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Stonewall Industries Case Summary

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Stonewall Industries Case Summary
In 1982 it seems the company will have to downsize. What are the factors that are forcing the company to make that decision? (10 marks)

Stonewall Industries is impacted greatly by the external environment, and as such downsizing is a way for the organization to continue to survive during times of decreased demand. There are a number of external factors that have lead Stonewall Industries to consider the option of downsizing.
The main cause of Stonewall’s concern’s stemmed from the fact that “Housing starts had stagnated and interest rates were too high to stimulate investment. Consumer demand was stalled because inflation levels had ballooned to unprecedented levels, peaking at above 12% that year.” This economic situation created a climate
…show more content…
(10 marks)

Downsizing, no matter how it is done, creates stress and corporate discontent for employees, and proper human resources planning attempts to limit this negative impact. Employees who are discontent can display negative behaviours and performance issues may begin to arise. With issues in performance within the organization, productivity may begin to decrease, which means that the cost to produce goods once again increases, threatening the benefits that may have come from downsizing.
Employees also begin to show lack of commitment to the organization in this sort of “if they don’t care about me” mentality. This means that the remaining employees may begin to search for new jobs creating increased turnover, and therefore increased training costs.
Another implication is lower employee morale and psychological trauma to remaining employees. This may in turn increase sick leave amongst employees.
All of these consequences can greatly impact the financial performance of the organization, and negate the positive financial gains that can come with downsizing. This is why it is so importance to for Stonewall to be strategic in it downsizing planning process. Some key things to consider to minimize the implications

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