Herman Miller Case Study

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So by contributing every ones ideas to the company there is a great chance that excellent ideas will come out. Employees in the company will also feel important when they are involved in almost all the important decisions made for the business. There is chance that employees will pay more attention and work with loyalty. In 2009 their was a recession and sales dropped by 19%.So, management handled the situation well by taking 10% pay cut for all top executive officers in January and in March they took another 10% pay cut for all the salaried workers but an year after an year in June 2010 most employees pay cuts were cancelled .

(5)https://www.allfreepapers.com/Business/Herman-Miller-Case-Analysis/79981.html

WEAKNESS

Poor geographic diversity

Although after the expansion of the business in England, Europe, Australia, Canada, Africa, Near east, Japan, south and central America through dealership and other strategies it is over dependent on the US office furniture industry. In 2008 only 15% of the revenue and 10% of the profit was from non North American countries (Herman Millar case study). So, this justifies that most of the revenue and profits earned by the company are from US. In 2007-09 us economy was greatly affected by recession and it is still in the recovery phase. The company also suffered from the recession badly.

If the company had its own plants outside us in other countries, the recession would have not affected the company badly. So, over depending on particular geography for profits and revenues will put the company’s financial performance on risk6.

(6)Herman Miller, Inc. SWOT Analysis. (2012). Herman Miller SWOT Analysis, 1-8.

High price for the products

Herman Miller is famous for its Quality and it also takes care that the product is eco-friendly but in this process it is not making sure that the price of the product is not controlled. One of the weakness of Herman Miller is the price of the product7. If the prices are high it cannot attract present middle class and lower middle class people. In many countries the population of middle and lower middle class is high. So, its better to expand its designs and design to attract new customers.

(7)

Excess cash reserves

As Mr Walton said “The good stuff about cash is that it is strong plan B.The negative to it is that it is an underperforming assert”8.If we look at the balance sheet Herman miller has too much of cash reserve which tells us that company is not making sure that the cash is completely used. Instead of keeping the excess cash it can invest that cash to get best possible returns on them.

(8)http://www.theglobeandmail.com/report-on-business/small-business/sb-money/cash-flow/got-excess-cash-make-the-most-of-it/article4256462/

Opportunities

Financial leverage

If a company has financial leverage like Herman Millers it can-

- Expand its business in other locations. This is the best option to do only when the following needs are fulfilled

- The company should make sure that it is maintaining profit and there is consistent growth seen in past few years.

- The new location chosen should be best for the business, That is the location should suit for the type of the business you want to start.

Herman millers can fulfill both the needs so it can expand its business to a new location where there is an opportunity to establish its own market.

- Company can sell complimentary products and services to attract more customers.

- Take control over raw material so that it can control pricing. By controlling our prices we have a competitive advantage over the rivals

- Target other markets-Now most of the Herman Miller focus on office and home environments, with more cash in hand it can target on other markets like hospitals. By doing so it can gain more profits as it is investing in its own field but expanding its market.

- Expand globally-80% of the companies revenue is from Us so in future if the business in US slows down, Herman Miller should have an alternate option from where he can earn revenue and profits. So expanding his business in other countries will help him to deal those kind of situations

So, finally Herman Miller can do all the above as it is financially leveraged and can be more successful9.

(9)http://www.entrepreneur.com/article/70660

Innovation

Looking at the balance sheet one can say that Herman Miller has spent a considerable amount of cash on research and development. Generally in workplace now a day’s employees prefer to use Ergonomic chairs as they spend a large part of their days behind the desks. The saying that “if you are more comfortable in your chair you are more productive”.so, its important for the companies to select the best ergonomic furnishing for their office space.

Harman Millar’s ergonomic chair, which is called Aeron was successful. Now with the growing demand the company can invest in Research more and develop new models of that kind and stay in the market giving a tough competition for the competetors in long-term.

Threats

Substitute products

Now a days there is so much of competition in every sector. So people can easily switch to any another product or service if they don’t like the existing service. Because of this Herman Miller may not be able to increase the cost of the products in a required level. In short tem the threat is not so much as the company is in a good beneficial phase but in long run if you don’t design the products with moderate costs the competitor company might take away the companies customers10.

(10) http://www.wikiwealth.com/swot-threat:herman-miller:substitute-products

Bad Economy

Bad Economy will affect the revenues and profits of the company badly. The company has suffered before with the Bad economy and has implemented some short term plans