Herman Miller Case Study Analysis Essay
Describe Herman Miller’s business strategy. Is there evidence it has produced a competitive advantage and good financial performance? Explain.
Herman Miller is a Star Furniture company which has embraced innovation to become a leader in the industry of office furniture. Herman Miller has for the last 10 decades pursued renewal and reinvention, a process that has made the company to gain competitive advantage in the furniture industry. As an innovative company, Herman Miller has focused mainly on product differentiation through product and market development strategies. For example, the company through product development in 1950s was able to mould a fiberglass chair and an Ergon chair. Through market development strategies, the company was able to expand its market overseas including Japan, Africa and Australia.
From the case study, its sales were significantly high in 2000 and 2001 when the company recorded a sales amounting to $2.2 billion resulting to a cumulative profit of $144 million. However, the company indicated a significant loss following the dot.com bubble burst in 2001. Despite the economic challenges the company faced in 2001 and during the economic recession in 2009, it continues to grow following its keen focus on efficiency in the production processes as well as innovation . Due to its innovation and design excellence, the company has been able to gain a competitive advantage over its close rivals. In addition, the company through innovation and the focus on performance was able to develop best-recognized chairs which were known as Aeron in 1994.Furthermore, the company continues to sell its highly innovative and quality furniture for a relatively cheaper price. To gain a competitive advantage in the furniture industry and control its overall cost structure, Herman Miller company continues to outsource through suppliers with an aim of reducing fixed manufacturing cost. As a result, the company was able to increase its sales between 2013 and 2014 from $ 468.1 million to 509.7 million.
How have the company’s values shaped its strategy and approach to strategy execution? Provide illustrations of how these values are reflected in company policies.
Herman Miller upholds environmental sustainability by using materials that are safe, as well as making use of recycled materials in order to mitigate negative impacts on the environment, in the course of its operation. The company has reported that there are more than five hundred individuals who are directly or indirectly engaged in environmental initiatives in the company. The respect for environmental sustainability shapes all the polices and strategies adopted by the environment and involving employees in environmental initiatives gives them an opportunity to make their contribution towards a better earth.
The organization values adopted by Herman Miller play a crucial role in enabling the company to develop and execute product and market strategies. This is through the development of policies by the top management which create a suitable working environment that creates a foundation for strategy execution. There are various values that have been adopted by Herman Miller. For example, Paul Murray recalls a worker who told him to get his safety glasses back on during his first day of job. This was an indication that workers at the Herman Miller were empowered in order to involve them in all levels of operations so that they could execute the set strategies. According to the values of Herman Miller, problem solving processes and strategy execution can only be attained through employee motivation. For this reason, the company values employee education and training in order to achieve operational excellence.
Herman Miller`s organizational values define what the company believes in and its intention is to unite all employees, contribute to communities and build relationships. Such values as highlighted in the case study include engagement that defines the company’s commitment to engage with the community. Another value identified is performance, which defines the organization’s strategy to improve its performance so as to develop real values for the stockholders, delight their customers and enrich the lives of its employees. Another value that defines the company policy is the desire and commitment to develop the employees’ competences, abilities and skills. This is with an aim of attaining performance excellence and providing a favorable environment for the shareholders, employees and top management. Consequently the company has continued to remain competitive within the fortune industry and has become one of the best companies to work for as indicated by Fortune 100.