AL DUNLAP AT SUNBEAM

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COMPANY OVERVIEW : SUNBEAM
From Agricultural to Home Appliances…
 Sunbeam was formed in 1897as the Chicago Flexible Shaft Company. The company
originally manufactured and sold agricultural tools. By 1910 the company introduced
the iron as its first electrical home appliance.

Brilliant years : Growing and growing…..

In 1960, Sunbeam acquired Oster which allowed Sunbeam to expand into other home
products such as hair dryers and health and beauty appliances and be main player in
USA cooking and home appliances.

Survive, but barely….

 1980s was tough years for all American companies due to bad economic condition,
Sunbeam barely survive by acquisition by Allegheny International. By 1988
Allegheny International was also forced into bankruptcy and sunbeam sold to Paul
Kazarian, and hedge fund manager Michael Steinhardt
Never be the same as before….
 Even under 2 CEOs, Paul Kazarian 1992-1993 and Former GE “star” Roger
Schipke 1993-1996 Sunbeam couldn’t get their best performance. Sunbeam
share prices was dropped drastically by 15%
 PRODUCTS

Coffee, Kettles, Toasters

& Beverages

Food Preparation,
Food Savers

Cooking Appliances

Home care & Accessories

 APPOINTING THE “MESSIAH”
A.K.A “DEMOLITION EXPERT” AL
DUNLAP
 In July 1996, Sunbeam’s BOD hired Albert J Dunlap as CEO and
Chairman. The reasons were :

Quick Turnaround
Dunlap had a reputation of quick corporate turnarounds
resulting in dramatic increases in share value

1 year growth
His strategy is to take sick company and turn it around
within a year.

Cost and efficiency

Cut costs at all levels of the organization and return the
corporate focus to its core products while searching for a
buyer for the newly-organized company
Make sick company great again
At Scott Paper (his former company), Dunlap fired 35%
of all the employees and 71% of the corporate staff and
raising the “sick” company stock price from $38.00 to
$120.00 and sold the company to Kimberly Clark for
more than $6B
DUNLAP’S RESTRUCTURE
STRATEGIES AT SUNBEAM
Step 1: New
Management He make his own “Dream Team” Management
with mostly members from his previous company
Team

Step 2: Cut Cut 6.000 employees out of 12.000, disposed

Excessive of 18 factories worldwide, reduced the number
of warehouses from 61 to 18

Step 3: Focus They identified five categories surrounding the core

on Core business as vital to Sunbeam’s success: kitchen appliances,
business health and home, outdoor cooking, personal care and
comfort, and professional products

Step 4: More Effective investment and efficiency with disposed

Global of 18 factories worldwide
 AL DUNLAP’S “MIDAS
TOUCH” AT SUNBEAM
Rocketing Stock Price
 Within a year Sunbeam’s stock price sky-
rocketing to $50 per share from over $15 per
share. The stock price was the highest in the
industry, selling at 2-3 times its competitors

Increase Sales
Sunbeam’s sales increase for the year of 22%
with earnings higher than analyst expectations

High Margin
In the 4th quarter, they had achieved 20%
operating margins with a 17% overall operating
margin for the year

Growing International Sales

International sales were up 34% by successed
acquisition three companies Coleman stoves, Mr
Coffee, and First Alert
 BEHIND SUNBEAM’S “SKY FULL
STARS” UNDER AL DUNLAP

Sacked 6.000 out of total 12.000 employees Used manipulative accounting

technique to inflate Sunbeam’s
financial result

Make Sunbeam’s Excecutives “fat”

Closed 18 out of total 26 factories
 WHEN DUNLAP’S “SKY CASTLE”
AT SUNBEAM GOES DOWN

FIRED

After only less than 2 years Dunlap became Sunbeam’s CEO, he has
fired by BOD as Company performance in his second year didn’t
met the expectation. Sunbeam’s stock price gone down drastically
from its all-time highest $53 to $16. What was happened with
Dunlap at Sunbeam at that time?
 THE FAULT IN DUNLAP’S
“STARS”
Chose Shareholders over Stakeholders

Shareholder’s Wealth
Maximization

Stakeholder’s Welfare as
Company Objective

Shareholders Responsibilities Stakeholders Responsibilities

Public Good Image, High Employee Financial, Well-

Return, Devidend Being, respects
Individual (include Good Image, Public (Shareholders,
BoD, Senior Profitable, High Auditors, Wall Transparency
Executive, Dunlap) Return Street, Analysts, etc)
Suppliers Fair in Business,
Accountability
THE FAULT IN DUNLAP’S
“STARS”
Ignored Sunbeam’s Cultures to the Strategy
Execution Process
High Performance
Healthy Cultures
Adaptive

Change-Resistance

Politized
Unhealthy Cultures
Insular, Inwardly Focused

Unethical and Greed-Driven

Incompatible Subcultures
 THE FAULT IN DUNLAP’S
“STARS”
Ignored Sunbeam’s Cultures to the Strategy
Execution Process (Cont’d)
Sunbeam’s Unhealthy Cultures
Change- Politized Insular, Unethical and Incompatible
Resistance Inwardly Greed-Driven Subcultures
Focused

Since the Quite high Numerous of They are prone Lack of

“Barely interests within old factories to adopt consensus
Survive” Sunbeam as and and fact accounting within
period in the Dunlap’s about their principles that Sunbeam,
1980s, dream team primary target make financial especially
Sunbean get issue and their market still performance among the top
used to BOD since they 40s-more look better management
avoiding risks were also married than it really with
on their acted as couple, they was stakesholders
business Shareholders were still focus
on them only
 MANAGEMENT BY WALKING
AROUND (MBWA)
MBWA : is one of the techniques that Effective leaders use to stay informed about
how well the strategy execution process is progressing.

Dunlap’s MBWA didn’t effective

informed him due to he was only
focus on specific internal actors. He
was neglected taking external
BOD advices such as from internal or
external analyst or auditor and
suppliers
Dunlap’s “Dream Team”
Dunlap Management

Russell A. Kersh
 WHAT WE COULD LEARN FROM
DUNLAP’S TERRIBLE, HORRIBLE,
NO GOOD, VERY BAD DAYS AS
CEO AT SUNBEAM?
Balancing Shareholders and Stakeholders
Even though stakeholders didn’t pay a penny for their stake as shareholders, their interests
are still valuable to the shareholders as they are the ones that drive shareholder profit.
Without the employees and the culture of the firm, there is nobody left to perform the labor
that creates value for the company.

Cultures are matter behind good leader Strategies

Originally, Sunbeam has strong cultures in operating practices and in

its people culture. But since they have had experiences in acquisition,
restructuring, and almost bankruptcy (especially in 1980s until 1990s)
those cultures became weaker. Dunlap has been failed to recognized
or overcome Sunbeam’s weak and unhealthy cultures since beginning,
and it influenced Dunlap’s crafting, adjusting and executing strategies
 THIS SLIDE
INTENTIONALLY LEFT
BLANK
 IN MEMORIAM, A FATHER, A
HUSBAND, AND A CONTROVERSIAL
YET IRON-WILLED CEO IN BUSINESS
WORLD…

“You’re not in business to be liked”

Albert John Dunlap
(1937-2019)