Herman Miller Inc: Case Insight

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Herman Miller - Case Insight Herman Miller Inc. (HMI) is a long established firm designing and manufacturing high end innovative office furniture. The firm has a history of innovation, including the award winning Ergon and Aeron chairs and more recently has benefited from the related diversification of the accessories division. This strategy is supported by a high commitment to employees; HMI was the first to introduce the Scanlon plan, with committees to share ideas and a profit sharing scheme. These strategies combined to create a competitive advantage of differentiation. The firm has expanded internationally, but 90% of the sales remained in North America. However, the twenty-first century has provided challenges, the 2001 dot.com bubble and slow down and the recession of 2008 have impacted negativity on the firms' performance. Cost cutting has been undertaken, including forfeiting for the lifetime employment commitment for a new social contract, which was well accepted, and more recently the withholding of payments to the retirement plans. However, the firm still faces some challenges; the net earrings have fallen to 2.1% in 2010 compared to 7.6% in 2008, with selling and general admin costs increasing proportionately. Cuts have failed to keep pace with the decreased demand. The sales are also covering less of the interest payments, falling from 11.2 in 2006 to only 2.5 in 2010. The firm needs to look to the future and determine the best way to move forward. Top
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