Continental Group Business Policies and Strategies
The Continental Group case presents a number of critical issues for the company. The primary issue is the diversification into four business areasùpackaging, financial services, energy, and forest products. Although originally a packaging company, Continental branched out into the additional areas on the advice of outside consultants who were experts in each of the business areas. The company has not achieved a competitive advantage in these areas, however, and needs to make a decision about how to regroup to achieve an advantage. Another critical issue is the companyÆs financial position. In the most recent four years, its overhead costs have totaled approximately $200,000,000, and its ôdebt is structured so that at least 40% of the net sale price of any assets must be paid to the debt holdersö (ôThe Continental Group, Inc.ö 9).
ContinentalÆs problem is that it has diversified into many segments without achieving a strong position in any of them. It did not even confine itself to the packaging industry but delved into peripheral areas that do not appreciably build its packaging business.
The problem can only be justified by resting the lionÆs share of responsibility on the outside consultants who advised Continental to diversify as it did. It is important to note, however, that each of the consultants was an expert in a specific industryùpackaging, financial services, energy, and forest productsùbut no consultant was expert at all of these industries. Continental therefore made its decisions based on expertise that was proprietary to each industry, without any overarching expertise from someone who could see the big picture and understand how to integrate the four disparate businesses successfully. If Continental had a corporate mission, goals, and objectives that tied together the four industries, no mention is made of them in the case study. This sugge...