The Big Fallacy: Al Dunlap's ineffective effectiveness approach at Sunbeam.

Essay by v0504University, Master's December 2005

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This paper analyses the organizational effectiveness of Sunbeam during the 2-years management period of CEO Al Dunlap. It looks different strategic constituencies and their satisfaction with the downsizing measures introduced by Al Dunlap. The paper will show, that Sunbeam's top management failed to satisfy internal and external demands and to follow a consistent and socially responsible management practice. Moreover, stakeholders relied on one man only, hoping that Dunlap will succeed, just because he seemed to have been successful in previous operations. This paper will show that the stakeholders' assumption was a big fallacy.


In 1996 Sunbeam, an US manufacturer of household appliances hired the famous manager Al Dunlap as its CEO (Businessweek online 1999). Dunlap initiated an overall change within the company with the aim of increasing organisational effectiveness, which meant for him shareholder's revenue. However, an evaluation of the company's effectiveness with the strategic constituencies approach shows that other stakeholders haven't been taken into consideration by Dunlop's strategy.

Their expectations and needs have been overridden and there was no balance between the degrees of satisfaction of all relevant constituencies. Moreover, even the shareholder's initial satisfaction changed with the time, since the share price decreased significantly. In order to analyse the development and effects of these changes, it is important to look at the actual actions Dunlop initiated: drastic downsizing measures and obscure financial movements. The fact that he brought his own fellow managers from previous job appointments resulted in decisions taken within a small group of people, often just by the CEO and the CFO (Businessweek online 1999). These practices led to frustrations and disappointments among employees and to confusion among customers and covenants. Instead of steering the company smoothly through the restructuring process, Dunlap disesteemed any responsibility and used his leadership power to turn...