Simmons case
Simmons Case Analysis Simmons should roll out the GGOL program in order to repair incongruence between the firm’s current culture and its strategy, as well as a misalignment between its present culture and CEO Charlie Eitel’s desired culture. The $7.2 million price tag is a substantial investment in light of the company’s +5 times EBITDA leverage ratio and will face resistance from Fenway Partners, the private equity shop that bought Simmons in 1998. We have identified Eitel’s sources of power, as well as how he should leverage those to influence the employees and Fenway that this risky solution is in fact the ideal solution.
Per Fenway, the company’s strategy is to increase portfolio value by aggressively implementing long-term growth strategies and developing customers and partners. Post-1978 management has a similar goal: reduce costs, improve performance/productivity and raise profits. Currently, the main task is to focus on Simmons’ historical roots of making mattresses (a manufacturing-based, labor-intensive process). Based on the congruence model, we find a disconnect between Simmons’ current culture and both its strategy and Eitel’s desired culture of empowerment, strong customer relationships and innovation. There are also aspects of the tasks and people that don’t fit with the firm’s strategic goals, such as production processes that likely differ among plants since they don’t share newfound ways to improve efficiency with one another. In addition, Eitel has the self-assigned tasks of improving customer relationships and personal employee development.
In terms of formal organization, Eitel recently altered the company’s structure by eliminating the General Manager position, in an attempt for the manufacturing plants to operate as “18 of one” rather than “one of 18.” Also, employees and management have a vested interest in the company’s profits, though a formal ESOP, and since many people’s family members work there too, we infer that at
Per Fenway, the company’s strategy is to increase portfolio value by aggressively implementing long-term growth strategies and developing customers and partners. Post-1978 management has a similar goal: reduce costs, improve performance/productivity and raise profits. Currently, the main task is to focus on Simmons’ historical roots of making mattresses (a manufacturing-based, labor-intensive process). Based on the congruence model, we find a disconnect between Simmons’ current culture and both its strategy and Eitel’s desired culture of empowerment, strong customer relationships and innovation. There are also aspects of the tasks and people that don’t fit with the firm’s strategic goals, such as production processes that likely differ among plants since they don’t share newfound ways to improve efficiency with one another. In addition, Eitel has the self-assigned tasks of improving customer relationships and personal employee development.
In terms of formal organization, Eitel recently altered the company’s structure by eliminating the General Manager position, in an attempt for the manufacturing plants to operate as “18 of one” rather than “one of 18.” Also, employees and management have a vested interest in the company’s profits, though a formal ESOP, and since many people’s family members work there too, we infer that at