Johnsonville Case

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Johnsonville Sausage Company

Executive Summary
The Johnsonville Sausage Co. was founded by the Stayers in 1945 as a rural meat market in Johnsonville, Wisconsin. The company started as a family home with a storefront, sausage kitchen, slaughter shed and smokehouse; the Stayers opened retail food stores between 1946 and 1952. In 1965 when their son, Ralph Stayer, graduated from Notre Dame with a degree in business, he and his father studied the wholesale and retail operations and decided to focus their efforts on building the wholesale business. After assuming most of the day-today decision-making authority in the 1970s, Ralph was officially named president in 1978. He “built the company’s wholesale business to $4 million in sales in 1975, $15 million in 1980, and $50 million in 1985. Between 1980 and 1985, return on equity climbed from 18% to 27%, and the debt-to-equity ratio hovered between 55% and 65%.” The transition from a mom-and-pop store to a world-class enterprise with over 500 employees was a feat of organizational change management.

Analysis
As the company grew, Stayer realized problems with his management style. By 1980, he “began to feel uncomfortable with the business and the way in which he was managing it.” The quality of the product was slipping and employees were not invested in their work. General morale was low and performance was poor. In many ways, Stayer’s early management style was responsible for creating a corporate culture that discouraged employee involvement. Initially, Stayer ran the business “from the sausage stuffer” and made all day-to-day decisions about purchasing, production scheduling, pricing, advertising, and sales. Previously competent managers fell into a rhythm of taking orders and lost the ability to take think strategically and take on responsibility. Stayer realized that change was critical for the success of the business. At the same time, he heard a lecture from Dr. Lee Thayer of the University...
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