Table of Contents
THE CASE GOES AS,
Larry Edmunds frowns as he dumps his company’s latest quarterly earnings report onto his office. Even before Edmunds Corrugated Parts & Service Co.’s sales surpassed the $million mark a few years ago, he was confident the company was well-positioned for long-term economic expansion. Today, the company, which supplied metal cutting parts and accessories to the domestic corrugated package economy, still has a dominant market share and makes money, albeit not as much as in the past. However, it is no possible to forget the fact that earnings was displaying clear signs of sluggish growth.
Larry’s grandfather loaned him the money to start the business and then handed over the barn on the family’s Shenandoah Valley farm to serve as his first factory more than two decades ago. He now works from a 50,000-square-foot factory near I-81, just a few miles from that old barn. The business enabled him to achieve what had previously appeared to be an almost impossible goal: he was earning a good living without having to leave his close-knit extended family and rural roots. He also felt good about employing about 100 people, many of whom were neighbors. They were among the most dedicated and devoted employees you could find anywhere.
Many of his original employees, however, were nearing retirement age. He knew from previous experience that replacing those skilled workers would be difficult. The area’s brightest and best young people were far more likely than their parents to leave in search of work. Those who stayed behind lacked the work ethic Larry had come to expect from his employees.
He was unconcerned about the opening of modern key rivals. Edmunds’ formidable market share—based on its reputation for dependability and extraordinary, quality services regarding sustainability at 75 percent, within a week of slipping slightly a couple of years ago. He was, even so, plagued by rising material costs in terms of the sharp increase in steel prices. The main worrying sign, however, largely stems from shifts within the carton economy on its own. The manufacturing was never especially recession-proof, with consumption altering in tandem with domestic product. Alternative shipping, primarily thermoplastic movies and reusable containers, was now appearing. It was unclear how much of a small crack they’d create in the consumption for cartons.
Worryingly, centralization in the manufacture of paper had erased out large numbers of the U.S. seedlings that Edmunds had held positions, with many of the victims whether starting foreign infrastructure or attempting to enter in to the partnerships abroad. The remaining manufacturers were planning to invest in higher-quality computers that disassembled parts. Nonetheless, he had to admit that, while the unorganised US corrugated box industry was certainly mature, nobody really truly expected US automakers to be ousted from their location as big suppliers for both domestic and export markets.
Edmunds was clearly at a crossroads. If Larry wanted that steady growth he’d assumed he could count on not so long ago, he suspect that business as usual wasn’t going to work. But if he wanted the company to grow, what was the best way to achieve that goal? Should he look into developing new products and services, possibly serving industries other than the box market? Should he investigate the possibility of going the mergers and acquisitions route or look for a partnership opportunity? He thought about the company’s rudimentary Web page, one that did little besides give a basic description of the company, and wondered whether he could find ways of making better use of the Internet? Was it feasible for Edmunds to find new markets by exporting its parts globally? All he knew for sure was that once he decided where to take the company from here, he would sleep better.
1. What would the SWOT analysis look like for this company?
Answer-1:
The following is how this company’s SWOT analysis looks:
Strength:
- It has been more than two decades since it has existed.
- It employs a dedicated and committed team.
- Integrated business management with an enviable track record of dependability.
- The market share is at 75%.
Weaknesses:
- The setting is the countryside
- Goods are out of date in terms of technology.
- Revenues were starting to show symptoms of stalling.
- The present employees are approaching retirement age.
Opportunities:
- There is both new and existing product diversification.
- Does indeed have manufacturing of 50,000 square feet.
- There is also a youth labor force available.
- There is a newer business initiative on the horizon.
- Use the internet to market the business and product.
Threats:
- Goods will become outdated.
- The paper industry is on the verge of extinction.
- Consumers are traveling to another country for a joint venture.
- Remaining manufacturers are investing in high-quality equipment that requires less maintenance.
2. What role do you expect the Internet to play in the corrugated box industry?
Answer-2:
I believe that the Internet has the potential to accelerate and broaden the advancement of the cardboard-box industry. This could send data all over the world in a microsecond.
First, Edmunds can even use the Internet to promote its own business. Second, he could indeed take orders from clients across the globe via the Internet. It has the ability to compress time and trade all over the universe. The Internet could play a vital role in the corrugated box industry. Science has added a lot to the business industry. If a growth strategy is used. We expect that the internet could be an efficient way to develop the corrugated box industry more quickly and widely. Because it is easily possible to transmit without the help of the internet. It can transmit any type of information to any distant location in a few seconds which is impossible in other ways without the help of the internet. In recent times, companies and industries are heavily dependent on the internet which helps them expand their products and services.
What are some ways that Edmunds could better use the Internet to foster growth?
Answer-2:(2nd part): There are several strategies Edmunds could use on the internet to foster the growth of his company Edmunds Corrugated Parts & Services. If he uses the “‘Porter’s Generic Strategies – Differentiation strategy’” on the internet which seeks to distinguish itself from competitors through the quality (broadly defined) of its products or services, I think he can make a huge difference in his company’s sales and growth. We know firms that successfully implement a differentiation strategy are able to charge more than competitors because customers are willing to pay more to obtain the extra value they perceive. I think if he can implement the right digital marketing strategies and prove to differentiate his products from the other competitors on the internet he can easily foster sustainable growth for his corrugated parts and services business.
3. Which of Porter’s competitive strategies would you recommend that Edmunds follow? Why? Which of the strategies do you think would be least likely to succeed?
Answer-3: Before deciding which generic strategies of Porter to follow, we need to identify what are the strategies Porter suggested. He had devised three strategies, they are the Differentiation strategy, the Overall cost leadership strategy, and the Focus strategy. The Differentiation strategy focuses on providing distinction (products of finer quality) between the firm in question and the competitors they have in the market. The distinction achieved further helps them justify the reason to charge a higher price for the products they sell. The Overall cost leadership strategy focuses on changing the pricing of products a firm has in the market and trying to lower prices to get a competitive advantage over the other competitor firms while still obtaining profits from it. The Focus strategy aims toward a certain regional market or a special line of products or a specific group of enthusiasts or buyers. Firms trying to run on this strategy might either try to focus on creating distinctive products for the market or selling the products via an overall cost leadership view. It is recommended for Edmunds to follow The Focus strategy as it would relieve him of the cost of searching for new alternatives for steel and he can focus on supplying products to buyers who prefer steel boxes over plastic ones. Further added the least successful strategy would be the overall cost leadership strategy as the price of raw materials are already high and the alternatives that the competition is using have a lower price both as raw materials and the production. Therefore if the price was lowered than that of the competition using the steel products the company would face a greater loss. First and foremost, he required young talented employees. In today’s world, finding the best and brightest young residents in the neighborhood at a minimal price is impossible. Second, both these producers were looking to invest in increased devices that broke down less regularly, necessitating fewer Edmunds’ parts. Edmund would be in an unfavorable position as a result of advances in technology. I would advise Edmunds to pursue the differentiation strategy because Edmunds’ reputation for dependability and exceptional, friendly service is based on its reputation for dependability and exceptional, personalized service. It’s very beneficial to him.