Herman Miller Inc - the Reinvention and Renewal of an Iconic Manufacturer of Office Furniture - Case Study Example

Name: Tutor: Title: The reinvention and renewal of an iconic manufacturer of office furniture The case study of Herman Miller Inc Institution: Date:   Executive Summary Part 1: Introduction Introduction sets the pace of the report by outlining the objective, scope and action plan of the report. Competition and changing business world compels companies to invest in research and development for new product development. Herman Miller Company grow into a formidable force in the furniture industry. Part 2: Findings There are several factors that made the company to be outstanding and award winning. Some of these strategies have been represented in the first part of the report. Sustainability of the company has been outlined in the manner which the company carried out its functions. The ability of the company to renew and reinvent itself assisted it in sustaining growth. Part 3: Recommendations There are several initiatives that have to be undertaken by the company in order to remain competitive and profitable. Herman Miller Company has to be prepared to deal with emerging issues that may occur during normal operations of the business. Suggestions that can be undertaken have been discussed extensively in the recommendation. Table of Contents Executive Summary 2 Part 1: Introduction 2 Part 2: Findings 2 Part 3: Recommendations 2 Table of Contents 3 1.0 Introduction 5 1.1 Objective 5 1.2 Scope 5 1.3 Action Plan 6 2.0 Findings-Issues in the case 6 2.1 Why the company was an outstanding and award-winning company 6 2.1.1 Strong Cultural Background 6 2.1.2 Outstanding Communication Network 7 2.1.3 Introduction of New Designs 7 2.1.4 Strategic Leadership 8 2.2 Sustainability of its competitive advantage 8 2.2.1 Use of New Technology 8 2.2.1 Improved Supply Chain 9 2.3 Ability to renew and reinvent itself in the face of challenges 10 2.3.1 Improved Designs 10 2.3.2 Hiring of Accomplished Designers 11 2.3.3 Visionary Leaders 11 3.0 Recommendations 12 4.0 Conclusion 17 5.0 References 18 5.0 APPENDICES 19 Appendix 1 19 Appendix 2: 20 1.0 Introduction 1.1 Objective Flexibility, dynamism, globalization, knowledge-based economy and technological advancement are some of the terms that characterize developments in the business world. If a company does not discern changing trends in the market, it is bound to lose its market share and competitive edge. Downsizing and structural changes are some of the strategies that are implemented by companies in an effort to remain profitable in the face of increased competition. Market intelligence department of any company has to collect information about the prevailing trends in the market and any other changes that are anticipated. This report discusses the initiative taken by Herman Miller Inc to ensure it remained competitive in an increasing flexible world. 1.2 Scope This report will discuss the various circumstances that Herman Inc has waged through and what has kept the company moving despite the changing environment. The objective spells out the purpose of this report while the scope provides a framework through which issues raised in this case study will be discussed. The recommendations provide a guideline of leeway that can be used by the company to achieve its objectives. The conclusion summarizes the main ideas discussed in the report. 1.3 Action Plan This report will evaluate the strategies used by Herman Miller Inc and determine their sustainability in a competitive world. Recommendations will be drawn from issues identified in the case. The conclusion recaps the main items. 2.0 Findings-Issues in the case 2.1 Why the company was an outstanding and award-winning company 2.1.1 Strong Cultural Background Herman Miller Inc established itself as an award winning and an outstanding company through the practices and strategies that were used by the company. The company hard a strong culture of treating employees equally which was a foundation laid down by De Pree. All workers were treated with respect and their diversity of gifts and talents were exploited exhaustively. The employees of the company were motivated to work by this fair treatment in the company and thus contributing to positive growth. De Pree treated all workers who possessed potential and special talents. Employees were given an opportunity to become shareholders and thus bestowing to them a sense of ownership. Becoming part of the ownership group of the company made employee have a sense of pride and commitment towards the activities of the company. Hard work and employee engagement were developed to the highest degree that cultivated a culture of cooperation. 2.1.2 Outstanding Communication Network Poor communication within the organization affect the way people relate in any given company. Herman Miller Inc made sure there is excellent rapport between the employees and the management and hence increasing their motivation. Synchronized-synergetic relationship made Herman Miller Company to develop into a ward winning and formidable company. The employees were personally concerned about the welfare of the company. The sense of identity of employee had towards the company made them devote themselves to the operations of the company. Implementation of environmental friendly programs with engagement of employees was a good course towards winning the support of the community and particularly the customers of products from the company. When the leadership of the company was extended to non-family member, the performance of the company increased tremendously (Weiss & Molinaro, 2005, p.55). The company got involved in proactive actions in times of crisis. When the sales dwindled in 2003, the Georgia plant was closely to reduce production costs in a shrinking market. Thirty eight percent of its workforce was laid off. 2.1.3 Introduction of New Designs In Herman Mill Company; simple designs were developed into attractive and interesting outfits that mesmerized customers. De Pree initiated a culture of designing and selling type of furniture which was a reflection of a way of life. The guidance of Dr. Frost of Michigan State University for the Scanlon Plans helped to improve the performance of the company. Expertise applied by the professor was well used within the company. Going public in 1970 helped Herman Miller company to raise additional capital that was used to expand the functions of the company. Growing into the overseas market through the introduction of new design made the company to be recognized internationally and hence leading to its tremendous success. 2.1.4 Strategic Leadership Strategic leadership ensured that Herman Miller remained an all time competitive company. Strategic leadership involves envisioning, anticipating, and maintaining flexibility together with empowering others for the purpose of creating strategic change. In 2000s, the profits of the company grew and impressive rate. Change within the company is inevitable despite the company implementing best strategies to deal with the adaptive world (Nag, Hambrick & Chen, 2007, p.951). The focus on residential market provided the company with the opportunity to expand on its home market. Some the designs that had been designed previously were re-introduced together with new designs. Anticipating the effects of global economic changes made the company to be a prepared mood when economic crisis happened in the world. 2.2 Sustainability of its competitive advantage 2.2.1 Use of New Technology Herman was one among the high tech organization to be recognized for innovation of its products. The company produced a variety of designs that covered many segments of the market and hence sustaining its growth. The introduction of ground breaking designs like the Aeron chair, which was ranked by Business Week as the design of the decade, made the company a leading producer of authentic designs. The sustainability of a company abounds in the kind of leadership that is demonstrated in the company. Every company has to look for ways of making itself better through improvement of the level of production within the organization (Pietersen, 2010, p.40). The use of Scanlon Plan that involved sharing ideas and a structure for sharing increased profitability encouraged focus on the development of the Herman Miller Company. The energy center of the company was very vital in product development since it provided both steam and electric power through burning of waste. This was a very economical and cheap way of producing energy for the company. Environmental initiatives were introduced in Herman Miller Inc by De Pree younger brother when took up the company. The company was a one of the founding members of Tropic Forest Foundation that was composed of furniture manufacturers. Engagement in environmental sustainable activities helped the company in attaining a competitive edge over the others and appealing for support from the society (Hamel, 2002). The ergonomic principles assisted the company in producing environmental friendly products that won many accolades in the business world. 2.2.1 Improved Supply Chain Discontinuing the use of rosewood which was an endangered species made the company more efficient. The various environmental initiatives implemented by the company made it to be appealing to many people. The company used sustainable sources like cherry and walnut in production of its design of furniture. The supply chain used by the company was well developed as had a network of many retailers which enhanced the supply of the company’s products. The network of retailers was put up to focus on small business as well as providing a 3D design program to mid-size customers. Increased marketing activities were undertaken to focus on mid-size and small businesses. A web site that advertised the products of the company was designed to boost the marketability of the company’s products. It can be seen that there was a progressive movement in all the strategies implemented by Herman Miller Company. The company became one of the early members of Green Building Council in the US. In the 1990s, the company got an award from National Wildlife Federation and Fortune magazine for kits effort in environmental conservation. All along there was an effort to improve the status quo in order to attain the next level of production. 2.3 Ability to renew and reinvent itself in the face of challenges 2.3.1 Improved Designs The traditional style bedroom suite designs gave the company’s product a formidable start into the designs of chairs. The design produced by Rhodes gave the company an identity into the furniture market. As described by De Pree, the design had to have life or a reflection of living. De Pree what he wanted, and he directed the company to new growth. Policies and practices within the company helped it to renew and reinvent itself. The company was able to renew and reinvent itself even after the aftermath of the economic meltdown that was experienced in most parts of the world. Subsequently Herman Miller came up with an Environmental Quality Action Team that incorporated as many employees as possible. This shows that leaders that are objective and visionary can take the performance of the company to greater heights. The company stopped using rosewood that was an endangered species. 2.3.2 Hiring of Accomplished Designers The hiring of capable designers through the life magazine made the company produce award winning designs like that Charles Earnes designs. A variety of designers employed by the company by provided the essential guidance for formidable designs. The featuring of the designs in modern art museum of New York gave the company’s products marketability that it essentially needed. Some of these designs were adopted by the museum as part of its permanent collection. Herman Miller was in the habit of producing and restructuring its designs in order to meet changing needs of clients (Traverso, 2000, p78). Herman Miller produced furniture designs for both the workplace and home and, therefore, covering all the essential markets. This trend sustained its growth. Herman Miller was able to penetrate the science market in 1976. The company worked closely with institutions of higher learning particularly Michigan University in development of some of its designs. The company encouraged a culture of gathering ideas from employees and using them to foster restructuring of the facility of production in order to cater for growing needs of customers. 2.3.3 Visionary Leaders The ascending to power of a non-family member provided an opportunity for the company to be led by visionary leaders who had the experience and expertise to deliver on the objectives of the company. Style and fashion are very important in the manufacturing companies. Disruptive, competitive, and economic forces will definitely play a role in changing the approach that the company will have in its future endeavor to meet the needs of the consumers. The business world is congested with dynamic forces that need constant changes and invention in order to cope with the competition that results from these forces (Barritt & Alderman, 2004, p.219). Continuous improvement and innovation is required to make the company to remain relevant in all times. Looking at the previous implemented strategies of Herman Miller, it will be realized that the company was prepared for changes in the competitive global world. Codification of Herman Miller practiced organizational practice, and placing them on a Web site page which has been given the title “What We Believe” strengthens the building of a culture of togetherness among the organization members. A strong culture within the organization builds a spirit of identification that encourages high morale in performance. The organizational beliefs were meant to be ways of uniting employees. To have common beliefs that are shared throughout the organization is the best thing towards achieving a transformational culture that is nurtured by visionary leadership. 3.0 Recommendations The company has to understand the business cycles that affect market trends. The recent economic meltdown caught many companies unaware. Some collapsed completely while others were bailed out of the crisis through government intervention. Workers were laid off and production costs were tremendously cut down. The economic crisis demonstrated the vulnerability of business enterprises to changing trends in the market. Even when the processes used in the company are thought to be efficient, there is need to seek ways of improving them. The company can reengineer previous processes or improve on the current processes. Total management quality has to be maintained throughout the company in order to make sure that there is high standard of production. The strategies that have made Herman Miller an award winning and outstanding company are not guaranteed to continue making the company remain competitive in its design of products. As competitors seek to improve their methods of production, the company should also seek ways of increased efficiency through value added services and products. The strategies used should be adaptive and flexible. The members of the organization have to be full aware of the impeding change so as to avoid resistance. Internal control systems should check the efficiency of production to see whether there is need for improvement in the processes. Product passes through a life cycle until when it is withdrawn from the market (Sääksvuori & Immonen, 2008, p.208). If the business does not adopt new processes it will end up being unprofitable owing to loss of market share. The practices and values held by members of organization of Herman Miller Company will determine whether the company will remain to be outstanding or if market changes will force disruption of normal operations of the company. The company has to anticipate and prepare of the change. The organizational culture of the organization should not be rigid. Flexibility has to be encouraged within the internal operations of the company. The structure of the company has to encourage quick decision making process in case of any crisis facing the company. Teamwork and shared beliefs unified the working spirit among the members of organization of Herman Miller Company. The five forces suggested by Porter can be very important to the development of the new strategies of the company (Barritt & Alderman, 2004, p.218). Herman Miller Company has to reduce the power of bargaining of customers through increased customer loyalty and partnering. Value added and incentives have to be increased in order to attract more customers who can be retained due to high quality goods. The company has also to reduce the risk of substitutes products by protecting the identity of is production through patents and trademarks (Mulcaster, 2009, p.69). Societal trends keep on changing from time to time and thus it is important for the company to carry out market intelligence to collect the latest development in the trends. Societal influence occasions opportunities and threats that have to be analyzed intensely by the business. For instance, increased societal interest in fitness and health has created business opportunities nutritional supplements and home fitness industries. Economic and disruptive technology can catch the company off-guard if it is not well prepared to implement change. Economic meltdown that let to the company to experience such huge losses was occasioned by the bubbles in the real estate market that commenced in the United States. The company has to design ways of reducing the bargaining power of suppliers. The threat of new entrants has to be dealt with through improvement of strategies that are used by the company. New entrants into the market will most likely destabilize the operation of the business. Five model proposed by Michael Porter explains the various environments that have to be studied keenly before an organization implements any strategy. Scales of operation efficiency has to be improved tremendously. Competitive rivalry has to be reduced through avoiding price competition (Kohlbacher, 2010, p.191). The products of the company have to be distinguished from the rivals through quality and trade marks. Profitable segments within the market should be chosen for the company to concentrate on. The company has to know how to deal with increased competition. The strategies being applied by the company have to be adjusted in order to keep pace with the changing business environment. Herman Miller Company has to engage research and development center in looking ways that improve the operations of the company. These are the broad forces that affect the running of any business enterprise. Therefore, it is important for the business to learn how to adapt to different forces within the external environment. Changes have to be implemented in order to keep pace with the changing needs of the consumers. Keeping ahead of competitors in terms of innovation and new product development helps the company to be relevant and profitable throughout. Technological advancement can render the type of technology in the company to be obsolete. The company has to adopt some of the latest technology in its production technology in order to command respect among its customers (Johnson, Scholes & Whittington, 2008). Efficiency and effectiveness can only be realized where means of production avoid waste and emphasize on value added functions. Methods of productions have to be improved from time to time. Herman Miller Company has emerged from periods that are challenging through the use of transformational processes and products. Some of the designs produced by the company were exceptional to great degree. The company was able achieve many accolades due to its ability to anticipate change and be responsive. Environment uncertainty and external stakeholders affect the decisions that are made within the company. The current strategies that are being used by the company can only be retained if they proof to be relevant in future. Outlining the basic foundation that forms the culture of the company is fundamental towards building a common belief within the members of the organization. Policies and strategies and procedures can assist strategy execution. Providing procedures and policies guidelines support the strategy that is formed by the company (Gladwell, 2000). The organizational structure has to support the implementation of strategies that have been adopted by the company. Disruptive technologies in many times have resulted into creation of a competitive advantage (Koh & Maguire, 2009, p.112). Sticking to one pattern of production give competitors the opportunity to copy or imitate it and hence occasion stiff competition in the market. Competitors will always investigate to know what their rivals are doing. Consequently it would be naïve for Herman Miller Company to stick to the prevailing strategies for along time. Beliefs and values of the company can be retained as long as they inspire and create unity in the members of the organization (Afuah, 2009, p.31). On the other hand, strategies have to be reviewed from time to time to determine whether they will play a role in making the company realize its organizational goals and objectives. Herman Miller Company has to press on and look for ways of making it remain ahead of its competitors. The market environment is not static and that is way the company has to focus on improving methods of production. The company had to change some of its policies and strategies in order to deal with the effects of economic meltdown. The long-held tradition of lifelong employment had to be done away with. One of the plant of the company located in Georgia had to be closely completely. This disturbance was caused by economic meltdown and state of security in America. New innovations and competition will not stop being introduced in the market, and that is why the company has to review its strategies from time to time. The business model adopted by the company has to be adjusted with the prevailing trends in the market (Heneman, 2002, p.65). Just like in the 2000s, it is not guaranteed that the status quo in the market will remain the same. Uncertainty compels companies to always have contingencies and provisions. Mostly important is to remain vigilant and updated on the state of the market and what the prevailing needs of customers are. There are so many aspects that affect the operations of the business regardless of the environment. Some of the forces that affect the company include socio-cultural forces, global economic forces, global technological forces, global legal forces and global political forces. 4.0 Conclusion Business environment are unpredictable and many companies falter to their own downfall when it matters so much. Herman Miller demonstrates a case of a company that rode periods of storm to emerge as a formidable company. The strategies adopted by the company were transformational and resulted in products that were exceptional. However, this does not mean that strategies being applied at the company will provide competitive advantage perpetually. There is need for continuous improvement in order to come up with processes that cannot be easily copied by competitors. There is no strategy that can be timeless owing to the dynamic economic environment that is witnessed in the changing times. Herman Miller Inc has to seek continuous improvement of its processes and products in order stay ahead of competitors. The company has to take advantage of disruptive technology when they come along. 5.0 References Barritt, C. & Alderman, L.F 2004, Creating a Reusable Learning Objects Strategy: Leveraging Information and Learning in a Knowledge Economy, John Wiley & Sons, New Jersey. Sääksvuori, A. & Immonen, A 2008, Product Lifecycle Management, Springer, New Mexico. Afuah, A 2009, Strategic Innovation: New Game Strategies for Competitive Advantage, Taylor & Francis, New York. Koh, S.C.H. & Maguire, S 2009, Information and Communication Technologies Management in Turbulent Business Environments, Idea Group Inc (IGI), Boston. Heneman, R. L 2002, Strategic Reward Management: Design, Implementation, and Evaluation, IAP, London. Weiss, D.S. & Molinaro, V 2005, The Leadership Gap: Building Leadership Capacity for Competitive Advantage, John Wiley & Sons, New York. Kohlbacher , F 2010, The Silver Market Phenomenon: Marketing and Innovation in the Aging Society, Springer, New Mexico. Pietersen, W 2010, Strategic Learning: How to Be Smarter Than Your Competition and Turn Key Insights Into Competitive Advantage, John Wiley & Sons, New Jersey. Nag, R.; Hambrick, D. C. & Chen, M.-J 2007, What is strategic management, really? Inductive derivation of a consensus definition of the field. Strategic Management Journal, 28 (9); 935–955. Johnson, G, Scholes, K, & Whittington, R 2008, Exploring Corporate Strategy, 8th Edition, FT Prentice Hall, Essex. Traverso, D 2000, Outsmarting Goliath, Bloomberg Press, Princeton. Mulcaster, W.R 2009, Three Strategic Frameworks, Business Strategy Series, 10(1), 68 – 75. Hamel, G 2002, Leading the Revolution, Plume (Penguin Books), New York. Gladwell, M., 2000, The Tipping Point, Little Brown, New York. 5.0 APPENDICES Appendix 1 Herman Miller Inc. Performance Trend Appendix 2: Financial Highlights for the Last 12 months Read More