and Security Services, and Flow Control. The Companys name was changed from Tyco Laboratories, Inc. to Tyco International Ltd. in 1993, to reflect Tycos global presence. Furthermore, it became, and remains, Tycos policy to add high-quality, cost-competitive, lower-tech industrial/commercial products to its product lines whenever possible.
The Company also adopted synergistic and strategic acquisition guidelines which established three base-line standards for potential acquisitions:
An acquisition candidate must be in a business related to one of Tycos four business segments;
It must be able to expand the product line and/or improve product distribution for at least one of Tycos business segments;
It must have excellent long-term growth prospects.
It must be using a manufacturing and/or processing technology already familiar to one of Tycos business segments if it plans to introduce a new product or product line.
Using the synergistic/strategic guidelines and stringent financial requirements to guide acquisitions, Tyco succeeded in significantly improving the Companys positions in each of its four business segments. In July of 2002, the board of directors decide to hire Edward D. Breen as their new Chairman and Chief Executive Officer. Edward Breen made decisions to hire a team of competent people. He employed: David FitzPatrick as Executive Vice President and CFO, William Lytton, Executive Vice President and General Counsel, and Eric Pillmore, Senior Vice President of Corporate Governance.
In August of 2002, Tyco appointed Jack Krol to the Board of Directors. With the precedence of cultivating Tycos Corporate Governance, Mr. Krol was chosen lead director of the Board and Tyco devoted to replacing the Board of Directors with all independent directors. Tycos newly appointed Board of Directors voted to take several actions, beyond those that had already been implemented under the companys new management, to improve corporate governance at Tyco. The actions included:
Re-election by the independent directors of John A. Krol as Lead Director;
New assignments for membership on the Boards committee;
Adoption of new Board Governance Principles;
Adoption of a new employee Guide to Ethical Conduct;
And the adoption of a new Delegation of Authority policy to strengthen control over cash disbursements at the Company.
The year 2003 accompanied new product launches and contracts. This array of
products and services played a significant part of Tycos customers everyday life, but a company research exemplified that many people did not understand Tycos product offerings. In order to encourage customer awareness and to regenerate its corporate image, Tyco globally embarked upon a new ad campaign that had the message “A vital part of our world” as its new slogan. By 2006, Tyco announced that its Board of Directors approved a plan to separate the companys current portfolio of diverse businesses into three separate, publicly traded companies Ð- Tyco Healthcare, one of the worlds leading diversified