EDMUNDS CORRUGGATED PARTS AND SERVICES: CASE ANALYSIS REPORT

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PORFERIO A. SALIDAGA, JR. Dr. George Fong Management Dynamics April 23, 2012

Problem The revenues are beginning to show clear signs of stagnation. Objective To increase the revenue. Analysis of Relative Facts Edmunds Corrugated Parts and Services is one of those businesses in rural areas whose owners are making a good living without having to leave their close-knit extended family and rural roots. Although its formidable market share is holding steady at 75%, its owner, Larry Edmunds has observed that the revenues of the company are beginning to show clear signs of stagnation. Mr. Edmunds has realized that his business has strengths he could bank on to get on with the competition. The company is endowed with hardworking people, has a high market share, and a reputation for reliability and exceptional personalized service. However, he also able to consider on the other hand that the internal and external environments of his company are changing, thereby threatening its survival. Many of the original employees are about to retire and, being the business is in the rural area, replacements are hard to find as some of the brightest and best young people are moving away for employment. The costs of raw materials are high. The industry has never been resistant to recession. The alternative shipping products are appearing. And the consolidation in the

paper industry has wiped out hundreds of US plants that his company once served. Some of the survivors have either opened overseas facilities or entered into joint ventures. There are also some which invest in higher quality machines thereby requiring fewer of Edmunds parts and services. So what then should Edmunds should do in order that the revenue of the company grows? Alternatives 1. To retain the identity of the products but apply the marketing expansion strategy: Producing the same products in the same rural area with the same personalized service, but with the enhanced marketing features of the companys web site by venturing into e-business. Through e-business, the company may be able to directly interact with its customers without leaving the comfort of the rural setting that Edmunds values, that is, making a good living without having to leave his close-knit extended family and rural roots. With the utilization of a user-friendly web site, and other social interactive media in the internet (i.e. Facebook, Tweeter, Ayos ako Dito), rural businesses can compete even with those businesses located at the commercial hubs. The retention of identity of the product maintains the old consumers trust and loyalty, and the application of e-business gains the company a new set of market. The downside of this alternative however is inflexibility. The company may find it hard to cope with the ever-changing demand and preferences of the market. It cannot answer the replacement issue of the retiring skilled workers. 2. To apply related diversification strategy through the following: a. Expand the market by venturing also into the flexible plastic films and reusable plastic containers without giving up its core products. b. Adopt e-business to widen the potential market. c. Establish a marketing department in commercial areas to make business dealings more accessible, and at the same time to attract the brightest and best young people to join the workforce, while maintaining the location of production in its original area. d. Enter into partnership and joint ventures with other businesses, domestic and abroad, for global expansion and to strengthen

more its financial standing. Under the assumption that the products technical specifications are standardized, the company may not find it hard to adapt with the global market, unlike the food industry which preferences, the likes and dislikes, to it are deeply embedded in the socio-cultural psyche of every country. Solution Alternative 2 is recommended.