Herman Miller Case Study

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Herman Miller Inc.

Financial Analysis: Herman Miller Inc.

Fiscal Years Ending| May 29, 2010| May 29, 2009| May 31, 2008| June 2, 2007| June 3, 2006| |  |  |  |  |  |
Profitability Ratios|  |  |  |  |  |
Gross Profit Margin| 32.5%| 32.4%| 34.7%| 33.7%| 33.1%| Operating profit margin| 71.6%| 75.2%| 77.5%| 76.7%| 76.0%| Net Profit margin| 2.1%| 4.2%| 7.6%| 6.7%| 5.7%|
Return on total assets | 6.5%| 12.2%| 21.8%| 21.4%| 16.9%| Return on stockholder's equity| 35.3%| 850.0%| 650.9%| 83.1%| 71.7%| Return on invested capital| 10.1%| 21.9%| 38.2%| 39.3%| 31.6%| Earnings per share| 0.0000005| 0.0000013|  |  |  | | | | | | |

Liquidity Ratios| | | | | |
Current ratio| 1.26| 1.60| 1.59| 1.35| 1.30|
Working Capital| $ 81.70 | $ 168.70 | $ 182.70 | $ 100.20 | $ 90.80 | Debt-to-assets ratio| 0.90 | 0.99 | 0.59 | 0.77 | 0.79 | Long-term debt-to capital ratio| 0.72 | 0.97 | 0.94 | 0.53 | 0.56 | Debt-to-equity ration| 8.62 | 94.91 | 19.65 | 3.29 | 3.83 | Long-term debt-to equity ration| 2.5 | 37.8 | 16.0 | 1.1 | 1.3 | Times-interest earned ratio| 2.47 | 4.80 | 13.12 | 14.46 | 11.26 |

FIVE FORCES ANALYSIS
Herman Miller Inc.
Office Furniture

The Threat of Substitutes
Bean Bags, Bar Stools, Ball Chairs, Dining Tables, and Plastic folding tables

 The Power of Buyers -> High
Many buyers relative to rivals? No -> High

Need the item? No -> High

Significant substitute threat? No -> Low
Product performance is critical? No -> High

Differentiation of the product is possible (products are not standardized)? Yes ->Low

The Threat of Entrants -> Low
Capital Requirements? Yes -> Low

Product Differentiation Possible? Yes -> High

Access to Distribution Channels? Yes -> High

Government Regulation? Yes -> Low

Buyer Switching Costs? Yes -> Low
Economies of scale? Yes -> High

Experience or learning effect in industry? Yes -> High

The Power of Suppliers -> Low

Many Suppliers relative to rivals? Yes -> Low

Differentiation of the (rivals’!) product is possible? Yes -> High Important Component? No -> Low
Rivals can switch suppliers easily? Yes -> Low
Suppliers’ products overall in short supply? No -> High Vertical Integration possible? (Backward or forward) Yes -> Low

The Intensity of Rivalry -> High
Industry Growth? No -> High
Differentiation of the product is possible? No -> High
Buyer Switching Costs? Yes -> Low
High Exit Barriers? Yes-> High

Macro Environmental Analysis

1990’s2000’s
Economic:Economic:
Good Employment numbersUnemployment / layoffs
Business expandingConsolidation

Political-Legal:Political-Legal:
Tax breaksSarbanes-Oxley act
Deregulation on banksEPA regulations

Technologies:Technologies:
ErgonomicsMobile computing/data
CAD DrawingsSocial media
3-D designs

Social: Social:
Company ESOP’sEnvironmental/going green
Environmental ConcernsCan’t retire, no way no how
Work life balance
Frugality in business

SWOT Analysis – Herman Miller Inc.
Strengths:
Lean Manufacturing
Cross-Functional Teams
Curiosity and Exploration
Ergonomic Health
Environmental Friendly
Employees* (dedication to the company)
Marketing
Weaknesses:
Brand Recognition
Lead time * (we are in the here and now)
No Online sales
No Physical Location
Opportunities:
Office Accessories...
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