implementing any new approaches and by so doing undermine the prospects of success. History suggested that both supervisors and workers would do just enough to “get by”, that is, they would provide minimum compliance.
Ajax management responded to the situation by establishing interactive sessions involving managers and supervisors. They decided that they needed to make a compelling case for change before they began thinking about specific strategies. In the past, they had done the planning before ever getting others involved in any way and suspected that that had contributed to the subsequent resistance. During the interactive sessions, the general manager and the managers made the case for change. As part of this process, they used stories about various companies that had faced similar situations and had suffered badly as a result of their inability to respond to competitive forces. They also, for the first time, adopted an “open-book” approach in which employees were given unprecedented access to data on Ajax’s financial performance, particularly “the numbers that drive the business.” Following on from this, a practice was established whereby workers, supervisors, and managers met weekly to share key performance numbers.
In view of all the Ajax management, they are already seeing a new level of cooperation between management and labor and are hopeful that it will help turn around the situation that has applied in the past in terms of management labor relations.
Problems at Perrier
Perrier may well be the iconic brand in the world of mineral waters. However, regardless of the profile of the brand, the company that produces the bottled sparkling mineral water is having a tough time. It is the focus of what one commentator describes as “a vicious struggle underway for the soul of the business”.
The origins of the Perrier company can be traced to 1898 when a local doctor, Louis Eugene Perrier, bought the mineral water source near Vergeze, France. The company grew steadily, but demand really escalated in the late 1980’s when it became highly fashionable and championed by a range of admirers including Wall Street yuppies. At its peak (1989), Perrier sold 1.2 billion bottles (830 million in 2003,) almost half to consumers in the United States.
The boom years were good for the Perrier workers. Bouyant profits were associated with regular pay raises, social benefits, and extra holidays. However, in 1990 the finding of a minute trace of benzene in a bottle led to the collapse of U.S. sales. By 1992, annual output had halved and the company was close to bankruptcy. At this point, it was bought for $2.7 billion by Nestle, the world’s largest food company. Attracted by the combination of bottled water as a fast growing business and the world’s best known mineral water brand, Nestle identified Perrier as an attractive takeover target.
However, Perrier struggles to turn a profit. In 2003 its pretax profit margin on $300 million of sales was only 0.6 percent, compared with 10.4 percent for the Nestle Waters division overall. In 2004, it again recorded a loss.