Preview

Al Dunpal Case Study

Better Essays
Open Document
Open Document
1394 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Al Dunpal Case Study
Situation-

Albert Dunlap was known for turning around badly shaped companies into profitable companies. Through his radical restructuring and downsizing methods, he created shareholder value. At Scott Paper, Dunlap fired 35% of all the employees and 71% of the corporate staff raising the stock price from $38.00 to $120.00 and sold the company to Kimberly Clark for more than $6B. Due to his past success, Al Dunlap was hired to turn around Sunbeam. Sunbeam had a long period of management and financial instability. In other words, Sunbeam needed a “savior.” Many believed this was Al Dunlap. Unfortunately, through his tenure at Sunbeam, stock price fell from a high $53.00 to $16.00 on the day that he was fired. Were his “rightsizing” techniques not adequate? or was he just an overpaid CEO?

1. Consider Dunlap’s statement on page 3 of the case: “Stakeholders! Everytime I hear the word I ask how much did they pay for their stake? There is only one constituency I am concerned about and that is the shareholders.” Do you agree or disagree with Dunlap’s view of shareholder primacy?” Explain

I completely disagree with Dunlap’s statement. Although shareholders are owners of the company who have “paid” for their stake, stakeholders do play a key role in an organization. In essence, shareholders are stakeholders. According to Kim in Corporate Governance (p. 166) although the primary goal of a firm is to create wealth for the shareholders many believe companies should a have a greater responsibility to society – stakeholders. I agree with this perspective. Every decision Dunlap made as a CEO affected not only the shareholders but also affected the needs and interests of the stakeholders in the company. In the short-term, shareholders profited from the company wide staff cuts and savings but Dunlap sacrificed Sunbeam’s culture and morale of its employees. In the long-term, the company suffered. During Dunlap’s tenure, many employees were let go

You May Also Find These Documents Helpful

  • Powerful Essays

    Sunbeam Case Analysis

    • 914 Words
    • 3 Pages

    1. Analyze the changes that Al Dunlap had initiated at Sunbeam after being hired from a strategic perspective. Did the changes started by Dunlap allow him opportunities to manage earnings?…

    • 914 Words
    • 3 Pages
    Powerful Essays
  • Powerful Essays

    Stakeholder for Staples

    • 2016 Words
    • 9 Pages

    Stakeholders are individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and who are therefore its potential beneficiaries and/or risk bearers1. There are several different types of stakeholders associated with a corporation, and those stakeholders can have different views and opinions on what corporation 's goals should be and how they should be running. I have interviewed three different stakeholders of Staples Inc., an employee, a customer and a stock holder, to find their relationship between them and the firm. Then, I will use this information to suggest how the firm should proceed and continue to have a better and more beneficial relationship with its stakeholders.…

    • 2016 Words
    • 9 Pages
    Powerful Essays
  • Satisfactory Essays

    Ethics Case Byp1

    • 296 Words
    • 2 Pages

    A) Who are the stakeholders in this situation? The stakeholders in this situation are everyone that affected by the decision made. This would include Wayne Terrago, the VP of Finance, the President, and the others that argued. This is because each one of these people and groups are affected by the outcome of the decision that is made.…

    • 296 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Sunbeam Dunlap Case

    • 695 Words
    • 3 Pages

    The management team that Dunlap brought merely had the same understanding about the company. They did not have any previous management team explaining what were their initial purposes of acquiring a specific company or opening a new product line. Dunlap was cutting down everything that he thought it was not necessary for the business. Within five years, Sunbeam has been investing in the production lines and closing down afterward, and it was definitely a waste of business capital. There would be a higher inherent risk because of inconsistency with management…

    • 695 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Corporate Goverment

    • 1300 Words
    • 4 Pages

    “Stakeholders! Every time I hear the word I ask ‘How much did they pay for their stake? There is only one constituency I am concerned about and that is the shareholders.” Do you agree or disagree with Dunlap’s view of shareholder primacy? Explain.…

    • 1300 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Sunbeam Corporation Ethics

    • 4974 Words
    • 20 Pages

    Ellis, Junius, (September 1996). “What Sunbeam Isn‟t Saying About Its Savior CEO and its 50% Stock…

    • 4974 Words
    • 20 Pages
    Powerful Essays
  • Powerful Essays

    A company has a dual nature as both an association of its members and a person separate from its members. The company’s property is owned by the company as a separate person, not by the members; the company’s business is conducted by the company as a separate person, not by the members; and it is the company as a separate person that enters into contracts in relation to the company’s business and property3. “The members are not personally entitled to the benefits or liable for the burdens arising, so their rights are restricted to receiving from the company their share of profits and their liabilities to paying the amounts due from them to the company4.”…

    • 4700 Words
    • 16 Pages
    Powerful Essays
  • Powerful Essays

    Al Dunlap at Sunbeam

    • 1920 Words
    • 8 Pages

    Through out his tenure at Sunbeam,Al Dunlap’s advocated profit by firing many employees and shutting down many factories.If we look at it in the short term ,this approach seems very attractive as it brings in quick short term gains.In the long term ,however, such a decision would not ensure the sustainability of the company. Profitability and responsibility can and should be combined in an ideal world, however it is clear that they are at least partially contradictory. Shareholder pressure should not force a company to make short-term decisions that might be detrimental to the long-term profitability of the company.…

    • 1920 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Albert Dunlap Essay

    • 659 Words
    • 3 Pages

    Management of a company is required to make difficult decisions based on the events that occur throughout its corporate history. Sunbeam Corporation was not an exception from this concept. The events led by Albert Dunlap had an effect on many people. Most of which affected the basis of financial implications of shareholders wealth.…

    • 659 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    CAPITAL LTD, an analysis into the division of powers between the members of a company and its board of directors was completed as well as the protection of interests of a company’s creditors. This case touched on these two issues in the context of reduction of capital under section 256B of the Corporations Act (2001).…

    • 1536 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Markstrat Final Report

    • 2968 Words
    • 9 Pages

    Firm E performed very well during the 8 periods we were in control. During those periods we grew the company’s contribution margin from $14.2 million dollars up to $70 million dollars and oversaw a stock price increase of over 170%. During this period we managed a maximum of 5 brands. Three of these five brands are making substantial profits totaling $75.7 million in the 8th period. The other two brands were targeted at the emerging Vodite market and although they are not currently seeing a profit, projections show they are on track to see profits within the next 2 periods (Exhibit #: chart showing Vodite sales)…

    • 2968 Words
    • 9 Pages
    Good Essays
  • Good Essays

    Stakeholder's Paradox

    • 498 Words
    • 2 Pages

    Ed Freeman on the other hand says something a bit different. He says that both the owners and stakeholders have a right to demand certain actions from management because they all have a vested stake in the corporation. But saying this makes everyone equal when they are really not.…

    • 498 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Financial decidion making

    • 454 Words
    • 2 Pages

    The stakeholders involved are Anne Distagne the CEO of Linkage Construction, Inc. and Sue Fault the CFO of Linkage Construction, Inc. But this decision effects many other stakeholders; the public, board of directors, the president of the company, employees, etc.…

    • 454 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    I don’t agree with Dunlap’s view that shareholders are the only constituencies about which corporate directors and executives should be concerned. In light of agents’ obligations to principals, managers are supposed act in the best interest of the company’s shareholders, the major capital providers, when making decisions; however, as shareholders and stakeholders interests are to a large extent compatible, especially from a long-term perspective, managers should also take into consideration the interests of multiple constituencies when operating a company. For example, both shareholders and customers may benefit from a company’s successful research and development (R&D) projects on cutting-edge products as customers can have high-value products while shareholders may profit considerably from the sales. Meanwhile, like shareholders, stakeholders also have their rights that managers should not treat with negligence. Below are some examples: customers have the right to receive safe products that they purchase; lenders have the right to receive interests at a negotiated rate and principal at maturity; employees have the right to work in a safe environment and be treated with respect for their dignity and human rights; competitors have the right to be treated fairly without groundless slanders or violation of their intellectual properties. Some of stakeholders’ rights are stated clearly in different laws and regulations, which aim to protect stakeholders and reinforce a business entity’s accountability to its multiple constituencies. Also, stakeholders can earn some rights due to their initiative positions in market. For instance, given the lenders’ finite resources for lending, lenders enjoy the right to acquire further disclosure regarding borrowers’ business or other concerns because they can decide whether or not to lend money to a certain prospective borrower. Likewise, customers…

    • 1011 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Every stakeholder of a company has their own rights with corresponding responsibilities. These must be given to them with due respect. It may differ depending on how they function in a company and how they can affect in the company’s performance. Nevertheless, each functions is essential and vital to the company’s operations, thus, each individual must also be given the rights which are really due for them.…

    • 3080 Words
    • 9 Pages
    Good Essays