The Johnsonville Sausage Co.

The Johnsonville Sausage Co.

This paper is a case analysis of the Johnsonville sausage Co. case study. It deals with managerial transition, individual responsibility, and private labels. Johnsonville Sausage Co. was a successful sausage company, gradually Ralph Stayer, the president, started to realize his management style wasn't performing as well as it used to. After transitioning the company to increase employee morale, a private label opportunity presented itself that would account for 25% in sales. This deal would push the company to their limits and Ralph must make a decision whether to take it or leave it.

Executive Summary Johnsonville Sausage Co. is based in Johnsonville Wisconsin a small town north of Milwaukee. When Ralph, their son, graduated from business school, they decided to focus mainly on the wholesale part of the business. The business grew immensely and was doing 50 million in sales by 1985. They had three types of sausage, fresh, smoked, and semi-dry. The companied used brokers and direct sales to move their product. They started to expand into neighboring states. In 1980 "Ralph began to feel uncomfortable with the business and the way in which he was managing it". The quality of the product was slipping, employees were getting careless, and the general moral of the company was declining. Ralph's managing style was to make all the decisions and let his subordinates be responsible for implementing them. when he wanted them to take more responsibility, Ralph started to realize that he had "beat" the independence out of them.

Ralph decided to transition the company into a different managing style based upon a lecture by Dr. Lee Thayer. Ralph hired a new team and gave his employees more individual responsibility by making them responsible for their performance and giving them permission to organize their area and teams as they wished. Sales began to increase and "employee commitment to the new organizational policy was growing"(Roberts, 1993). Palmer, a company who they had good relations with approached them to do a private label deal.

Analysis Ralph started to realize that making all the decisions was counterproductive to the development of the company. He needed people who he could trust to make important decisions and not just follow orders. Ralph spoke that "I'm not paying them to push tough decisions up to me; I'm paying them to think"(Roberts, 1993). He transitioned his company successfully to focus more on individual performance and responsibility. This helped increase overall morale and production. The Palmer private label deal was a stressful decision. "It could have a demoralizing impact on our own people and cause the quality of products to suffer"(Roberts, 1993). They would also have to build a new plant to keep up with the orders which would be risky if they happened to loose the deal. On one hand this deal could be very profitable for the company. But considering the history including the strikes the concern that the hours of production needed could affect the worker's morale.

Recommendation In order to meet the production numbers for the private label deal they will need to increase production and build another factory. Ralph Stayer should draft up a contract that locks the private label company into a 5 year deal minimum. That way he doesn't have to worry about them backing out until at least 5 years which gives the company time to lock in other orders and expand their services to more regions and states. Or he could incorporate the setup and maintenance costs into the deal so some of the new factory costs could be passed on to the brander. Also by establishing a "Strategic category management" style to strengthen bonds between companies. Strategic category management "is instrumental for a retailer to realize its “own” brand goals and aspirations. It requires the development of a symbiotic relationship with manufacturers and/or suppliers to elevate relationships and further a mentality of partnership"(Kanwar, 2001).

Conclusion

Ralph Stayer, President of Johnsonville Sausage Co., is faced with a difficult decision on whether to accept a private label deal or not knowing that it will push the company to their limits. He should arrange a 5 year contract, establish a strategic partnership with Palmer, and continue to focus on improving the overall company morale and increasing individual responsibility.

References

Kanwar, M. (2001) The Evolution of private Label Branding. Brand Channel. Dec. 2013.

McShane, & Glinow, V. (2012). Organizational Behavior. New York: McGraw-Hill/Irwin.

Roberts, M. (1993). The Johnsonville Sausage Co. (A). Harvard Business School Publishing.