Herman Miller Inc Essay

From the headquarters of Herman Miller Inc. , Curt Pullen talks amid the unmistakable pounding sounds and commotion associated with a construction work site about his company’s plan to rebound from the recession. Pullen, the firm’s executive vice president and president of North America, says the workers are installing new lower-height Herman Miller workstations designed to accommodate a growing trend in offices toward more open, collaborative environments. The new product, called Canvas, is part of the company’s market-shift strategy after the demand for office furniture fell hard during the economic downturn. The plan also involves diversifying into the health care and academic furniture markets and more emphasis on emerging economies. The plan appears to be paying off. For the first time in nearly four years the company reported two consecutive quarters of double-digit percentage sales growth after releasing its second-quarter earnings statement on Dec 15th. Orders in the second quarter rose 34% to $462 million. CEO Brian Walker noted the company’s expanded market reach as a contributing factor to growth. Significant increases occurred in international markets where sales rose 33%. In 2010 the company acquired UK-based ergonomic workstation manufacturer Colebrook Bosson Saunders and purchased assets from Australian furniture maker Living Edge Group. In 2008, the company announced a partnership with China’s Posh Office Systems Ltd. to expand in the Asia-Pacific region. The company attributed a year-end surge to gains in its international, health care, learning and retail vertical markets. The expanding health care industry has become one of the company’s key growth targets. One of the more recent expansions into the health care field came on Jan. 31 when Herman Miller completed its acquisition of health care furniture manufacturer Nemschoff Chairs LLC based in Sheboygan, Wis. Herman Miller designed the Canvas workstation at a lower height than traditional workstations to facilitate a workplace trend toward more collaborative environments. The design also allows more light into work areas and saves space, the company says. Including sinks and headwalls, to be reconfigured to meet patient needs. 2. Business Strategy: Broad Differentiation Strategies This strategy pursues the buyer’s needs and preference to make them satisfied with the product. And to be different from other rivals, the product must have unique product attributes that a wide range of buyers find appealing and worth paying for. The strategy achieves its aim when an attractively large numbers of buyers find the customer buyer value proposition. Herman miller is pursuing this strategy as we refer to the case study that their products are based on the design which is designed according to the people who use the furniture. Like the president of Herman Miller said: ‘people are important not the furniture. Furniture should be useful’. Besides, this company emphasizes on product design and environmental friendly, these are two basic things that they have been practicing for many decades. Furthermore, they also invest more in research and development for product innovation. Take an example of office design product, Herman Miller’s Insight and Exploration team observed various workplaces to analyze how people collaborate and the ways in which their interactions vary over the course of a day, and throughout the life of a project by differentiating the subtleties of how, when, where, and why people connect independent of content or industry. Senior Researcher Shilpi Kumar notes that, â€Å"outlining these collaborative work behaviors will empower designers and decision makers with a greater understanding for how people really work, and will enable more informed choices in regards to office spaces. Herman Miller takes advantage of the growing desire for green products to create a better world and increase ergonomic furniture, because the consumers are willing to pay a premium for such quality and social responsible product. Since the designer of Herman Miller emphasized quality, excellence, and the continual improvement of their products, obviously one of their product which is designed by Charles and Ray Eames since its launch in 1950 had developed from plastic chair to wood chair in 2000. She also confirmed that this wood chair is 100 times recyclable since Herman Miller is concerned about environmental friendly, and Eames Molded Wood Side Chair earns â€Å"Gold† award at NeoCon 2013 in the Guest Seating category. 3. Functional strategy: Research and Development (R&D) This category focuses on strategy that is concerned with the actions in managing particular functions within a business especially in R&D. In terms of Herman Miller R&D, they invested in research and development (R&D) financially. Although there was downturn in financial, Herman Miller still invested tens of millions of dollars in R&D. The investment in R&D was code named Purple. A result of investment in R&D was an outgrowth of project Purple. The goal of this project was to spread beyond the boundaries of normal business. Herman miller created a special team called the accessories team in which the team-identified a potential growth area. This team is made to recruit people with different disciplines needed to support that goal. In addition, this team focuses on contributing ideas to the success of the team from all resources and also to develop a particular product as it goes through that piece of work. This project is in line with functional strategy of R&D in which a company’s product development represents the plan for keeping the company’s product in accordance with what buyers are looking for (Thompson et al, 2014). In the case of Herman Miller Inc, they began with research in every real design solution in which the exploitation and insights of the best research leads to human-centered design and problem solving. Herman Miller Inc is doing many things for R&D in the case of education, sustainability, performance, healthcare, manufacturing, architectures design and ergonomics. Herman Miller Inc has its major R&D activities and projects, i. e. its way to support and develop a company’s product. According to Herman Miller’s financial statement for fiscal years 2006-2011, there was a decline in design and research in 2009 due to the ongoing economic downturn. Figure 1. 1: Spending on Design and research So far, they have done some research projects regarding education such as; student’s research work behaviors behind innovation spaces. In the fall 2012, there was a project Herman Miller funded as a way of investing in the next generation of workers by giving students the chance to apply what hey learn in a real-world setting. Herman Miller wanted them to look at the business objective of the company. Besides Herman Miller providing the funds, the employees of the company also participated in the project. After the field research, the goal of this project was that the students shared what they had learned from going to the company for a workshop. The company also wanted to discover more about places that encourage creativity and the places of creative people. Besides Herman Miller providing the funds, the employee of the company also participated in the project. In regarding with the research in technology, the research starts by understanding which technological trends are creating new behaviors in the workplace. So from that, they can produce new design solution. Over the last three years, a group of designers, engineers, and researchers, the Insight Herman Miller and Exploration Team (I & E) has focused on emerging technologies and how they alter social behavior in the workplace. Herman Miller’s goal is to identify the technology trends that are relevant to the office and also understanding new behaviors that allow the designers, architects and manufacturers to bring new workplace design. For healthcare, Herman Miller Healthcare saw the opportunity to study and analyze by doing the research from the discussion of Bluewater health in which prior to design development and also the satisfaction and safety of patients and staff members. Herman Miller Healthcare is sponsoring a research project that will explore how changes in the built environment have affected staff in three important areas: Ambulatory Care, Intensive Care Unit and Emergency Department. 3 4. Functional Strategies: Marketing Marketing is one of the strategies used under functional strategy. First and foremost, Herman Miller products were sold internationally through wholly owned subsidiaries in countries including Canada, France, Germany, Italy, Japan, Mexico, Australia, Singapore, China, India, and the Netherlands. Hence, they use the international strategy to compete its products in each country. In other words, they use the foreign subsidiary strategies because it seemed that they prefer to have a direct control over all aspects of operating in a foreign country that is the reason why they established wholly owned subsidiaries. As a result, this strategy was successful as their brand was recognized by customers and increased customer base spreading over 100 countries. Moreover, they used green marketing strategy to sell their products. This is because they mainly focus on environmental friendly such as Mirra chair, one of their products which was made of 45 percent recycled materials, and 96 percent of its material were recyclable. Therefore, the chairs used 100 percent renewable energy. Due to this strategy used, Mirra chair was recorded as one of the Top 10 Green Products by Architectural Record and Environmental Building News. Hence, this can indicate the success of using this strategy. In addition, Herman Miller engaged in cooperating advertising with strategic partners. As the example of Hilton Garden Inns which they equipped the Mirra chair in some room and on the desk in the room, was a card that explain how to adjust the chair while also providing the advertisement of Herman Miller’s website, how to purchase the products. Likewise, this is one of the advertising used to promote their products by using the strategic partner. As a result, they can reduce the advertising cost and gain more brand awareness. . Operating Strategy: Lean Production Initially, at Spring Lake, Herman Miller had invested in a giant robot assembly that welded supports inside file cabinet housings, including a tractor-trailer-length automated welding line with 1,000 sensors to drive labor completely out of the process. Unfortunately, big customers like Hewlett-Packard and AT&T were pulling their orders of 100 instead of 500 and some wanted file cabinets in two weeks instead of six with much higher quality. The Spring Lake plant could not deliver, and certainly not for the lower prices customers demanded. 995, they adapted Toyota’s leading-edge formula for plant-floor management into an approach they called the Herman Miller Performance System (Booz&co. , 2010, para 20). Based on the above quote, it depicted that Herman Miller’s decision to employ Herman Miller Performance System (HMPS); lean production, was to maintain efficiencies and cost savings by minimizing the amount of inventory on hand through a just-in-time process. To ensure a fluid flow on the order – driven production, Herman Miller collaborated with reliable and strategic suppliers. HMPS created competitive advantage through large assembly – manufacturing based. For example, direct materials and components purchased as needed to meet the demand and some suppliers delivered parts to Herman Miller production facilities five or six times per day. This resulted in a standard lead time of 10 to 20 days for majority of the products and low inventories on hand. Interestingly, HMPS managed to increase the variable costs rather than fixed costs while retaining proprietary control over manufacturing process. It was reported that â€Å"the plant managers across Herman Miller have learned that the best-run plants rely on people, not machines. Only people can solve problems to make assembly lines go faster, run cheaper, and deliver higher quality† (Booz&co. , 2010, para 25). Therefore, it can be concluded that labor intensive approach tend to outperform machine intensive approach especially when the products demand further customization with limited time and the majority of industry products are built to each customer’s unique order. Question 2: Culture at HMI: healthy and largely supportive of good strategy execution. Herman Miller had codified its long-practiced organizational values, intended as a basic for uniting all employees, building relationship, and contributing to society. Herman Miller started in 1905 with the Star Furniture Company and created the Herman Miller furniture company with his son in law named Dirk Jan De Pree. From the beginning, De Pree committed himself to treating all workers as individuals with specials talents and potential. This was part of Herman Miller’s corporate culture which continued to generate respect for all employees and take advantage of the diversity of skills possessed by all. This is one of the functional strategies in corporate culture in Herman Miller Inc in which included the company’s approach to people management, procedures and operating practices that provide the guidelines for the behavior of the company. The impact of this culture became one of the competitive advantages that make strong management and employee satisfaction in the company. The business principles and ethical standard of Herman Miller are the management practices as the key of company’s culture. Herman Miller was one of the furniture company named to Fast Company’s â€Å"Most Innovative Companies† in both 2008 and 2010. Herman Miller had pursued a path of reinvention and renewal. Herman Miller has many ways to develop their products and its culture is also unique. Through the growing of the company, Herman Miller maintains the relationship with the employees. Herman Miller’s commitment to innovation included sharing ideas and opinions from the employees. On January 1979, Herman Miller established new organization structures that included all employees were to be given the opportunity to discuss new plan in small group settings. In addition, Herman Miller also established a plan in which all employees became shareholders. Herman Miller Inc. also focuses on more efficient and environmentally friendly by taking a major initiative in 1981. It is in line with a better world value which is pursuing sustainability and environmental policy. They established environmental quality action team whose goal was to coordinate environmental programs worldwide that involves many employees. A Herman Miller’s culture is grounded in and resides to certain core value and some sets for ethical behavior. Herman Miller had long practiced organizational values that were still used in 2012. The values are as basis for uniting all employees, building relationship, adapt the implied attitude, behaviors and work practices. The company adopted inclusiveness which means they include all the expressions of human talent and potential that society offers. As mentioned before, Herman Miller corporate culture continued to create respect to all employees and looking for and utilizing the skills possessed by anyone. The second value is design in which it is important to Herman Miller Inc. in order to make innovative products. It is the way for them for looking at the world and how it can work. The results of this value are Herman Miller established many innovative products and designs. In 1971 and 1984, they introduced products based on ergonomics principles such as the Ergon chair and Equa chair. For another groundbreaking design, it introduced the Aeron chair which was almost added to New York Museum of Modern Art’s permanent design collection in 1990. Other important values are based on Herman Miller’s best performance that focuses on enriching the lives of employees, customers and create value for the shareholders. The result of this value has made Herman Miller share the gains and pains with the employees especially about the compensation. All employees received a base pay and they also participated in a profit sharing program where they received stock in accordance to the company’s financial performance. The company also offered to the employees the employee stock purchase plan (ESPP), retirement income plan, offered annual bonus to all employees based on company’s performance, and in regard to profit sharing both the employees and executives have same calculation of bonus potential. High performance culture In Herman Miller Inc. there is a strong sense of involvement on the part of company personnel and emphasis on individual initiative and creativity. Two of the greatest strengths lie behind our heritage of research-driven design. Respecting and encouraging risks, exploring new ideas and freedom of speech. Owners actively committed to the life of the community called Herman Miller, pride in doing things right, sharing in its success and risks. The strengths and payoff really comes in when engaging in people’s own problems, solutions and behavior. Performance is required at the highest level possible. Herman Miller enriches employees’ lives, delight its customers, and create value for its shareholders. Herman Miller includes all the express human talent and potential, everyone should have a chance to realize his or her potential regardless of color, gender, age, sexual orientation. It believes that skill; different educational background could bring the company uniqueness. Adaptive Culture Herman Miller always keep innovating its products to serve their customers better. Herman Miller’s corporate culture, which continued to generate respect for all employees, had fueled the quest to tap the diversity of gifts and skill held by all. The company designs products according to what people want the most, and it is a way of looking at the world and how it works or does not. To design a solution, rather than simply devising one, required research, thought sometime starting over, listening and humility. Manager and employees support each other in dealing with working environment. Herman Miller designed the Canvas workstation, at a lower height than traditional workstations to facilitate a workplace trend toward more collaborative environments. The design also allows more light into work areas and saves space, the company says. Additionally, the company also keeps changing its production designs from time to time according to the needs of the people and follow ergonomic system. Herman Miller hired much expertise to design its furniture, and it is costly to spend on R;D but company the company was willing to take risks on new innovation. Financial performance Year 2008 2009 2010 2011 Revenue ($ millions) $ 2,012. 1 $1,630. 0 $1,318. 8 $1,649. 2 R;D to Sales Ratio R;D/Sale 51. 2 / 2,012. 1 = 2. 5 % 45. 7 / 1,630. 0 = 2. 8 % 40. 5 / 1,318. 8 = 3. 1 % 45. 8 / 1,649. 2 = 2. 8 % Table 2. : HMI’s Revenues and R;D to Sales ratio from 2008 to 2011 Figure 2. 1: Research and development (R;D) to Sales ratio from 2008 to 2011 The above graph shows the trend of R;D sales ratio which increases from year 2008 until 2010. However, it decreased slightly in 2011 due to low R;D investment because of recession. However, it is not clear whether measuring the R;D ratio is a good metric to represent its efficiency towards a company. This is because it takes into consideration the R;D expenses rather than R;D investment thus it is easy to manipulate the number by lowering the R;D expenditure. Even, in the balance sheet of Herman Miller, the R;D investment is not disclosed under assets. If R;D is capitalized as asset, then it depicts the efficiency of R;D towards business revenues. In brief, due to that constraint, we assume that at least the R;D sales ratio increases and contributes positively towards Herman Miller’s business structure as Herman Miller invests heavily in R;D to create the furniture. Figure 2. 2: HMI’s Revenues from 2008 to 2011 The above graph illustrates that the trend of sales revenue decreases from year 2008 until 2010. However, it started to increase in year 2011. Thus, in brief, Herman Miller is improving in their sales through investment in Research and Development and produces competitive design. Question 3: HMI’s Financial situation: prior years and its competitors 1. HMI’s financial situation In order to measure the financial performance of Herman Miller Inc, we have used different ratios, such as liquidity, profitability, leverage and activity ratios. Besides, we also compare the financial performance of HMI in relation to its competitors – HNI and Steelcase Inc from 2008 until 2012 based on the above mention ratios. For our case, we have used the current ratio to measure the extent to which the three companies (HMI, HNI and Steelcase) can meet their short term obligations as shown in the figure below. Figure 3. 1: HMI’s current ratio versus its competitors’ ratio The figure above shows the current ratios for the three manufacturers’ of office furniture and equipment for five consecutive years. In the case of Herman Miller Inc. , their current ratio showed some slight increase of about 1 percent from 2008 to 2009. However, a drop of about 21 percent was xperienced in 2010 but they were still able to maintain a current ratio of greater than 1. In the year 2011 and 2012, there had been a tremendous increase in their current ratio to 1. 76 and 1. 81 respectively. This current ratio of greater than 1 provides additional cushion against unforeseeable contingencies that may arise in the short term. In the case of HNI, their current ratio showed a moderate increase of about 7 percen t from 2008 to 2009. However, for the subsequent years, HNI experienced a decrease in their current ratio of approximately 10 percent from 2010 all the way to 2012. Nonetheless, they were able to maintain a current ratio of at least 1 to ensure that the value of their current assets covers at least the amount of their short term obligations. As for Steelcase, their current ratio showed a moderate increase of about 8 percent from 2008 to 2010. On the other hand, the company experienced a decrease of roughly 8 percent in the year 2011 but they were still able to maintain a current ratio of greater than 1. However, Steelcase managed to have an increase in their current ratio from 1. 37 in 2011 to 1. 52 in 2012. Overall, Herman Miller Inc. as shown a significant increasing trend in their current ratio as compared to the other two companies. This may suggest improved liquidity of the company or a more conservative approach to working capital management. ii. Profitability ratios: Profitability ratios measure management’s overall effectiveness as shown by the returns generated on sales and investment. There are a number of ratios under profitability but for our case, we have used the Return on Assets (ROA) to measure the after-tax profits per dollar of assets and Gross Profit Margin which measures the total margin available to cover operating expenses and yield a profit. These two ratios have been used to evaluate the three companies (HMI, HNI and Steelcase). Figure 3. 2. 1: HMI’s return on asset ratio versus its competitors’ ratio The figure above shows the Return on Assets for the three manufacturers’ of office furniture and equipment for five consecutive years. In the case of Herman Miller Inc. , there has been a decreasing trend of ROA in the year 2008 to 2010 from 19 percent to 4 percent respectively. This shows that the profitability of the company is deteriorating. Nevertheless, rom the year 2010 to the year 2012, the company has shown some slight increasing trend of ROA from 4 percent to 9 percent respectively. This indicates that the company’s profitability is quite improving over the years. When it comes to HNI, it has also shown a high decreasing trend of ROA in the year 2008 to 2011 from 5 percent to -0. 6 percent respectively. This shows that the profitability of the company is extremely deteriorating. However , in the year 2012, there was an increase of about 4 percent as compared to the previous year. The company was able to move from -0. 6 percent to 3. 8 percent. This signifies that the company’s profitability is slightly improving. Lastly for Steelcase, there has also been a high decreasing trend of ROA from the year 2008 to 2010 with about 6 percent and -0. 8 percent respectively. This shows that the profitability of the company is extremely deteriorating. However, there was a slight increasing trend of ROA in 2011 and 2012 of 1. 02 percent and 3. 33 percent respectively. This means that the company’s profitability is somewhat improving. Overall, Herman Miller Inc. has shown a considerable increasing trend in their ROA over the years as compared to the other two companies. This may imply effective use of assets and creation of high margins by the company as well as gauging how well the company uses its financing from borrowing and bonds. Figure 3. 2. 2: HMI’s gross profit ratio versus its competitors’ ratio The figure above shows the Gross Profit Margin for the three manufacturers’ of office furniture and equipment for five consecutive years. In the case of Herman Miller Inc. , there has been a slight decrease of the Gross Profit Margin in the year 2008 to 2009 from 34. 72 percent to 32. 37 percent respectively. However, from the year 2010 to the year 2012, the company has shown some slight increase in their Gross Profit Margin from 32. 49 percent to 34. 26 percent respectively. This indicates that the company can make a reasonable profit. For HNI, there has been an increasing trend of the Gross Profit Margin from the year 2008 to 2011 with about 33. 66 percent and 34. 6 percent respectively. However, in the year 2012, there was a slight decrease of about 1. 3 percent as compared to the previous year. The company’s Gross Profit Margin moved from 34. 86 percent to 34. 39 percent. This also signifies that the company can make a reasonable profit. Lastly for Steelcase, it has shown a slight decreasing trend of Gross Profit Margin from the year 2008 to 2010 with 32. 12 percent and 28. 35 percent respectively. However, there was a slight increasing trend of Gross Profit Margin in the subsequent years amounting to 29. 5 percent in 2012. This means that the company can still make a reasonable profit. Overall, HNI has shown a steady increasing trend in their Gross Profit Margin over the years as compared to the other two companies. This may indicate how efficiently the company is using its materials and labor in the production process and gives an indication of the pricing, cost structure, and production efficiency of the company. iii. Leverage ratios This ratio is used to determine the companies’ financing methods, or the ability to meet the obligations. There are many ratios to calculate leverage but the important factors include debt, interest expenses, equity and assets. In this section, we will examine two ratios which are debt to assets and debt to equity ratios. Figure 3. 3. 1: HMI’s debt to asset ratio versus its competitors’ ratio The debt to asset ratio gives us a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. In general, the debt to asset ratio for Herman Miller fluctuated over the years as compared to its competitors – HNI and Steel case. In 2008, the debt to equity ratio for Herman Miller was above 80 percent and rose approximately to 100 percent in 2009, whereas this ratio was just about 61 percent and 57 percent for HNI and Steel case respectively in 2008; and about 58 percent in 2009 for both competitors. This indicated that almost 100 percent of Herman Miller’s assets were financed by debt or creditors which implied that the Company has high level of leverage and risk, while its competitors had roughly 50 percent of their assets financed by the owners. However, Herman Miller’s ratio significantly dropped in 2010 to about 40 percent which was below its competitors who almost maintained their position over the years. In 2012, 70 percent of Herman Miller’s assets were financed by debt. In general, although the company debt to assets ratio is still high in relation to its competitors, the financial performance of the company is improving after the financial crisis. However, the Company needs to further reduce the amount of debt resulting to the reduction of risk; this is because it may affect the company’s survival in the long-run. Figure 3. 3. 2: HMI’s debt to equity ratio versus its competitors’ ratio A debt-to-equity ratio measures the amount of debt a company uses to fund its business for every dollar of equity it has. In other words, it is a measure of a company’s ability to repay its obligations. Generally companies with less debt equity ratio are less risky than the companies with high ratios. As we can see from the graphs, Herman Miller Inc. has the highest ratio over the year in relation to the other companies. For instance, its ratio fluctuated significantly over the years which were at 32. 7 and 94. 91 in 2008 and 2009 respectively. This might be due to the effect of the financial crisis, which caused the company to increase its debt financing heavily. Also, this indicates that the company had substantial high amount of debt as compared to equity which can endanger the long term survival of the firm since the company may not be able to generate enough cash to satisfy its debt obl igations. Meanwhile, debt to equity ratio for HNI and Steel case was roughly lower than 2, which was acceptable for large public companies. For Herman Miller, however, this ratio sharply dropped over the next years to just about 8. 62 in 2010 and 2. 37 in 2012. In contrast, its competitors still can maintain their ratio below two over the next years. In order to improve this ratio, Herman Miller had sold its common stock and tried to lower the mount debt financing, this can be seen by the amount of long-term debt decreasing. This implies that the company’s financial performance has been improving after the financial crisis. In terms of leverage, overall, it can be said that the performance of the company has been improving over the years and regaining its position in the furniture market after the economic downturn. Although it may not do well as compared to its competitors in terms of financing the debt and equity, there is a sign of improvement and effort in positioning its self in the market industry in U. S. iv. Activity Ratios Figure 3. 4. 1: HMI’s Inventory turnover ratio versus its competitors’ ratio The inventory turnover is commonly used to measure the operational efficiency in managing its assets. Based on the figure 4. 1 illustrated above, in 2009, Herman Miller Inc. has the highest ratio compared to other years. This high ratio could indicate two conditions, such as; whether the company has strong sales during the year or it has an ineffective buying activity. However, it is perceived that the company did have strong sales proven from the lowest level of inventory and high sales revenue which are seen in the annual report during the year. While in 2010, Herman Miller Inc. ’s turnover ratio drops significantly compared to the other years. Its cost of sales for the year has the lowest and showed a decrement of 24% from previous year which simultaneously contribute to low ratio as well as indicating the lack of effectiveness particularly in turning its inventory into sales. One of the reasons is that it could be due to the recession which highly affected the company, and hence making them to reduce the cost of sales. However, Herman Miller Inc is getting better in turning its inventory into sales proven from the increment of its ratio by year. Additionally, compared to competitors, the position of the ratio shown for Herman Miller Inc. is located somewhat in the middle. Steelcase is somewhat faster in turning their inventory into sales compared to others. In contrast, HNI has the lowest rate. This proves that Steelcase is more effective in managing its operational assets. Figure 3. 4. 2: HMI’s Average collection period versus its competitors’ ratio Average collection period is the number of days it takes a company to collect its account receivables. As illustrated from the figure 4. 2 above, Herman Miller is getting better in obtaining its receivables shown by the average days taken which was from 58 days in 2008 and 34 days in 2012. This demonstrates that Herman miller Inc. onstantly improve its credit policy effectiveness confirmed by a dramatic slump by years. Comparing to other competitors, originally HNI was the most effective company in managing its credit term policy, as the company only took 38 days in collecting its account receivables compared to Steelcase or Herman Miller. However, the company ended up to be the highest rate at 2012 showing that it is not effective in evaluating company’s credit policy. As a result, when a company possesses a lower average collection period, it is seen as optimal as it indicates that the company does not take very long to turn its receivables into cash. . HMI’s current strategies: an issues of need to change its strategies during poor economic conditions The current Herman Miller strategy which focuses on growth strategy, through innovative products and related diversification made the company to survive the Great Depression early in its history, multiple recessions in 20th century and in early 21st century the company recovered from the dot-com bust and was able to continue expanding overseas. The furniture industry is an economically volatile industry. The office furniture segment of the industry was hit hard by the recession. Industry sales decreased 26. 5 percent during the 2009 economic downturn. However, because of the innovative and diversification, Herman Miller was able to outperform its competitors in terms of sales and profitability, during that time Herman Mill’s sales dropped by 19% which is relatively low in comparison with its competitors HNI Corporation and Steelcase which had dropped by 33 percent and 28% respectively. The furniture industry is at its maturity stage, thus Innovation is crucial to the company’s survival. If Herman Miller continues to successfully innovate, it will enable them to compete in the market strongly. The industry had been negatively impacted telecommunication which had reduced the need office furniture. Yet, more employees were spending more hours in front of the computer screens than ever before. Because of Herman Miller’s effective innovation, they were able to respond to the need of ergonomically correct office furniture that had helped to decrease fatigue and injuries like carpal tunnel syndrome. In summary, the company does not need to radically alter its main strategy which focuses more on innovation and diversification as it’s the reason they were not dramatically hit by recessions and competitions among the rivals. 3. Recommendation: i. Reduced current benefit and incentive schemes There are several incentives that had been eliminated by Herman Miller’s management due to the economic downturn in 2009. The suspend of 401(k) contribution plans (saving contribution plan), cut-off 15 percent of current workforce and 10 percent reduction in salary for remaining workforce had been implemented during the crisis. However the pay cuts was discontinued because of Herman Miller’s quick turnaround. The company was stable starting the year 2011, but the selling, general, and administrative were the highest contribution of the operating expenses. Specifically, â€Å"†¦$3. million and $16. 6 million of additional operating expenses during fiscal 2011 due to the reinstatement of all of our employee benefits and employee incentive expenses† (Herman Miller’s Annual Report, 2011). The company believed that the large benefit and incentives had created motivated and skilful employees which are the key of its competitive advantage. Even though the company has increased in sales as compared to the year 2010, it is important to cut the costs by eliminating some of the less important incentives schemes and benefits such as $100 rebate on a bike purchase, concierge services and one-site services to name a few. Previously, the company had eliminated the 401(k) contribution plan so that they could stop providing some percentage on the employees’ contribution. It is crucial since it could allow the company to save a significant amount of money in the long run (Richardson, 2009). It can be done by communicating the problems and issues which need to be addressed to the staff before they get out of hand. Address the problems proportionately and regular communication could make the staff be aware on their role to support the company throughout the economy downturn. By having it, the staff might accept the decision positively and provide effort to help the company to fully recover after the recession (‘Recession Business Cost Cutting†, 2013). ii. Reduction in company’s cost of sales According to Herman Miller’s Annual Report (2011), the increase in cost of sales for the year 2011 was due to the increase in sales volume that was driven primarily by cost leverage on higher production, which was partially offset by deeper discounting, higher employee benefit and incentive costs, and higher costs of key direct materials, most notably steel and steel components. Besides that, the cost of direct material increased as compared to previous years which there was increase in the cost of commodities and the increase in discounting, which has the effect of reducing net sales The costs of certain manufacturing materials used in producing finished products are sensitive to the volatility of commodity market price. The cost of direct labor and overhead were increased due to increase in product volume while the cost of freight expenses had increased during the year because of increase in product volume as well as increase in fuel costs in 2011. First recommendation to cut the cost of sales in terms of direct material is substituting lower cost material where possible to replace the expensive one and each angle should be considered for better decision. For example, the substitution of carbon steel to replace expensive stainless steel could reduce the cost but the corrosion protection might not last longer. This method should be applied if only the benefit from the substitution is higher than the cost of reduction in quality (Lewis, n. d. ). Second recommendation is by eliminating unnecessary product features to reduce cost. The company should produce a product that really suits customers’ preferences in buying their products. For example, the company should identify whether customers are purchasing its products because of their unique looks, lower price or high quality. If customers buy the products because of their lower price, unique features may not be needed (Lewis, n. d. ). Third recommendation which is the most effective one is by hedging the price of the steel through futures contract. According to Herman Miller’s Annual Report (2011): The company believes market prices for commodities in the near term may move higher and acknowledges that over time increases on its key direct materials and assembly components are likely. Consequently, it views the prospect of such increases as an outlook risk to the business† (p. 34). By locking the price in the contract, it could eliminate any risk of price volatility (â€Å"Hedging in Practice†, 2013). For example, if there is a huge possibility that the price of steel will increase in a certain period of time. Due to that, the company will engage in future contract and lock-in the price for a specific period in the future. Regardless of increase in steel price, the company is eligible to buy the commodity at a lower lock-in price as stated in the agreed future contract. Conclusion Herman Miller Inc. has implemented different strategies in order to improve its performance and expand its self in furniture market, such as diversified strategy, broad differentiation strategy, green marketing, product development and innovation. In addition, besides focusing on those strategies to achieve the business goals, the company also concerns about how it communicates and treat its employees. â€Å"All workers as individuals ith special talents and potential† can be considered as one of the healthy culture at Herman Miller since 1927 and the Company continued to generate respect for all employees and fueled the quest to tap diversity of gifts and skills held by all. According to one of the verse in chapter 42 of the Qur’an: â€Å"Those who hearken to their Lord, and establish regular Prayer; who (cond uct) their affairs by mutual Consultation; who spend out of what We bestow on them for Sustenance† (Quran 42:38) The verse above explains the importance of mutual consent in making a decision. Islam encourages Muslims to decide their affairs by consulting with those who will be affected by the decision. Thus, in the case of Herman Miller, it empowers its employees and nurture participative decision making so that the employees feel as part of the company. Surviving in matured furniture industry and the economic volatility such as recession, demand full cooperation from the whole organization. It is not easy to integrate the diverse nature of employees with different backgrounds and behaviors to achieve goal congruence. Thus, Herman Miller’s healthy culture leads to its employee’s readiness to accept any relevant decision by Herman Miller such as cutting their salaries as the employees work with Herman Miller and not just work for it. Furthermore, in term of design value, the designer team of Herman Miller always emphasized on quality, excellence, and the continual improvement of their products. â€Å"At Herman Miller the products we made decade ago are still sold after today, and products we make today we will do for a decade to come. † All in all, Herman Miller should pursue its current strategies and continue to expand those strategies such as product innovation, diversification and so on. We believe that these strategies have made and will make Herman Miller one of an outstanding and award winning Company. They will continue to provide the Company with the ability to renew and reinvent itself in the furniture market and outperform its rivals in the future. From the explanation above, it gives us a broad view of how the company’s long-term strategy and objective affects all their business: from product design to decision-making process to the culture of the Company.

Analysis of the business operations of Toyota Essay

Analysis of the business operations of Toyota - Essay Example also been able to achieve competitive advantage within the highly competitive automobile industry across the globe by applying supply chain and inventory management concepts. The Toyota Prius is one of the products by Toyota that has helped the company to gain a competitive advantage because of its focus on providing greener energy solutions that the vehicle market desires. Additionally, Toyota also applies the lean philosophy of manufacturing that advocates for the minimization of any wastages and also focuses more on achieving cost reduction measures in order for the company to continue running efficiently. The Toyota Prius has been able to reduce costs because vehicle consumers have shifted from the conventional fuel powered vehicles that are usually affected by fuel costs. The company also solves its problems adequately by continuously training its staff on how to handle certain production challenges and also anticipate for such problems in future. With this, this essay will review and critically analyze the operations of the Toyota company with a keen focus on the Toyota Prius vehicle, which will also include figures that would illustrate the production process of the same. The production system applied by Toyota is highly standardized and it also effective because it eliminates wastages through the lean production and movement, which is one key principle in operations management (Eyob & Tetteh 2012, p. 225). Also known as the TPS (Toyota Production System), this philosophy tends to be customer oriented that have led to the adoption of the same strategy by other companies across the globe. This strategy is a flexible one and has helped in the running of daily activities at Toyota because of the outcomes that it seeks to achieve. According to Jayaram, Das & Nicolae (2010, p. 280), one of the desired outcomes that this process tends to have is that the company seeks to provide high quality vehicles to their consumers with the cost attached to them being as

Decision To Downgrade The Yuan Essay Example | Topics and Well Written Essays - 750 words

Decision To Downgrade The Yuan - Essay Example One key reason for the devaluation of the Yuan to which the Chinese government and other players agree on is the fact that China is now willing to make financial reforms. The International Monetary Fund has, in particular, applauded the decision to downgrade the Yuan. The move is seen by both sides as part of measures by China to open up their financial systems and hence allow foreign exchange institutions to have more control over the value of the Yuan. Although the United States has been demanding that China embraces financial reforms they have rubbished the move claiming that the Chinese government is only doubling down. The United States demands are based on their belief that China for years has been rigging the rules and played currency games that have left American workers to suffer. Additionally, policymakers in the United States have interpreted the move has a way of countering their trade agreements with China's rivals such as Japan in the Trans-Pacific Partnership. The deci sion to devalue the Yuan is part of currency manipulation games to gain an unfair trade advantage over the United States (Deng).One of the reasons that led to the downgrading of the Yuan according to China’s central bank is a way of shifting from an economy that depends on exports for growth to one that is based on consumer spending. The decision would further try to deflate the real estate market. Chinese policymakers were increasingly frustrated by the strategy of the export-dependent economy.

Pen Profile of the Client Essay Example | Topics and Well Written Essays - 3250 words

Pen Profile of the Client - Essay Example According to the paper, this evacuation lasted months, and it definitely had a psychological impact on Dereck. A man named Alexander who was evacuated at 11 years of age recalls. â€Å"We were dumped at a roundabout with our labels on. People pulled and tugged at the children they wanted. It was a bit like a cattle market... people just waded in. I went with a lady and her daughter - she was like a second mum† . Dereck feels disappointed with numerous aspects of his life. Whenever Dereck is faced with a challenge, he gives up. As a child, Dereck was not performing well in his studies, which is evident from the fact that he failed his 11 plus exams thrice. As an adult, Dereck once owned a pub, holiday flats and a shop. At the moment he doesn’t own any of these properties because he got rid of them. Dereck is intimidated by his younger classmates. When he is faced with a problem, he does not ask questions because he believes that he will hurt his pride. He feels that it i s too late for him to change who he is. Dereck is vigilant in pursuing his interests. This is evident from the fact that he likes counselling. Dereck has consistently attended classes and has been pursuing a degree in Psychology for nine months now. While growing up, Dereck realised he was good at sports. He played football at elementary school, where he eventually played for his town, his county and London. After school Dereck proceeded on to become a professional football player for 3 years. Dereck currently plays golf two or three times a week at a golfing society called Elderly Gentlemen’s Golfing Society. Dereck does not think he needs any counselling because he believes he has no problem. He believes that he does not need anybody to help him because he has nothing to complain about. Dereck thinks that he is conceited, proud and confident but all these traits can be attributed to the fact that he is insecure.  

Reflect on If I could be any historical figure within the time period, Research Paper - 1

Reflect on If I could be any historical figure within the time period, who would I be and why - Research Paper Example Whereas many of the founding fathers were ultimately against slavery, there were several that either did not discuss the issue in any level of depth or did not see it as a vital issue to the strength and continued growth/prosperity of the nation. Interestingly, many of the pro-and anti-slavery statements that were made by the founding fathers varied little throughout their lives. What is meant by this is that individuals such as Thomas Jefferson and James Madison retained strong proslavery sentiments and wrote prolifically about the benefits that the institution of slavery had to offer. By the same token, individuals such as James Madison held anti-slavery views throughout his entire life. However, a third group necessarily exists within this seemingly obvious dichotomy. Individuals such as Benjamin Franklin and George Washington initially held proslavery views; however, as they began to integrate with the American experience and formulate a more nuanced and philosophical understandi ng of the concepts of democracy, self determinism, and freedom of choice, their views concerning slavery began to shift. Whereas it is impossible to trace all of the founding fathers that had an epiphany with regards to slavery, this particular analysis will focus upon Benjamin Franklin and the way in which his political leanings began to shift later in his life with regards to the issue of slavery. In seeking to promote such an understanding of realization, the following analysis will focus specifically on primary that Benjamin Franklin was himself responsible for writing. Like many of the founding fathers, Franklin himself owned slaves in the earlier part of his life. However, as a result of his metropolitan nature and incessant travels, not to mention his polymath tendencies towards reading and writing on topics as broad and diverse as economics, philosophy, and ethics, Franklin came to understand that the practice of slavery was in and of itself abhorrent. As such, he soon relea sed the few slaves that he did possess. However, merely releasing the slaves that he was responsible for was not enough for Franklin. Rather, due to the fact that he saw slavery as such a morbid and horrific societal ill, he began to advocate abolition at a time when abolitionists were far from being in the vote. One of the most famous means through which Franklin was able to affect this was by signing and sending a petition to the first Congress in February 1790. Among other things, the petition requested time devoted towards â€Å"devising means removing the inconsistency from the character of the American people and promoting mercy and justice towards this distressed race† (Basker 221). However, before the reader begins to assume that Benjamin Franklin was a champion of human rights throughout his entire life, it must be added that beyond merely owning up to seven slaves in the earlier years, Franklin also worked for the Pennsylvania Gazette and was responsible for the pri nting and publication of information concerning wanted ads for the sale of slaves as well as rewards for the capture and return of runaway slaves (Franklin 7). Obviously, this information in and of itself must have touched upon the conscience of Benjamin Franklin as a means of promoting him towards a level of abolitionism later years. However, the fact remains that Benjamin Franklin can convincingly be labeled as both a tacit advocate of slavery as well as an abolitionist

Business communications Essay Example | Topics and Well Written Essays - 250 words

Business communications - Essay Example The balance of trade becomes affected in such cases, thereby adversely affected the economy as whole. The Canadian dollar is positively correlated to the strength of the world commodity prices. This situation will boost imports as most traders will find it highly profitable to export to Canada at a comparatively lower exchange rate compared to the U.S. dollar. However, the exports will be affected negatively since it will be comparatively expensive to export Canadian products compared to the U.S. products. In conclusion, the fact that the recent report on the Purchasing Power Parity estimates a bundle of goods that cost a consumer $1 CAD in Canada would cost in the range of 80-85 US cents in the United States is a strong indication that some economic improvement should be done. As the Canadian dollar trends along these ranges, the Canadian consumers are, and will be paying a significant value on their goods compared to their counterparts in the United

Relationship formation Essay Example for Free

Relationship formation Essay A relationship is an encounter with another person or a group of people that endures over time. It happens with celebrities even though you dont meet them. Derrick (2008) discovered how these fake relationships (parasocial relationships) could provide a safe route for people who have a difficult time with real interpersonal relationships. People with low self-esteem can use parasocial relationships to feel closer to their ideal selves (i.e. the person they would rather be than the person they actually are). Â  Relationships are important to social well being. They are characterised by features including the following: responsibility, giving,, taking, rules (for e.g. you cant sleep with your friends ex-partner) and roles (best friend, wife, daughter mother etc). There are two main theories that explain why relationships are formed. I am going to begin with the reward/need satisfaction model (Byrne and Clove, 1970) this suggests that both operant and classical conditioning play a part in relationships. This theory states that we learn to associate with people for positive and enjoyable situations even if they are not directly rewarding us in these instances. In other words, we enter a relationship that rewards us the most or give us the most pleasure. As generally when time is spent with others we have a laugh and feel happy, vibrant and awesome. Whereas when we spend time alone we tend to feel sad and lonely to some extent lethargic. Also, this theory uses conditioning and reinforcement. Classical conditioning is when we associate with pleasure rather than being directly rewarded. In contrast, operant conditioning is when we are directly rewarded such as through gifts, companionship and sex. Positive reinforcement is when you are rewarded by compliments for example. On the other hand negative reinforcement is achieved by taking something good away from you such as you split with your boyfriend but to make the sadness go away from splitting up with your partner by sleeping with someone else or going out with someone else (rebound). Therefore, this relationship is based on negative reinforcement as you are involved in the relationship to take away the upset and sad feelings you have. In addition May and Hamilton (1980) asked female students to say how much they liked the look of male students (strangers), whose photographs they were given. Some students viewed them while pleasant music was being played. Others looked at the photographs while unpleasant music was being played. A comparison (control) group viewed the same pictures, but no music was played. As predicted in the hypothesis, the students who had heard the pleasant music while looking at the photographs liked the men best and rated them more attractive. This and many experiments (e.g. Cunningham, 1998) have shown that positive effect (feeling/emotion) can lead to attraction. However this experiment didnt take into account individual differences as participants may like the unpleasant music just as much as the pleasant music. Also doesnt take into account gender differences as the type of music played may not affect males on their scoring. Overall, the reward/need satisfaction model doesnt take into account that giving may provide people with pleasure rather than just receiving. Hays (1985) found when examining student friendships as much value was given to rewarding the other person than as being rewarded oneself. Participants in relationships are often more concerned with equity and fairness in rewards and demands than with the desire to maximise their own benefits. Furthermore, this model tends to focus on western cultures hence lacks ecological validity. In non -western cultures you tend to be rewarded for being like everyone else rather than individualistic so being in a relationship wouldnt be rewarding in these cultures. Hill (1972) showed that kinship bonds are very influential resilient not dependent on reinforcement. Indicating social relationships are more commonly found in these countries and show little concern for the receipt of reinforcements. In addition this theory doesnt take into account gender differences as women are more focused on the needs of others, with men it is against their machismo and manliness, who are orientated towards the gratification of their own needs, (Lott, 1994). However it could be argued that meeting the needs of others might be reinforcing in itself. Moreover, the matching hypothesis (Walster et al, 1966) suggests that physical attractiveness is the main thing we look for in a mate and that we are attracted to those that are similar to us. Further research lead to the following main theories: socially desirable individuals seek out other socially desirable individuals and matched couples tend to be more successful than unmatched couples. When we are choosing a mate we are influenced by desirability and the probability of the person saying yes (realistic choice). Murstein (1972) supports the theory that physical attractiveness is the main factor when forming a relationship (the matching hypothesis). Murstein argues that individuals initial attraction towards each other in the formative stages of a relationship depends on available costs that indicate their social desirability (e.g. physical attractiveness). Data collected in the real world shows strong evidence for the matching effect in correlational studies conducted with actual couples (e.g. Murstein 1972, Silverman 1971). In these studies the attractiveness level is measured for each partner for actual couples.