Corrugated Box Industry

CASE STUDY EDMUNDS CORRUGATED PARTS AND SERVICES. Larry Edmunds grimaced as he tossed his companys latest quarterly earnings onto his desk. When Virginia-based Edmunds Corrugated Parts & Service Companys sales surged past the $10 million sword a while back, he was certain the company was well positioned for steady growth. Today, the company, which provided precision machine parts and service to the domestic corrugated cuff industry, slake enjoys a dominant market share and is showing profit, although not quite the profit seen in years past.However, it is no longer possible to ignore the point that revenues were beginning to show clear signs of stagnation. More than two decades ago, Larrys grandfather loaned him the money to start the ancestry and then handed over the barn on what has been the familys Shenandoah Valley farm to serve as his first factory. Today, he operates from a 50,000 square-foot factory located near I-81 just a few miles from that honest-to-god barn. The busi ness allowed him to realize what had once seemed an almost impossible goal He was making a good living with appear having to leave his close-knit extended family and country-bred roots.He also felt a sense of satisfaction at employing about 100 people, many of them neighbors. They were among the most hard-working, loyal workers youd find anywhere. However, many of his veritable employees were now nearing retirement. Replacing those skilled workers was going to be difficult, he realized from experience. The areas brightest and best young people were much more probably to move away in search of employment than their parents had been. Those who remained behind just didnt seem to have the work ethic Larry had come to anticipate in his employees.He didnt feel pres sured by the emergence of any new direct competitors. After slipping slightly a couple years ago, Edmundss terrible market share based on its reputation for reliability and exceptional, personalized service was holding s teady at 75 percent. He did feel plagued, however, by higher raw material costs resulting from the steep increase in steel prices. But the main source of concern stemmed from changes in the box industry itself. The industry had never been particularly recession resistant, with demand fluctuating with manufacturing output.Now alternative shipping products were beginning to make their appearance, mostly flexible plastic films and useful plastic containers. It remained to be seen how much of a dent theyd make in the demand for boxes. More worrying, consolidation in the paper industry had wiped out hundreds of the U. S. plants that Edmunds once served, with many of the survivors either opening overseas facilities or entering into joint ventures abroad. The surviving manufacturers were investing in higher quality machines that broke defeat less frequently, thus requiring fewer of Edmunds parts.Still, he had to admit that although the highly fragmented U. S. corrugated box industry cert ainly qualified as a mature one, no one seriously expected U. S. manufacturers to be dislodged from their position as major producers for both the domestic and export markets. Edmunds was clearly at a crossroads. If Larry wanted that steady growth hed assumed he could count on not so long ago, he suspect that business as usual wasnt going to work. But if he wanted the company to grow, what was the best way to achieve that goal?All he knew for sure was that once he decided where to take the company from here, he would sleep better. QUESTIONS 1. What would the SWOT analysis look like for this company? 2. What role do you expect the Internet to play in the corrugated box industry? What are some ways that Edmunds could better use the Internet to foster growth? 3. Which of doorkeepers competitive strategies would you recommend that Edmunds follow? Which of the strategies do you think would be least likely to succeed?