Sunbeam Corporation Ethics

Journal of Business Case Studies – January/February 2010

Volume 6, Number 1

Sunbeam Corporation: A Forensic Analysis
Patricia Hatfield, Ph.D., Bradley University, USA
Shelly Webb, Ph. D., Xavier University, USA

ABSTRACT
The members of the Board of Directors at Sunbeam were completely bewildered. Al Dunlap,
Sunbeam’s highly successful but controversial CEO was threatening to resign after almost two years of leading Sunbeam successfully out of a slump that had threatened the long-term viability of the company. Al Dunlap didn’t mince words. He angrily told the board, “We can’t fight a battle on two fronts. Either we get the support we should have or Russ [chief financial officer] and I are prepared to go…Just pay us.”1 The directors had always stood solidly behind their hardnosed, cost-cutting leader and had been rewarded handsomely for their allegiance. The directors were taken aback. Why would they stop now? What was going on? Was it possible that one of the lead investors had conspired against the success of Sunbeam? A sense of panic set in but the board members assured Al Dunlap that he had their full support.
Keywords: Financial Statements, Financial Analysis, Ratio Analysis, Quality of Earnings, Corporate Governance

COMPANY BACKGROUND

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unbeam was formed in 1897 as the Chicago Flexible Shaft Company. The company originally manufactured mechanical horse clippers. By 1910 the company introduced the iron as its first electrical home appliance. Later other appliances such as mixers, toasters and coffeemakers were introduced.
Sunbeam came to be known as a recognized designer, manufacturer and marketer of innovative consumer products aimed at improving lifestyle. In 1946, the company changed its name to Sunbeam Corporation. In 1960, Sunbeam acquired Oster which allowed Sunbeam to expand into other home products such as hair dryers and health and beauty appliances. The company later added electric blankets, mattresses, humidifiers,

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