Tycos
Vodopia Caitlin Chapter 10 Closing Case 1. Tycos multibusiness model has changed a lot over time. At first, the strategy was diversification. Tyco acquired businesses in other industries to become the dominant competitor in these new industries. Then, Tyco decided to target low-tech products that commanded a large market share but had underperformed their competitors. Tyco would acquire these businesses if it passed an audit, and would transform them into profitable business units under the Tyco name. But as time passed, this business model started failing, and even though the company was growing, profitability was falling. To turn the business around, a new CEO started restructuring the company. Tyco formed three separate companies each given the freedom to pursue the strategy it felt would be most successful for its specific industry. This gave Tyco International, Tyco Electronics, and Covidien the opportunity to focus on its core business and rebuild its distinctive competencies. Today, 2. Tyco International is the largest player in a highly fragmented group of smaller competitors. Although this gives the firm control of costs, Tyco International faced a net loss of over a billion dollars in 2009. http://www.wikinvest.com/stock/Tyco_International_%28TYC%29 Tyco Electronics is pursuing a 50:50 merger with Indian company Raychem RPG Ltd. (RRL). Tyco is going to integrate its energy business into RRL, and this will allow RRL to diversify its product offerings and should propel them into the continuous growth and profitability they have been having in the Indian market. http://www.thehindu.com/business/Industry/article801174.ece Covidien operates in three business segments: medical devices, pharmaceuticals and medical supplies. In the third quarter of 2010, Covidien posted 2 percent increase in net sales and net income of $364 million.