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1. Situation analysis

Mr. Chris Rufer founded The Morning Star in 1970 when he rented trucks and trailers
to deliver tomatoes and peaches from the farms to the processing equipment. Then in 1982, he
found the Ignomar Packing Company to process tomato paste. In 1990, he founded The
Morning Star Packing Company, Los Banos. The company's main products are tomato-based
products, and most of the share in the tomato paste and diced tomatoes industry with a market
share of 40%. The company’s mission was to produce tomato-based products by continuously
delivering quality and service to customers in a cost-effective and environmentally responsible
manner. To achieve this goal, the company practices a unique decentralized structure of “Self-
management.” This structure is also called a lattice or flat organization structure. The
employees are free to choose what work they would like to do rather than being told what to
do. There is no hierarchy in the system. It has adopted a culture of self-management, self-
initiation of communication and coordination of the activities with the colleagues, customers,
and suppliers without any direction from others.

The company mainly follow the two rules includes, refraining from initiating physical force
against other people and their property which emphasizes on more peer interactions in a natural
way rather than being and doing everything they agreed to which emphasize on every
individual are binding to the commitment that they made to their fellow.

To solve any conflict between the co-workers they follow the ‘Gaining Agreements’. If a
conflict arises between two workers first they have to solve by themselves and if they cannot
resolve it they will engage the third colleague. If a third colleague cannot resolve, then the next
step is to establish a panel and finally elevate to the president.

To decide the compensation for the employees, they used to follow four steps procedures. First
step involves 360-degree review technique; then the second step is a compensation packet,
which includes four components: a compensation letter, colleague review summary, CLOU
(Colleague Letter of Understanding) of prior year, steppingstone result. The third step is
compensation committee review and in the final step, the president reviews all the decisions.