Outstanding and Award Winning Nature of Herman Miller - Case Study Example

Heading: Business Integration Your name: Course name: Professors’ name: Date Executive summary This report concerns Herman Miller, an award-wining and outstanding company whose origin that originated from US. Within a few years of establishment, the company expanded its operations to the European markets, Australia, Japan, and others countries in the globe. The company has a distinctive and award-winning nature that results from a well-designed strategic plan. Its ability to reinvent and renew, in spite of the past challenges, is due to the sustainable competitive advantage. Herman Miller’s competitive advantage results from successful marketing strategies, effective production and operations, strong organizational value and belief system, excellent financial management, and efficient human resource management. Therefore, the report seeks to explore reasons for the company’s outstanding and award winning nature, sustainable competitive advantage, and ability to reinvest and renew. Table of contents Executive summary 2 Introduction 4 Reasons for its outstanding and award winning nature 4 Sustainability of Herman Miller’s competitive advantage 8 Ability to reinvent and renew itself as future challenges appear 13 Conclusion 14 Recommendations 15 References 16 Introduction Herman Miller is a highly performing manufacturing company whose origin is in United States. It later expanded its operations to Europe, Australia, Japan, and other parts of the world (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Its award-winning and outstanding nature results from the appropriate strategic plan and development (Hill & Jones 2009, pp. 1-20). Moreover, the company has a sustainable competitive advantage resulting from its organizational values and beliefs, effective human resource management, favorable marketing strategies, efficient financial management, and sustainable productions and operations. It is also clear that the firm has an ability for reinvention and renewal evident in its past performances and strategies. Reasons for its outstanding and award winning nature One of the reasons to become an award winning and ordinary firm was its innovativeness. This means that the company had an ability to create and invent new designs and ideas regarding its business. These inventions and new creations mostly originate from the external designers who present their ideas to the company for consideration. For instance, in 1930s, a New York based designer called Gilbert Rhode, approached De Pree, and requested a chance to create a bedroom design worth $1,000, an idea to which De Pree negatively reacted. Later, when the designer proposed another mode of payment, 3% royalty, the president agreed. The designs by Rhode boosted the company’s performance, as by 1942, it manufactured its first office chairs, which was the Executive Office Group. In fact, Rhode was instrumental in the company’s change of business line by advising the firm to move from traditional bedroom suites to office furniture that was suitable to clients’ way of life. This implies that Herman Miller’s success and uniqueness resulted in the ability to offer products that meet customer needs (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Additionally, Hitt, Ireland and Hoskisson (2011, pp. 184-195) show that Herman Miller’ uniqueness resulted from the employment of competent design leaders that would direct all furniture designs in the company. This move by the firm’s president was crucial in that it led to the production of well-designed products that attracted and retained many customers in the company. For example, upon Rhode’s death, De Pree hired new design director, Charles Eames whose designs featured in the New York’s Museum of Modern Art. Notably, the Eames’ designs are still in the museum’s long-lasting compilation. Hitt, Ireland and Hoskisson (2011, pp. 184-195) say that the president’s ability to listen to advise and follow guidance by experts also resulted in the business’s high performance. In 1950s, the firm, with the help of Dr. Carl Frost, implemented a Scanlon Plan. This move was influential in promoting justice and equity among company workers. This was critical in that it indicated that the company cared for employees’ welfare, in terms of justice and equity. Besides, the execution of the plan was beneficial in that advocated for use of a particular structure during the distribution of increased profitability, as well as using committees in the sharing of ideas necessary for performance improvements. Moreover, the association between the firm and Frost, which lasted for almost four decades, helped a lot in the effectiveness of its operations. Further, Hitt, Ireland and Hoskisson (2011, pp. 184-195) maintain that Herman Miller’s prosperity and popularity resulted from its decision to expand the business overseas. For instance, it 1950s, the company started its initial forays in across the borders by introducing its furniture in the European markets. This was beneficial in that it increased its publicity and popularity in the market. The move also increased its sales; hence, high profits and performance. Besides, establishment of subsidiaries in Europe and Scandinavian countries also increased the company’s success. To ensure this, the company put in place marketing and sales responsibilities in the aforementioned regions. Additionally, the company had developed dealers in Australia, Africa, Japan, Europe, Central and South America, and Near East. The company also expanded its business to the health and science market, and in 1976, the firm manufactured its first Ergon chair based on the ergonomic principles and scientific observations. Moreover, the establishment of the Facility Management Institute also facilitated the company’s success (Hitt, Ireland and Hoskisson 2011, pp. 184-195). What is more, Hitt, Ireland and Hoskisson (2011, pp. 184-195) note that the openness to changes was also instrumental in Herman Miller’s success. This implies that the company had to change the Scanlon Plan whose initial intention was to cater for the production labor force. Therefore, there was need to establish a new organizational structure consisting of caucuses, work teams, and councils. The firm’s involvement of employees’ in decision-making process regarding the adoption of the new plan also played a key role in its prosperity. In the new plan, workers became shareholders, a move that boosted their performance. In addition, Hitt, Ireland and Hoskisson (2011, pp. 184-195) assert that the use of sustainable sources of manufacturing furniture also enhanced the firm’s effectiveness. For instance, the organization ceased to use endangered rosewood in the popular ottoman and lounge chair, and alternatively used walnut and cherry. The decision to use sustainable sources in its productions was beneficial to the company because it was a way of conserving the environment; hence, boosting its image and reputation. In 1994, the company emphasized its environmental concerns by starting the US Green Building Council. Besides, the establishment of Environmental Quality Action Team by Herman Miller helped in the coordination of environmental policies internationally, and involved many workers (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Another establishment of the company in a bid to improve its performance was the 1994’s launch of Herman Miller for the Home. This initiative’s aim was to emphasize on residential market. In fact, the initiative allowed reintroduction of its past designs, and several marketing strategies helped to capture small and medium businesses (Lamb 2012, pp.1-20). It also involved 180 retailers to handle small businesses. It also established 3D computer design for medium clients, and initiated digital order entry to link suppliers, customers, and distributors. This strategy’s objective was to enhance accuracy and to speed up orders. Despite the fact that it is not a high technology firm, like Cisco, Microsoft, and Google, Herman Miller was among the only four listed non-high technology firms in the Most Innovative Companies; Most Admired companies; and 100 Best Companies to Work For, awards. Herman Miller’s uniqueness and award winning nature resulted from its initiative in starting the Tropical Forest Foundation. Another way in which the company became award winning and outstanding was through its establishment of Leadership in Energy and Environmental Design (LEED) principles. This initiative arose from the company’s desire to participate in the conservation of the environment. Consequently, it won itself many awards from the National Wildlife Federation and the fortune magazine in 1990s (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Additionally, the firm’s inventive nature led him into winning numerous awards and receiving recognitions. For instance, when it introduced new designs in 1990s, especially the Aeron chair in 1994, the New York Museum of Art’s lasting design Collection added its products in the collections. In fact, in 1999, the new chair design, Aeron chair won the company another award of Design of the Decade from the industrial Designers of America and Business Week magazine. In 2000s, the company began with remarkably high sales and profits between 2000 and 2001. Once again, the company, through Eames plywood chair, won a Design of the Century award by the TIME magazine. This happened after the offer of an Employee Stock Option Plan (ESOP) (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Sustainability of Herman Miller’s competitive advantage To start with, Herman Miller’s sustainable competitive advantage is evident in its organizational values and beliefs. In 2010, the company codified its values and published them on its website page called ‘What We Believe’ (Hitt, Ireland & Hoskisson 2011, pp. 184-195). One of the main objectives of these values was to foster unity among employees; strong and healthy relationships among workers; and effective company contribution to communities. The first value focused on curiosity and exploration, which were the greatest strengths of the company. The value lay behind the company’s study-motivated design. They encouraged curiosity among employees through respect, taking risks, and forgiveness. The value asserted that lack of mistakes indicates lack of exploration, which is detrimental to a firm’s performance. Therefore, Herman Miller upheld the values of curiosity and exploration as one of maintaining its competitive advantage (Hoskisson, Hitt & Ireland 2008, pp. 41-42). Engagement was the second value that Herman Miller maintains in order to make keep its competitive advantage sustainable (Hitt, Ireland & Hoskisson 2011, pp. 184-195). This implies that workers and management ought to be actively dedicated to the Herman Miller community by sharing its risks and successes. This was possible through stock ownership, owning behavior, problems, and solutions. It also advocated for taking responsibility, and decision to move forward. Therefore, the company’s competitive advantage was sustainable since it facilitated care for community and making a difference in it (Thompson 2010, 65-68). Value for performance was another indicator of Herman Miller’s sustainable competitive advantage. According to the firm, Hitt, Ireland and Hoskisson (2011, pp. 184-195) notes that performance is indispensable for effective leadership. This implies that the firm intended to be a leader; hence, its dedication to improve its performance to the greatest levels in comparison to its competitors. It also recognized that performance is inevitable for every firm that wants to make a difference in the market. Therefore, the value encourages all employees in the firm to perform to the highest levels to create a competitive advantage; enrich their lives; please their clients; and create actual value for the shareholders (Kerzner 2005, pp.145-150). Herman Miller’s sustainable competitive advantage results from its value for inclusiveness. To ensure success, a company ought to include all human talents and capacity the community provides. The firm values a whole person and his talents and capabilities. Besides, there was no discrimination against age, color, gender, educational background, sexual orientation, height, weight, family status, and skill levels. In fact, the company maintained that it goes beyond merely tolerating and understanding individual’s qualities that make it distinctive, and unites its employees (Hitt, Ireland & Hoskisson 2011, pp. 184-195). In terms of design, Hitt, Ireland and Hoskisson (2011, pp. 184-195) says that the company’s view on design is how it looks at the word, and how it functions. Besides, it termed it as a technique of solving a problem; hence, the need for study, thought, listening, starting over, and humility. According to the company, design can result in timeless furniture, memorable occasions, or fun events. It also asserted that design is beyond just what an object looks or works. What is more, the company’s sustainable competitive advantage was due to its high regard for foundations. This implies that the firm values and respects its past without letting it control its present operations. This involves the people, stories, and experiences regarding Herman Miller that helps in building a distinctive foundation. Notably, the firm’s past facilitates knowledge on design, leadership, risk-taking, human compassion, collaboration, and research. Foundation led to a common language, understanding, and a set of beliefs. The firm’s value for its rich legacy also created a sustainable competitive advantage. Herman Miller’s sustainable competitive advantage was due to its objective to build and contribute to a better world. This was possible through pursuance of environmental wisdom and sustainability. Environmental advocacy also made a part of its responsibility and heritage for the next generations. Besides, its corporate social responsibility also advocated for contribution to the community in form of money and time (Hill 2008, pp. 8-15). These actions helped raise employees’ spirits and spirits of the communities; hence, making it competitive. Herman Miller also builds its sustainable competitive advantage through perpetuating transparency. This was possible by allowing people see how the firm makes and owns them. Though it upheld confidentiality, the company advocated for transparency as a key to integrity and trust among employees (Hitt, Ireland and Hoskisson 2011, pp. 184-195). In terms of management, the company had a competent management made up of CEO and other four executives, as well as Board of Directors at the top leadership. Board of directors must have an equity interest in the firm. Besides, the company’s management upheld employees working as teams to ensure excellent performance. These teams’ bases were on product development, after which members join various projects from any level of the firm. Additionally, the company facilitated leadership sharing, and encouraged contribution of ideas by all employees. Moreover, employees’ empowerment was crucial in creating a sustainable competitive advantage (Hitt & Hoskisson 2010, pp. 1-20). What is more, its employees worked for 16 paid hours in charitable institutions, and have goals for their volunteer activities (Hitt, Ireland & Hoskisson 2011, pp. 184-195). In marketing, the firm uses appropriate marketing and promotional strategies that facilitated acquisition and retention of as many customers as possible. The firm sold its products globally through wholly owned subsidiaries in different countries including France, Canada, Germany, Italy, Mexico, Japan, Australia, India, china, Singapore, and Netherlands. It also spread its branches to more than 100 countries and offered its products via autonomous dealerships. Additionally, it employs green marketing in selling its products. It also used cooperative advertising with particular partners to market its products (Lamb 2012, pp. 1-20). The firm develops it sustainable competitive advantage is from its operations and production. This is because its positioning is in terms of manufacturing operations, which are in various parts of the America and other countries. It has a unique system of lean production techniques called Herman Miller Performance System (HMPS) (Hitt, Ireland & Hoskisson 2011, pp. 184-195). This way, the firm maintained cost savings and efficiencies through minimization of inventory quantity on hand via a ‘just in time’ process. It also bought components and materials only necessary for satisfying demand. Most of its products’ lead-time was between 10 and 20 days; hence, a high inventory turnover rate. It also differentiated its operations by outsourcing component parts from various suppliers; hence, increasing its cost structure’s nature whilst maintaining proprietary power on its manufacturing processes. More so, Hitt, Ireland and Hoskisson (2011, pp. 184-195) notes that the company had a Greenhouse in Michigan, in line with its values and beliefs, which were environmentally friendly. Herman Miller also valued its human resource management unit because it was its backbone. Workers got base pay, and take part in a profit sharing plan in which they obtained stock based on firm’s yearly financial status. It is worth noting that the company based its profit sharing on corporate performance. It also provided an Employee Stock Purchase Plan (ESPP) via payroll deductions of 15% reduction from the market value (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Other benefits that employees enjoyed, and made the company unique include workers’ product purchase reductions; and on-site services like cafeterias, massage therapies, health services, personal trainers, fitness classes, and fitness centers. Besides, there were concierge services like directions, greeting cards, dry cleaning, or take-away-meals, which enabled workers to balance their work and home lives; flexible schedules, such as, compressed workweek, job sharing, and telecommunication alternatives; and 100% tuition compensation (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Other benefits that make the company unique include that each family with own child or an adopted one obtains a company’s rocking chair. Second, each worker retiring after 25 years of work in the company and was 55 years old obtained an Eames lounge chair. Third, it also had an employee retreat for events like celebrations and retirement parties (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Ability to reinvent and renew itself as future challenges appear Herman Miller Company had an ability to reinvent and renew itself even amid emerging challenges. This is because of its well-designed strategies, beliefs, values, and competitive advantage. To begin with, the company had a focus on development and research in order to improve its products and the overall performance. Such a business had the ability to reinvent and renew regardless of the hard situation. For instance, during the worst economic periods in the world, the company could operate by making appropriate decisions that made it survive. This also happened during the dot-com downturn, whereby Herman Miller allocated millions of dollars to revive and keep its operations running, while maintaining its profits (Hitt, Ireland and Hoskisson 2011, pp. 184-195). In addition, the firm’s ability to reinvest and renew was possible through its empowerment of employees. This is critical in motivating the workers to participate actively in the growth of the company via contributing ideas, and making decisions regarding the company’s affairs. This helps a company to reinvent and renew because of the availability of numerous and diverse ideas and suggestions from which to choose. What is more, Hitt, Ireland and Hoskisson (2011, pp. 184-195) argues that the company’s ability to renew and reinvest was evident in the fact that it can reintroduce its traditional furniture and modify them to fit the current market segments. For instance, to deal with dot.com downturn, the firm consulted with experts on way to go, who advised on creating designs that comply with people’s ways of life. This helped a great deal in changing the firm’s business line from bedroom furniture to office furniture. For instance, in 1994, the company launched the Herman Miller for the Home to handle the residential market. Here, the firm got chance to reintroduce some of its present, classic designs ranging from 1940s, 1950s, and 1960s alongside the latest designs. This way, it managed to meet all customer needs and create a competitive advantage. Besides, Hitt, Ireland and Hoskisson (2011, pp. 184-195) demonstrates that the company modified its marketing strategies to suit the present technological and environmental changes. For example, it established 180 retailers to handle small firms, and introduced a 3-Dimensional computer design program for its medium consumers. Moreover, it made its order entries digitally to ensure speedy services and enhanced accuracy. Moreover, to ensure the firm’s survival during the economic crisis in the US, the then president, Volkema, developed a new social contract, and resized its taskforce by retaining only those whose talents and ablates met consumers’ needs. It is also during this time that the company redesigned benefits like 401K plans and educational reimbursement to be transferable. In the 2009 recession, the company still managed to recover by readjusting its strategies. It was after this challenge that the company decided to codify its long practiced firm’s values and beliefs and published them on its website. Here, the company expressed its value for design, foundations, inclusiveness, transparency, performance, a better world, engagement, and curiosity and exploration. These values and beliefs are instrumental in guiding the firm’s decisions and operations, especially during challenging economic times (Hitt, Ireland & Hoskisson 2011, pp. 184-195). Conclusion Herman Miller is a successful company despite tough economic times in the course of its operations. Its distinctive and award-winning nature results from the firm’s appropriate strategic planning and development (Hill 2007, pp. 40-56). It has a series of highly competent executive officers whose right and wrong decisions propelled the firm to its present status. The company has numerous awards due to its outstanding performance, especially in terms of designs. It also has a sustainable competitive advantage due to its appropriate human resource management, financial management, effective marketing strategies; appropriate productions and operations, and practiced organizational values. Therefore, the firm has a great potential to reinvent and renew in spite of present and future adversities because it managed to recover from the past, and that it has a flexible strategic plan that accommodates changes. Recommendations To ensure greater success and ability to handle its challenges, the firm should readjust its strategies, establish manageable subsidiaries, and offer adequate training for its employees. It should also employ competent executive officers that can forecast firm’s future and facilitate creation and implementation of appropriate strategies. It should also further create a competitive advantage to beat its competitors, and meet clients’ needs. References Hill, CWL 2008, Strategic management: an integrated approach, Houghton Mifflin, Boston. Pp. 8-15. Hill, R 2007, Management Development: Perspectives from Research and Practice, Routledge, New York. Pp. 40-55. Hill, CWL & Jones, GR 2009, Strategic Management Theory: An Integrated Approach, South-Western Pub, UK. Pp. 1-20. Hitt, MC, Ireland, RD & Hoskisson, RE 2011, Strategic Management Competitiveness & Globalization, Cengage Learning, Mason, OH. Pp. 184-195. Hitt, M & Hoskisson, R 2010, Strategic Management: Concepts, South-Western College Pub, Cincinnati. Pp. 1-20. Kerzner, H 2005, Using the project management maturity model strategic planning for project management, John Wiley & Sons, Hoboken, N.J. Pp. 145-150. Lamb, C 2012, Essentials of marketing, South-Western Cengage Learning, Mason, Ohio. Pp.1-20 Hoskisson, RE, Hitt, MA & Ireland, RD 2008, Competing for advantage, Thomson/South-Western, Mason, OH. Pp. 41-42. Thompson, J 2010, Strategic management: awareness & change, South-Western Cengage Learning, Andover. Pp. 65-68. Read More