Al Dunlap At Sunbeam

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Al Dunlop at Sunbeam A Case Study Analysis

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Al Dunlop at Sunbeam A Case Study Analysis

Preamble

Sunbeam Corporation was encountering tough times and when it hired Al Dunlop. Dunlop was an eminent figure in handling business turnarounds in a quite effective and harsh manner. According to Dunlop, the downsizing and restructuring are the anchors to save the businesses from drowning. Sunbeam hired Dunlop in 1996 at that point, the stock augmented at a remarkable pace and became 53 dollars. However, the magic did not last long, and after two months, the stock fell in an exacerbated manner and became 16 dollars consequently Dunlop was fired.

Focus Questions

1. Dunlops Statement about Shareholders. Agree or Disagree

Stakeholders Every time I hear the word, I ask, how much did they pay for their stake Stakeholders dont pay a penny for their stake. There is only one constituency I am concerned about, and that is the stakeholders (Khurana Hall, 2003). No doubt, only a few ones will agree with the statement because of the implied absurdity of the notion. An organization is a singular entity that cannot operate in the absence of its stakeholders. However, shareholders are in a stable position because they pay for the financing of the business, but this fact never mitigates the effectiveness of other stakeholders. Stakeholders of industry include employees, government, suppliers, investors, retailers, and customers, and no business can even imagine completing its business process cycle in the absence of any of them (Ronnegard Smith, 2018).

The pivotal objective of any business is maximizing profitability for all the investors, but the contemporary business archetype has expanded the scope of practices. Therefore the stakeholders are considered as a social responsibility of the organization. Take the instance of Sunbeam case study the selfish decision making of Dunlop impacted the well-being of a myriad of stakeholders, particularly and society generally. The irrationally taken initiatives of Dunlop cut the cost of employees that temporarily proven to be advantageous for shareholders in the short-term. Throughout the process, Dunlop destroyed the motivational spirit of the workforce and overlooked the organizational culture altogether. Consequently, Sunbeam confronted adversaries in long terms. Dunlop even fired an extraordinarily loyal and experienced employee Marsha, who was working with the organization for about thirty-four years. On the other hand, Dunlap shut downed many production plants that, in turn, disturbed the employment proportion of company and community simultaneously. In his context, it is indispensable to deem that stakeholders, especially personnel, are the driving force and integral part of business operations without their prosperity, no business can imagine thriving.

2. Dunlaps Compensation Packages and Motivated Behaviors

Because of the Scott Paper case, Dunlop carried a renowned reputation in handling the intricacies while turning around the companies loss into profits. The perceived fame of Dunlop made him entitled to an ultimately competitive package. In the start, Dunlops salary is showing about 507k dollars that comprised only on stock awards and options without any bonuses. In due course, Dunlop invested a sizeable amount of five million dollars as Chief Executive Officer, and in turn, he earned 1.5 million dollars against his first stock purchase. The underlying motivation of the compensation package was the acceleration of stock price, and in due course, all other external and internal factors were neglected.

Dunlap generated considerable shareholder value to Sunbeam by eradicating the employees expenditures (fired off more than 12,000 employees) and shutting down of several manufacturing plants. Moreover, the first salary package was devised with a feasible structure, but the second one merely pivoted the idea of shareholders wealth maximization ignored the stakeholders position concurrently.

3. Controversies Created By Al Dunlap at Scott Paper and Sunbeam

Al Dunlap altered the visages of Scott Paper and then Sunbeam to an exacerbated level. The modification of conventional paradigms, in turn, caused the emergence of numerous controversies. At Scott Paper, Dunlop boarded up Scotts headquarters that was spread on a massive area of 750,000 square-feet he also fired 70 of the employees. Furthermore, Dunlop reneged on all the charitable donations of Scott, and in the wake of Dunlops insensitive and callous business stratagem Scott Paper started to lose is suppliers. Sunbeam faced similar consequences after hiring Dunlop as he urged on the layoff approach to protecting the organization.

Hiring Dunlop was not a completely wrong decision, but approaches of Dunlop were not practical and versatile. Dunlop delineated only on one dimension i.e., maximizing the shareholders value, and in due course, he forgot to pay attention to other facades that are imperative for a bountiful business.

4. Firing Dunlop Is a Right Decision

By analyzing the case and all other intertwined aspects of Al Dunlops expertise in turnaround the businesses and his approaches to tackle the circumstances and elevating shareholders value, it becomes evident that it was the right decision to fire Dunlop. Through glimpses of case studies of Scott Paper and Sunbeam, it seems that Dunlop possesses a stubborn and self-indulgent, self-oriented personality, and such people are seldom able to shun their haughtiness. Throughout his job tenure, Dunlop only pondered about attaining the immediate and short-term benefits, and in due course, he completely disregarded the long-term prospects. Dunlop and all other CEOs and managers need to comprehend that shareholders value and value maximization never come from unfair and socially detrimental practices. The contemporary model of business practices asserts the significance of human resources and corporate social responsibility in achieving organizational goals. And through such strategies, the benefits and impact will be fruitful for the business in the long-term and will reflect as an affluent society in the big picture.

Reference

Hall, B., Khurana, R. (2003). Al Dunlap at Sunbeam.  https//www.hbs.edu/faculty/Pages/item.aspxnum26045

Ronnegard, D., Smith, N. (2018). Shareholder Primacy vs. Stakeholder Theory The  Law as Constraint and Potential Enabler of Stakeholder Concerns. SSRN Electronic  Journal. doi 10.2139/ssrn.3165992

Sunbeam Corporation Chainsaw Al, Greed, and Recovery. (2019).  https//danielsethics.mgt.unm.edu/pdf/sunbeam-case-study.pdf

Al Dunlop at Sunbeam A Case Study Analysis

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