Herman Miller Case Essay

Herman Miller, Inc. Case – Page C-319 Herman Miller, Inc. is a company that specializes in the production and manufacture of modern office furniture. The company began its reputation through product innovation and production processes which started in the 1920’s. In the path of their success, Herman Miller, Inc. has been able to pursue a path distinctively marked by reinvention and by renewal. I would say that in the beginning the company pursued a focused low-cost strategy. The initial items the company specialized in, is what the company perfected and grew to produce efficiently.

However that was soon to change. This path was able to serve the company well for many a decade. With the passing of time the company instituted a Scanlon Plan which is a productivity incentive program that helps companies to find ways at being more productive in their product offering. This model helped the company a lot. With the usage of this the company then moved to having a differentiation strategy. They started to produce more products that were based on scientific observation and ergonomic principles…some of the same observations and principles that the company still utilizes today.

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In the reading of the case it was difficult for me to pinpoint exact issues in Herman Miller, Inc’s. functional departments (i. e. , HRM, Accounting, Finance, Operations, etc). However in the area of human resource management this was actually a strength of the company. Being routinely listed on Fortune’s 100 Best Companies to Work for, applicants desires to work for the company were very strong. There were many employee incentive programs offered that helped to boost the morale of employee and to retain the companies top performers. The finance department was considered a bit more conservative.

Some issues that became was during the time of the recession when the debt-to-equity ratio rose. In order to improve these numbers the company sold more than 3 million shares of stock to help the company during this time. It is interesting to note that even when rough times abounded, Herman Miller, Inc. stayed true to their original beliefs. Even when times were bad, they continues to invest money in research and development in order to remain true to their innovative ideas and product offerings. Examining the financial ratios for the company can help a person to be able to see how the company is doing from a financial standpoint.

The case provided some financial figures, so if we just looked at a few numbers we can generally tell how the company is doing. I have decided to analyze the following financial ratios: Current Ratio= current assets / current liabilities – 1. 26 Net Working Capital Ratio= net working capital / total assets – 0. 11 The current ratio is looked at to see how well the company would be able to pay back their short term liabilities. Usually if a company’s number is under 1 then that would indicate that they would have problems in paying off their debts.

However, Herman Miller, Inc’s ratio is 1. 26 so that is telling me that the company would not have a problem in paying off their debts. Since the net working capital ratio is positive this is telling us that the company can pay off its short-term liabilities. If the number was negative then this would be a bad look for the company. The ability for a company to pay off their short and long term debts (liabilities) is a very good indicator of how financially stable the company is. So that is why I decided to analyze these two financial ratios for this company.