Question Question: When Al Dunlap was CEO of Kimberly Clark’s Scott Paper Division, he eliminate

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Question: When Al Dunlap was CEO of Kimberly Clark's Scott Paper Division, he eliminated the company's $5 million annual corporate philanthropy budget as part of his efforts to cut costs and boost the company's profits. When he became CEO of Sunbeam, Dunlap announced he was cutting the company's $1 million annual giving program. He explained, “The purest form of charity is to make the most money you can for shareholders and let them give it to whatever charity they want.” What do you think about Al Dunlap's approach to increasing profits for the firm? (Don’t forget to search the Internet for more information on Al Dunlap before posting your response. There is no information about Mr. Dunlap in your textbook.) 1. Cutting costs is a good thing for any firm however, when if the business is only concerned with maximizing its profits it may be overlooking its social responsibility. In these cases he did not take into account how his decisions would affect the environment, his employees, nor his customers. Being a cost-cutting CEO, Al truly felt his businesses simply existed to make a profit and not to be socially accepted. To make money for the shareholders, Dunlap used four simple rules of business: 1) get the right management team, 2) cut back to the lowest costs, 3) focus on the core business, and 4) get a real strategy. His operating philosophy was to make extreme cuts in all areas of operations, including massive layoffs, to streamline business. He operated as if people were dispensable and fired them if he felt they cost more than they were worth. One of Dunlap’s strategies was to use “bill and hold” which allowed Sunbeam to book sales months prior to actual shipping and this inflated its quarterly earnings. While this was not an illegal act it was misleading to the shareholders. Dunlap tried to recover from these losses by announcing another layoff of 5,100 employees. In doing this Al’s management team created ethical issues that embarrassed Sunbeam. www.content.time.com 2. I think Al Dunlap failed in his ethical responsibility to the business. He took over Sunbeam Corporation with the sole focus on raising a profit. He cut nearly 6,000 of Sunbeam's employees and half of its product lines (Schifrin). I think he focused too much on the consumer benefits with the “early buy” and “bill and hold” programs (Schifrin). He failed to weigh the overall sales and profits of the company. Later, Dunlap was fired from the company under the suspension of changing the financial reports (Rider). Clearly his sole focus was to increase the sale value of Sunbeam to sale the company just like he did with Kimberly Clark. He had no intention of fixing the business. http://articles.baltimoresun.com/2002-01-15/business/0201150314_1_sunbeam-arthur-andersen-chainsaw-al http://www.forbes.com/forbes/1998/0504/6109044a.html 3. When I went to research Al Dunlap I must say I wasn't surprised as to what popped up in Google. “Top 10 worst bosses”, professional downsizer, and chainsaw were just a few words to describe this guy. I agree that after reading information about Al Dunlap his fixes for companies are very short term. He’s a con that takes a very ruthless route when it comes to making money. Downsizing companies and allowing employees be without jobs are ridiculous. I don't agree with his madness. Getting rid of what a company needs to fatten pockets of shareholders is unethical.

 

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