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1. How did pressures for financial performance contribute to Sunbeams culture where quarterly sales were manipulated to influence investors?
The coercive power wielded by Al Dunlap, high performance expectations from the market and the board of directors of Sunbeam probably all contributed to a cultural mindset that allowed stakeholders to push the limits of the GAAP and ignore good business practices and the needs of other vital stakeholders. The cronies that Dunlap brought with him to Sunbeam would be well experienced in the techniques and processes to implement Dunlaps vision and were able to implement them quickly. The board of directors at Sunbeam hired Dunlap for a reason. They knew his track record, real or inflated, and gambled that Dunlap would be able to apply his four rules of business and turn Sunbeam around. The new risk taking culture at Sunbeam was also aided by Arthur Andersons buy-off of their financials. The market responded positively to Dunlaps lay-offs, consolidations, re-branding and inflated numbers and this would have kept the “mean business” wheels rolling.
2. What were Dunlaps contributions to the financial and public relations embarrassments at Sunbeam that caused investors and the public to question Sunbeams integrity?
Everything about the Sunbeam failure was magnified because of Dunlaps high profile status. He was already well-known as a hatchet man when he took the job at Sunbeam and he helped to keep focus on the company because of his book and his enormous ego. Dunlap couldnt stop promoting himself and his business theories and strategies.
Some of what Dunlap did at Sunbeam made good business sense. Sunbeams product line was overloaded and paring it down to the basics, focusing on quality service and “differentiating Sunbeams products” (pp. 5 page 372 were very good strategies. Some lay-offs and consolidations were probably also necessary but severe cutbacks, “highly aggressive sales tactics”, and consolidation of power under Dunlap was not perceived well in financial circles. (Byrne, 1998 ¶ 23) If the U.S Labor Secretary singles a company out with criticism of their business practices, that should signal trouble. The precipitous departure of one of two men who hired Dunlap, Michael Steinhardt, would seem to mean that, for some, Dunlaps methods were a too bitter pill to swallow.