1. In what ways has Tyco’s multi-business model changed over time? Why did its top managers make these changes?  

2. Collect some recent information on the current performance of the three new companies that were created in 2007. What corporate strategies does each pursue? How well are they currently performing?

Tyco’s changing corporate-level strategies

Tyco, having a multi-business model has experienced success and failures over time. In the 1990s, Tyco experienced success by pursuing unrelated diversification based on consistent strategies of acquisitions to become a dominant competitor and to take advantage of opportunities to improve performance. After each acquisition, Tyco would re-work its business model by improving management, cutting corporate overhead, downsizing, and selling off unprofitable product lines. While this worked well, by 2000, acquisitions were not helping to increase company performance. Critics, then, conveyed inappropriate accounting methods, altering financial reports, and fraud by top management. While the CEO and CFO were forced to resign in 2003, both inherited prison sentences for their actions, the company sank, and the business model was a failure. In 2006, Edward Breen, CEO, decided to pursue a new non-diversified business model hoping to create business value by separating their companies. He, essentially, de-diversified to increase the profitability and provide returns to stockholders. As of 2009, it seems that Breen’s change boosted profitability. However, the recession causes the jury to still be out on Tyco’s overall success.