Herman Millers strategy Essay
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Is there evidence it has produced a competitive advantage and good financial performance Explain Herman Millers has produce competitive advantages and good financial performance by performing key pieces of activities as their strategies components as follows PRIMARY ACTIVITIES Supply Chain Management and Operation Having agreements with qualified suppliers to deliver parts to Herman Miller production facilities in a just-in-time process. The company outsources component parts to suppliers in order to reduce the fix production cost. Herman Miller uses lean manufacturing techniques to gain efficiencies, cost savings, lower inventories, higher inventory turnover, greater on-time shipments, higher quality, and better safety performance.
To speed up delivery time to its customer, Herman Miller mainly used the different manufacturing location operations in many countries. the company uses cross-functional product development teams to facilitate internal innovation, integrate activities across departments, increase the speed of new product development, enhance the commercialization of new products, and provide strategic flexibility.
It engages in supply partnerships, outsourcing component production with strategic suppliers to limit fixed production costs, increase profitability, and enable the company to retain control over production processes that have the greatest potential to yield competitive advantages.
Sales Marketing and Customer Service All productions are made of recyclable materials and renewable energy. For the builders who used its production will earn points of Leadership in Energy and Environmental Design certification. Herman Miller has followed product development and market development strategies with clear emphasis on differentiating its product. It operates in the upper end office furniture market in over 100 countries, although only 10 of its profits were from non-North American countries. The efforts of its Accessories Team could be classified as related diversification. Herman Miller uses green marketing and cooperative advertising initiatives to attract customers Provide complete explanations and description of the products, to support customer inquiries or complaints. SUPPORT ACTIVITIES RD Product RD, Technology and Systems Development Herman Miller focus on improving and innovating new productions, even during the recession, the company still invested in RD.
(Thrive Collection Products) Human Resources Management the company have a strong HR Management team and it offers various benefits to it employee. Competitive Advantage – Herman Miller continuously investing in RD and innovating in new products to satisfy the need of its customers earned the customer brand loyalty. In addition, the company willingness to contribute in the green world and environmental friendly strategy gained a good reputation in the market. As the company new product lines meet the increasing demand of ergonomic health products in the working environment, the new innovation product will become a competitive advantage over its rivals. Human Resources Management Described as a continuous strategy of reinvention and renewal, Herman Millers is a differentiation strategy based on product innovation. It depends on contributions made by individual employees the companys original design philosophy an organizational structure based on work teams, caucuses, and councils and exceptional HR policies The company continues to invest in research and development, even when survival from economic conditions is uncertain. (The income statement analysis above records a .3 percentage of sales increase in RD in each of the past two years.)
Strategy Herman Millers The companys culture is built on an empowered workforce and human resource practices that acknowledge the special talents and potential of all individuals, utilize committee-oriented collaboration to generate improvement ideas, encourage risk-taking, and exemplify shared sacrifice. Herman Millers codified values serve to unite employees, build productive relationships, and advocate employee-driven community contributions. Its Business as Unusual philosophy expands performance beyond the confines of measurable capabilities. 2. How have the companys values shaped its strategy and approach to strategy execution Provide illustrations of how these values are reflected in company policies. HMI companys value Curiosity Exploration respecting and encouraging risk and practicing forgiveness. People cant explore new ideas if never make a mistake. Learn from all the mistakes. Engagement being owner, actively committed to the life of this community Performance perform at the highest level possible to enriches lives as employees, delights customers and create real value for shareholder Inclusiveness include all the expressions of human talent and potential that society offers.
HMI value that every person should have the chance to realize his/her potential and finally understanding all the qualities. Design the way something looks and the way something works a method for getting something done. Foundations unique foundation shaped by stories, people and experiences in HMs past A Better World contribute to a better world by pursuing sustainability and environmental wisdom. Transparency letting people see how decisions are made and owning the decisions. Strategy and its execution Curiosity Exploration, Performance and Design value can be seen in HMI differentiated strategy as overall that pursued a path distinctively marked by reinvention and renewal. HUMAN RESOURCE MANAGEMENT Living office is one of strategy execution that based on many HMI value like curiosity exploration, engagement, performance, inclusiveness and design. This living office designed to foster camaraderie, connection, spontaneous interaction and group expression, that essential to attract, nurture, enable, and retain the talent to drive innovation and execution Forming a Team, as work unit at HMI shows curiosity exploration value that all levels were encouraged to put new idea and inclusiveness value that the team member are cross-functional and based on employees ability to contribute to that team.
Scanlon Plan, as a productivity incentive program, showing principles of equity and justice for everyone in the company which is reflecting inclusiveness value. Employee Gifts Committee the Environmental Quality Action Team that involves all employee and Environmental Quality Action Team whose purpose was to coordinate environmental programs worldwide and involve as many employees as possible is an example that HMI strategy that contain inclusiveness and A Better World value. Value about create A Better World, make company executes strategy by set goals for the number of company volunteer hours and by forming Environmental Affairs Team based on curiosity and exploration value so the company can make improvements both at environmentally friendly and cost effectiveness. SALES MARKETING In sales and marketing area, mostly HMI strategies are based on Design, Performance and A Better World value. HMI winning award in design through Ergon, Equa Aeron chair design and use Green Marketing to sell its product. They using recyclable materials and renewable energy. HMI also engaged in cooperative advertising with strategic partner. SUPPLY CHAIN MANAGEMENT OPERATION HMPS (Herman Miller Production System) strove to maintain efficiencies and cost savings through just-in-time process and limit fixed production cost by outsourcing component parts from strategic suppliers.
Learn from their subsidiary Integrated Metals Technology that costly, take a long time, and just 70 in quality (reflecting Foundations value) , HMI enlisting help and ideas of every one and hire supplier like Toyota Supplier Support Center based on inclusiveness and performance value. FINANCE AND RD Curiosity and exploration value, as two of HM greatest strength which has large effect towards financial strategic and execution especially on RD implementation. Although their financial performance in downturn, HM invester in RD as a investment called Purple Several Policy that reflecting HM values BOD requires each director will have an equity interest after one year on the board and within 5 years the board encouraged the board the directors to have shares of common stock of the company with a value of at least three times the amount af the annual retainer paid to each director and Business as Usual policy that appeared to pay off in both and good times ( HM engagement and inclusiveness value in ESOP program Policy that any transaction between the company and any executive officer or director of the company must be disclosed to the BOD shows transparency and engagement value. 4.
Until 2003, HMI offered lifelong employment. How did this practice affect the companys 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 For the company can hope to perform the activities required for succesful strategy execution with attracting and retaining talented managers and employess with suitable skill and intellectual capital. In HMI using this has long traditional value from De Pree its founder to treating all workers as individual and special talents. To make a practice build the organizational capabilities is using the three types building actions, such as Staffing the organization Building dynamic capabilities and core competencies Structuring the organization and work effort HMI seemed to be doing an excellent job of attracting talented managers and employees, building organizational capabilities, linking rewards to strategic goals, creating a strategy-supportive culture, and creating a culture supportive of strategy execution.
Despite these efforts, the company was forced to lay off 38 of the workforce and reduce pay by 10 for managers and employees. 5. Do non-monetary incentives facilitate strategy execution at HMI Explain. Perks at Herman Miller not only wonderful for their employees but also surprisingly these benefits help Herman Miller attract a talented workforce and it has also helped the firm retain those talents as well. In example, the tuition reimbursement helped build the employees capabilities. The concierge and on-site services allowed employees to focus on work without unneeded distractions. Flexible schedule, including job sharing, compressed workweek and employee assistance programs help to create a work athmosphere in which there is genuine sincerity caring and mutual respect among workers and between management and employee. It also the employee to find their suitable working time, their best capability and their be These perks are Health insurance, vision care prescription plans Flexible schedule, including job sharing, compressed workweek and telecommuting Short-term long-term disability insurance Life insurance accidental death insurance Long-term care insurance Gym memberships and Employee assistance programs. 100 tuition reimbursement Concierge services (e.g. dry cleaning, greeting cards take-home meals) and On-site services (e.g. massage therapy, banking, and personal trainers).
6. Describe the culture at HMI. Would you characterize HMIs culture as healthy and largely supportive of good strategy execution Explain. HMI Culture was treated by De Pree, HMI President in 1919. In this HMI Culture, all workers treated as individuals with special talents and potential. This commitment become HMs Corporate culture generate respect for all employees and fueled the guest to tap the diversity of gifts and skills held by all. This culture can lead company in managing their resources capabilities and evaluate their internal situation. Based on the understanding of internal situation, HMI can improve ther performed value chain activities and has Companys competitively important resources. This resources capabilies is a part of HMI strength that supports companys strategies and strategies execution. With this kind of culture, HMI has core competencies in that are competitively valuable and rare, hard to copy, and non susbstitutable like their human capital/talents, Besides that, HMI also has sustainability culture which create efficiency and friendly environment.
This is a good culture because it can assist HM to be able to adapt with external changes and contribute to communities. 7. What recommendations would you make to Herman Millers CEO Brian Walker to improve the companys current financial performance Does the company need to radically alter its strategy because of poor economic conditions Should it improve its approach to implementing the strategy to reduce costs and improve efficiency Explain. The Recommendations to HMI is Management has Termination of lifelong employment in 2003 and the accompanying 38 reduction of the workforce through the pay cuts and reduced work week in 2009, it is hard to fault the companys responses to the economic downturn. And in the case, We should concerned in the times interest earned ratio, because in the case the change of ratio were as follows in 2006 until 2010 there are change 8.7 the times of ratio. We should change of budgeting in RD, because HMI need more saving of Cash, not only for RD. Until the condition of economic and internal of HMI stable, we must make saving. For the expansion to the market, we must push sales to get a increase in revenue in Global Market.