Chainsaw Al Dunlap Essay

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Al Dunlap was a corporate executive known for turning poor performing companies into profitable companies. He utilized radical restructuring and downsizing methods, which created shareholder value. Nitec, where Dunlap held his first corporate executive position as President, eventually fired him for his abrasive management style. Dunlap was later employed at Scott Paper, where he eventually served as CEO. While in the role of CEO, he made widespread cuts and performed massive layoffs to streamline operations and make the company profitable. It was these ruthless methods he used to revitalize failing companies that earned him the nicknames “Chainsaw Al” and “Rambo in Pinstripes”. In 1996, he became the CEO of Sunbeam. This paper is going …show more content…

This approach allows a company to measure performance in four key areas, which are financial, internal business process, customer, and learning and growth. Since financial performance is based on past results, a lot of companies use the balanced scorecard, which focuses on current activities. Dunlap’s immediate action was to restructure the company so it would become profitable again. This process focuses on the financial perspective of the balanced scorecard, which would allow Dunlap to look good to the shareholders. Dunlap eliminated nearly 6,000 employees and reduced SKU’s to 1,500. This led to several warehouses and factories closing, and company headquarters being consolidated into a single location. The financial year ending 1997 was a record year for Sunbeam, with stock at an all-time high and net income reported at $160 million. Sunbeam was very impressed with how Dunlap turned around the company, and in February 1998, he was offered a new compensation package, which included a three-year contract, his salary being doubled to $2 million annually, and a free grant of 300,000 additional Sunbeam shares (Bloomberg News). Dunlap and most CEO’s receive the majority of their compensation through shares of stock. This incentive motivated Dunlap to set a goal stock price of $70 per share. To attempt reaching this goal, Dunlap aided Sunbeam in purchased …show more content…

There were more acquisitions and massive layoffs, which Dunlap thought would restore investor confidence. His plan ultimately failed because the media continued to report on his “Bill and Hold” techniques and other accounting practices he allegedly used to inflate profits and mislead investors. In June 1998, the board called a meeting with the Vice President and Controller, and they were asked to rework the second quarter estimated numbers. Their findings forecasted that second quarter was estimated to lose $60 million. This revised forecast preempted several closed door board meetings that led to the termination of

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