Examining a Business Failure


In all the organization, different parties play a great role in efficiency and fall of an organization. The management of a company may lead a company either into success or into failure (Hersey, Blanchard & Johnson, 2001). For this fact, an organizational behavior in a company is an extremely important strategy that should not be forgotten by the management. For example, Tyco international Limited company had a massive failure that almost brought down the company due to the poor organizational behaviors. The management ignored other parties to the company and conducted business in accordance with their own selfish gains (Kay, 2002). Therefore, using the organization behavior theories, an analysis of Tyco International Limited business failure is evaluated with a comparison of leadership and structures on how they were led to failure.


Tyco International Limited is a company that is divided into three business divisions. These divisions are security options, fire protection and flow control. The company was founded in 1960 by Arthur. SIt continued to grow steadily until early 2002 when the company started experiencing their business failure. In the past, the company started to acquire as many companies as they could for purposes of creating an instant growth. This was successful until the early 2002 when management of the company was found dealing in fraudulent activities and mismanagement of funds. They were doing this in secrecy without considering the opinion of the other parties affecting the company. This reflected into the financial book of accounts as losses leading to company business failure (Kay, 2002).

This failure could be best explained by the use of classical theory of organizational behavior. According to classical theory of organization behavior, a chain of command structure is put in place where the head or management of the company is left with the burden of making choices and decisions in the company. In this case, deliberations or consultations among different parties in the company are extremely difficult (Robbins, 2001). In this case, management of the company can make any decisions without being questioned. Additionally, this theory is extremely rigid making it difficult for the company to do any changes. In this case, the classical theory of organizational behavior is perfect to explain the case of Tyco International Limited Company (Robbins, 2001).

When applying this theory in the case of Tyco International Limited Company, it can be seen that the structures of the company were rigid. Additionally, they gave the management of the company powers to make any decisions at their own free will. For the reason, CEO, Denis Kozlowsky, was left with powers of making any decisions without the need to consult anybody in the company. As a result, this made him to make decisions that will lead to his own personal gain. Additionally, the rigid structures ensured that no changes or barriers would come in his way of making such poor decisions at the expenses of the company. This led to huge losses causing the company to have business failures.

If the management, leadership and organizations structures can be compared, it can be seen that they led to the business failure. The management of the company and the leadership of the compared are extremely different. As leaders, leaders are expected to take the plight of the other parties before their own. In the case of Tyco International Limited Company, management led by Kozlowsky, put their selfish gains at the expense of the company causing the business failure. However, the structure could be seen to have facilitated the management of the company in performing their own selfish gains. This is because the organizational structure was rigid and gave the management powers to make decisions without consultation. As a result, the management took this advantage to steal money from the company.

A quality structure should always have policies or structures that support deliberations, ensures management and is not committing any illegal activities. Second, it should be flexible to accommodate any changes that might occur (Papa, Daniels, Spiker, & Daniels, 2008). However, this is in contrast to Tyco International Limited Company structures. Tyco organizational structures are extremely rigid and they offer management with all the powers. This results the company management to commit fraudulent cases under the noses of the other parties in the company leading to failure.

Finally, a competent management should always consult with their juniors and the other outside parties concerning decisions they are about to make. Additionally, management is entrusted with the company assets to maintain them and increase their value (Robbins, 2001). However, in the case of Tyco, management tried to increase the value of assets in the company but in the process, they did not consult with other parties. Moreover, they used the money for their personal gains leading to the failure.


Organizational behavior is an important strategy in companies. This is because it improves the relationship between the different parties in the company leading to success. However, if it is not used well, it can lead to business failure. In the case of Tyco, application of classical theory of organization behavior led to immense failure of the company. First, management had powers to make decisions as they pleased. Second, the structure was rigid allowing no change to occur in the company. When these structures are compared to an excellent company structures they lead to failure. For instance, organizational structures are supposed to be flexible to allow change and consultations between different parties. However, this is not the case in Tyco because they are rigid and do not allow consultation. Finally, mangers are supposed to act in the interest of the others but in Tyco situation, mangers acted in their interest leading to failure.

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