Case 22: Herman Miller Essay

1617 Words May 9th, 2012 7 Pages
Case 22: Herman Miller Inc.
History- Herman Miller’s roots go back to 1905 and the Star Furniture Company, a manufacturer of traditional-style bedroom suites in Zeeland, Michigan. In 1909 the company was renamed Michigan Star Furniture Company and hired Dirk Jan De Pree as a clerk. De Pree became president in 1919 and four years later convinced his father-in-law, Herman Miller, to purchase the majority of shares; De Pree renamed the company Herman Miller Furniture Company in recognition of Miller’s support.

1. Describe Herman Miller’s strategy. Is there evidence it has produced a competitive advantage and good financial performance? Explain.
Herman Miller’s strategy is a growth strategy, through innovative products and production
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The net profit margin for 2010 was 2.14%, 4.17% for 2009, 7.57% for 2008, 6.72% for 2007, and 5.71% for 2006. The gross profit margin was increasing up until 2009 when it went down to 32.3% in 2009, from 34.7% in 2008. HMI’s financial performance has taken a downturn since 2009. Compared to the competition, HMI is not doing too badly, the industry was hit hard by the recession and sales were expected to drop by 26.5 percent from 2008 to 2009, but HMI sales only dropped by 19 percent. HMI’s stock market value of more than $1 billion at the end of 2009 represented 7.3 percent of the total stock market value of the industry. 4. Until 2003, HMI offered lifelong employment. How did this practice affect the company’s ability to staff the organization with managers and employees capable of executing the strategy? How did this practice build the organizational capabilities required for successful strategy execution?
Herman Miller did a great job of staffing employees and managers that were capable of executing the “lifelong employment” strategy until they realized that the needs of a customer were ever changing, therefore, the expertise of a particular employee may not be needed once those needs shift. To help better explain the change from the “lifelong employment”, Volkema developed what was called “the new social contract.” Volkema explained it like this:

“We are a commercial enterprise, and the

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