Task Herman Miller Case

Task 1. Herman Miller Case
Instructions: read the case and answer the questions! Submit ONLY questions with your answers, do not submit whole case otherwise task will not be accepted! Do not copy case sentences and paragraphs! Put it in your own words! Group the relevant answers by points!

It was late 2001 when Brian Walker confronted Herman Miller CEO Michael Volkema and the rest of the top executive team. Walker (who was then president of Herman Miller North America and today serves as CEO of the company) told the team they needed to stop hoping for a quick turnaround and start planning for brutal cutbacks to help the company survive. After years of success, the maker of office furniture such as the stylish, ergonomically engineered Aeron chair was suffering “an industry heart attack,” with sales dropping drastically after the collapse of the dot-com boom.

Managers noticed the decline, but they kept thinking it would be short-lived. Walker, though, believed it was just the beginning of a long and painful downturn. He was right; by 2003, the company’s business had dropped 45 percent. Fortunately, the executive team had listened and taken action. The plan involved some painful decisions and some risky ones. First, the team cut 4,500 jobs—nearly 38 percent of the workforce, sold off more than a million square feet of prime real estate, and slashed some promising new businesses, such as a ready-to-assemble line of furniture sold over the Internet. However, managers knew that cutting back wasn’t enough to ensure that the company would survive over the long term. Looking at the industry environment, the economy, and international competition, the team believed volatility in their business would increase rather than decrease in the future. Therefore, they made a risky decision to invest millions in research and development of highly innovative ideas that might not pay off for years—if ever.
The decisions about what to cut and what to fund were made thoughtfully after much debate and discussion. With the current economic environment, Herman Miller is still facing challenges, but the most recent fiscal year’s profits exceeded forecasts and new products, such as a new-generation cubicle that promises a sense of privacy with openness, are showing promise. The company began hiring more workers in mid-2008, and a $1,595 “environmentally friendly” executive chair named the Embody was touted by Fortune magazine as “the new throne of the techie.” Moreover, the company is building business by creating innovative hospital furniture, such as a chair designed to help patients recovering from surgery.
Questions:
1. What were indicators of declining?
2. What was the decline phase? Why? Explain it!
3. What decisions did the new manager Brian Walker take to save the company?
4. How the decisions were made?