Examining a Business failure

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Examining a Business Failure

The organizational behavior studies the relationship between the employee and the employer in an organization. This paper will examine business failures in large corporations such as Tyco, Enron and Chrysler/Daimler-Benz. Therefore, I will be determining the organizational behavior theories could have prevented the business failure. The organizational behavior principles are based on an ethical behavior of an organization including the senior management and the board of Directors. The ethics help to build the transparent communication and interaction within organization. Nowadays, the organizational behavior is determined by global management, information technology, customer focus, workforce diversity, and business ethics. Understanding the organizational behavior will help businesses to predict the possible failures or to correct the current danger within organization.

Failure of Business Ethics

The company’s mission, vision and values are important and must be implemented therefore by board of Directors, senior management, employees and stakeholders. Creating the code of conduct of ethics is effective, however, needs to be implemented by senior management to the highest standards to be example for lower levels. The senior management is the role model for the entire company when committed to ethical behavior with transparency and honesty to business practices. This is what Enron, Tyco and other large failed corporations have missed and could have predicted with clear communication and internal or external auditing procedures. Enron’s case involves unethical practices that caused thousands of Enron investors and employees to loose their savings and jobs. In 2002, after the collapse of Enron, the Sarbanes-Oxley Act (SOX) was created in to attempt to protect shareholders and the corporation by improving the accuracy and reliability of corporate disclosures (Auditing Journal, 2006.)

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SOX require a financial report for internal control in order to protect and enhance standards for corporate accountability, responsibility and financial reporting transparency.

Failure of Leadership Effectiveness

Tyco case shows that lack of communication and accuracy of judgment within the board of Directors encouraged the fraudulent practice of the chief Kozlowski. If the board of Directors was more committed within the organization, they should have question where is the problem coming from and how to resolve it and take a closer look at the financial reports or to address to the financial auditing organizations. Tyco’s board of Directors was ...

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