CASE ANALYSIS: SCHULTZ WAXED CONTAINERS, INC.
The elements of this analysis are (1) the firm's existing strategy, (2) the firm's new cost system, (3) the firm's new strategy, and (4) recommended changes to the both firm's cost system and the firm's strategy. The firm's existing strategy is a somewhat confusing term in that one would expect that the existing strategy is the one in force. For the purpose of this case analysis, however, it is assumed that existing strategy refers to the strategy in place prior to the adoption of the strategy currently in force, which is further assumed to be the firm's new strategy.
Evaluation of the Firm's Existing Strategy
The three major market segments targeted by Schulze Was Containers were (1) high volume, custom print products, (2) low volume, custom print products, and (3) stock print products. Traditionally, (1) high volume, custom print products accounted for 50.5 percent of unit based output, (2) low volume, custom print products accounted for 29.6 percent of unit based output, and (3) stock print products accounted for 19.9 percent of unit based output. The firm's long held strategy was one based on customer service. The relationship between the industry players dictated against attempts by Schulze Wax Containers to compete on either price or massive production levels. The customer service based strategy adopted by the firm required (1) relatively high inventory levels to assure that customers never received an out of stock notice, (2) temporary production increases and the use of overtime to meet temporary demands in excess of capacity sales were never rejected because of capacity constraints, and (3) the maintenance of exclusive distributor territories.
While low volume, custom print products accounted for only 29.6 percent of unit based output, this market segment contributed 34.6 percent of the firm's sales revenues. This relationship was just the reverse for high volu...