Sunbeam Dunlap Case

Sunbeam was a company originated in Chicago started off with manufacturing electrical appliances in 1910. Over 50 years, Sunbeam had produced different products from a food mixer to an electric blanket. The company acquired their rivalry company- Oster Company in 1960. However, the company turned over into different hands. In 1981, Sunbeam was acquired by Allegheny International, but it went bankruptcy 7 years later. Paul Kazarian and two other partners bought Sunbeam company from Allegheny International’s creditor and renamed it Sunbeam-Oster. When the company went public in 1992, Kazarian, chief executive officer of the company, was forced out and replaced. In a business cycle, there's always an upside and a downside . For Sunbeam-Oster, it was in 1995 where their products were facing stagnant growth. The company tried to introduce new products by opening up new product lines and investing in greater production capacity. Yet, it did not turn out the way they wanted. The following year, they appointed Albert J. Dunlap as their new CEO. Sunbeam’s stock price rose by 50% on the day Dunlap was hired. Nonetheless, Dunlap was still fired two years later due to the unexpected performance.

When Albert Dunlap was hired, he brought in his team of management. In addition, he took an aggressive move on
The management team that Dunlap brought merely had the same understanding about the company. They did not have any previous management team explaining what were their initial purposes of acquiring a specific company or opening a new product line. Dunlap was cutting down everything that he thought it was not necessary for the business. Within five years, Sunbeam has been investing in the production lines and closing down afterward, and it was definitely a waste of business capital. There would be a higher inherent risk because of inconsistency with management