Sunbeam is an American home appliances maker all the way from 1910. Over their long years of operating, they have created some of the best most widely used products in the market such as electric iron and a pop-up toaster. Even though the company was well known, it was no secret that it has been running into financial problems. So it was decided to fix it. In July 1996, they hired a new CEO and a chairman of board , Albert Dunlap. He was Nicknamed Albert ,, Chainsaw’’ Dunlap because of his ruthlessness in the business field and willingness to do whatever it takes. He was best known as a turnaround specialist and professional downsizer but his reputation was ruined after he engineered a massive accounting scandal at Sunbeam corporation and …show more content…
So first , he had to conceal financial problems. He created ,,cookie jar ‘’ reserves and they were used to make the company look as if it was experiencing a rapid turnaround. Initially, they increased the losses of Sunbeam in 1996, so that it can later be reversed to inflate profit in 1997. Dunlap made the company recognize revenues for sales that did not meet applicable rules of accounting. As a result of this, at least 60 million dollars of sunbeams record-setting 190 million dollars reported earnings in 1997 was deemed to be due to fraudulent acts. He also caused Sunbeam to engage in the acceleration of sales revenue from a later period and deleted certain corporate records to conceal pending returns of merchandise. Another thing that sunbeam did was they recorded some sales that were not real, through a variety of methods, and recorded other sales that came from ''channel stuffing,'' putting inventory onto the books of distributors and retailers. In one case, electric blankets that had been packaged for a certain retailer were sent to a distributor who agreed, in return for a guaranteed profit, to hold the blankets until the retailer was ready to accept them. Other sales were made by offering deep discounts to persuade customers to buy merchandise that they would not need for many months. According to the rules of accounting the company should have disclosed those discounts and the sales should have been recorded in later
When Jim Kilts showed up at Gillette in 2001, the first outsider to run the Boston-based company in more than 70 years, he found a business with great brands losing market share. Its acquisitions of Duracell and Braun were not delivering. Sales and earnings were flat, the company had missed its earnings estimates for 15 straight quarters, the stock had plummeted, and Wall Street had lost patience. Yet two-thirds of the top managers were getting top ratings. People were being rewarded for effort; performance, under Mr. Kilts regime, became the new measure.
The company purchased Solomon’s business for 39,000 which was an excessive price for its value. His wife and five eldest children became subscribers and two eldest sons also directors.mr Solomon took 20,001 of the company’s 20,007 shares. Transfer of the business took place on June 1,1892. The company also gave Solomon 10,000 in debentures. On the security of his debentures, Solomon received an advance of 5,000 from Edmund Broderip. Soon after Mr Solomon incorporated his business a decline in boot sales, exacerbated by a series of strikes which led the government, Solomon main customer, to split its contracts among more firms to avoid the risk of its few suppliers being crippled by strikes. Solomon business failed defaulting on its interest payment on the debentures. Broderip sued to enforce his security in October 1893. The company was put into liquidation. Broderip was repaid his 5,000. This left 1,055 company assets remaining of which Solomon claimed under his retained
Charles Michael Schwab is a natural-born leader and organizer, destined to be a great businessman. Schwab, having modest beginnings, is born “February 18, 1862” to “the son of a woolen worker and blanket manufacturer.” Ambitious in his work as a metal-laborer, he is noticed by his superiors and “by the age of 19 he was assistant plant manager.” Continuing his upward trend in business, in his mid-thirties he “became president of the Carnegie Steel Company at an annual compensation in excess of $1,000,000.” In time Schwab determines to merge several steel companies into U.S. Steel. During this time that he “earned more than $2,000,000 annually.” U.S. Steel is not the only one to benefit though from Schwab’s expertise. Schwab’s morale
Since Ogilvy's vision at the time was constrained to "just keep doing the same thing, better," the firm's re-creation was necessitated by external factors & events. For example, the central office had been unwilling to rein in its autonomous local offices' spending after the 1987 stock market crash even as...
In many ways, this transition for banks to remove this extra oversight intity from banks and other financial corporations could cause a positive development. I believe this is for the fact of this product being costly for bank financials and expending their partnerships. Financial sectors such as BB&T corp., SunTrust Bank Inc., and Zion, citizens Financial group Inc. all failed the stress test administrated by the Fed reserve in the past. Institutions must build and fund a system that meet the expectations of the Fed’s, that alone could cost firms somewhere between ten million dollars or higher. In the past for banks to payout dividends to stockholders, banks had to complete detailed financial and risk exams. This would be the largest increase in the financial rule book, by raising
In 1994 Rite Aid makes Martin Grass CEO and Chairman of the Board. In 1995 the board asks for Alex’s resignation from the Rite Aid Corporation. The rift between father and son was brought to an apex when Martin disses his father to the board and the financial markets as being too fearful and conservative to grow and leverage the Rite Aid brand. Once Martin Grass assumed control and was CEO of Rite Aid, he proceeded to get himself and other executive’...
Sunbeam committed the following two fraud schemes while Al Dunlap was the company’s Chief Executive Officer (CEO): (1) Improper Timing of Revenue Recognition via Bill Hold Sales, Consignment Sales, and Other Contingency Sales and (2) Overstating Earnings via Improper Use of Restructuring Reserves. A series of detection methods were utilized in each fraud scheme to determine the indicators that proved that Sunbeam was involved in manipulating its financial data. The most utilized method for detecting Sunbeam’s fraud was Financial Statement Analysis. Utilization of Annual Reports and Disclosures were utilized just as much as Corporate Research and Media while Business Plan Analysis was ranked as being the fourth most used. Finally; leadership
Sears needs to take the first step to admit they took a wrong direction and are implementing a solution to work on restoring the good company name. Prepare a speech for the CEO to make publically, nationally on the wrongdoing and recourse that is now being taken. This needs to be done immediately.
As the owner of the company, Al main concerns could be taking care of his business, and making sure they thrive. Since the beginning of the company, Al’s has been profiting in his business. So, his main concern could be to keep his cost down and his profits up. As for Al’s employees, seeing in the course of six years he has done nothing to fix issues within the company. His employees could assume Al could care less about the status and morale within the company. Therefore, they could believe their actions is not effecting the company’s in a negative way. Along with, the fact his supervisor was not providing adequate information about his employees to Al and vice versa. He failed to follow the chain of command, dealing with employees whom, were lacking in their duties within the company. As a result, Al lacked in the communication with his team. Thus, his supervisor and employee lacked respect for his
At the Maytag shareholders’ meeting held on May 9, 2002, many shareholders were anticipating an interesting meeting. There were many questions that needed to be answered and Ralph Hake would be the one to answer the questions and ease the shareholders’ mind. Ralph Hake, Chair and CEO of Maytag Corporation, made his speech and voiced two goals. These goals were to return the corporation to the historic earnings levels under Leonard Hadley and exceed those earnings. These goals would take the effort of everyone within the Maytag Corporation to make this possible. His speech spoke of problems that the company had encountered and was addressing. They were not going to let the company lose anymore customers or market share.
The Body Shop International case is an interesting case study into the miscommunication of owners and stockholder interests with regard to financial conditions. Anita Roddick, the founder of The Body Shop had no financial experience and thought that all she needed to do was expand her business and the financing would take shape as she developed her business. While Anita’s product concept of a natural skin-care line was good; her lack of experience in financial matters took its toll on her business.
From the time of WorldCom’s inception there always seemed to be a tradition in management as if the company was only 100 or so employees. There was a “good old boys” mentality among the limited few running the company and if you were outside that circle then were told only what they wanted you to hear. An unspoken rule among employees was to do what you were told without questions or risk the consequences. One example of this situation occurred when senior management member Gene Morse told an employee “If you show those damn numbers to the f****ing auditors, I’ll throw you out the window” (Kaplan, R.S., & Kiron, D., 2007, p. 3).WorldCom showed no concern regarding an employee’s need and obligation to voice concerns on matters related to their job function. “Employees felt they did not have an independent outlet for expressing concerns about company policies or behavior” (Kaplan et al., 2007, p. 3). This treatment created a climate of fear among employees and reinforced the management team’s ability to keep knowledge and decision making within their grasp.
For the best part of a decade Parmalat SpA, an Italian multinational dairy and food group committed and got away with one of the most sophisticated and largest acts of fraudulent accounting in recent history. They carried out a number of fraudulent practices designed to mislead and create a false image that the company was financially healthy. Some of their most prominent practices are identified below.
Phar- Mor- was engaged in creative accounting practices: inventory was overstated as proper inventory records were not maintained to support inventory purchases; $15 million was embezzled from Phar-Mor to support WBL activities and over $200,000 were used for upgrades to his personal residence and meals to his country club. As the losses mounted, the losses were charged to what senior staff referred to a “bucket account” and were then reallocated to the inventory of the existing stores.
As humans we can only retain so much knowledge. To the CEOs and managers who are resistant to changes, JCP is a prime example of how overconfidence, bias, not looking both at the inside and outside view, not paying attention to competition, and not paying attention to what customers want, can lead to good decisions turning into bad outcomes. Companies like JCP should take their time to evaluate their choices and judgements to improve their decision making process.