CASE STUDY

Aakash Gupta Roll No: 008

Batch: SMBA-2

Presented by:

DAIRY

PAKCase

Objectives of case To construct Value Chain Analysis

To use value chain as a power tool

To implement strategic plans in accordance with the value chain

GIST OF CASEDairy Pak is Ohio based international company.

Dairy Pak began their operations in 1947 as one of the original license of the Pure-Pak Technology.

They focused on producing polyethylene coated paper carton for milk and orange juice.

Due to growing demand, it expanded its operations and built converting plants in different states. During the early 1960's through 1988 Champion steadily produced 2,50,000 tons of polyethylene coated boards annually.

During this period, the paper board industry was threatened by the intrusion of plastic containers but Champion did not falter and continued with its existing operations without changes in strategy or equipment.

At this point, the company decided to have the harvest strategy.

Incidentally, the paper carton did not die, and since there were no major changes in Champion its infrastructure got old and technologically outdated.

In the early 1980's the sudden increase of the juice market created opportunities which Champion did not expect.

In 1988 however, Champion successfully managed to retain its share in the declining market while losing almost half of its share in the fastest-growing segment, the branded juices.

Champion strategy was to be the low cost producer in commodity dairy segment.

In 1988, the Vice President of the Dairy-Pak Division of Champion International has to make some tough choices. He is facing: Declining market share in the growing “Branded

Juice” segment of domestic paperboard carton segment

Their manufacturing system is old Limited output capability which had not grown in

10 years.Rapidly expanding international market which the

corporation had seen as fraught with some problems than competitors.

The Competitors International Paper

It was the industry leader & considered to be low cost producer.

It is also the most technologically advanced company.

Champion was currently a strong number 2, with more domestic volume.

Potlatch, Westvaco, and Weyerhaeuser all ranked in a third tier of competition facing difficulties related to quality and inefficient scale.

The Pure-Pak Customers Domestic Dairies- The diary’s product was usually a

commodity that achieve price premium for brand name.

Differentiated Juicers- This was the fastest growing segment in liquid packing in 1988.

Special Uses- This market had grown slowly, volume per customer was very low it was 4% of Champion’s volume.

Export Market- The fourth group of customers for the Pure-Pak carton was the export market.

Pulp

Paper Mill

Extruder

Conversion

Regional Diary

Minute Maid

Orange Juice

Processor Processor Processor

Super Markets & Distributors

Customer

Process Flow

Champion’s Market positionDomestic Consumption of Pure-Pak Cartons (000)

1980 (tons) 1987 (tons) % change

Dairy 506 374 -26%

Non Dairy 66 120 +82%

Total 572 494 -14%

Champion’s Domestic Pure-Pak Cartons1980 (tons) % share 1987 (tons) % share

200 39% 150 40%

30 46% 30 25%

230 40% 180 36%

For the purpose of competition and to invest, Earle Bensing’s first proposal was to renovate paperboard

machine. Second proposal was to add a third extruder at

the Waynesville, North Carolina plant.

Third was to add roll wrapping equipment at the Waynesville location.

Fourth potential area for investment was adding rotogravure printing.

TOWS Analysis

Threat Overall Domestic Dairies market has

been shirking about 3% per year since 1980

Opportunity A dramatically expanding international

market Growing branded juice segment

( Overall market growing at 10%; potential to grow faster)

Overall Export Market growing at more than 10% per year

Weakness Limited extrusion capacity Lack rotogravure printing Champion has been unable to respond efficiently

to the diverse need of the non-dairy segment Although tremendous progress has been made,

there are still nagging problems with the quality of the board

Lack roll- wrapping and labelling capability of competitors at the extruding plant

Reputation of uncertain commitment in export market

Strength Large and efficient board machine Efficient and geographically well located extrusion

facility Five competitive and strategically located carton

converting plants Successful oven able board converting plant Very successful position in the dairy market east of

the Rockies Excellent services reputation among domestic dairies Knowledgeable operating people throughout the

system

The company should invest in Operating Capital To improve there operating efficiency so that they

can meet the increased market demand for different product line.

Improve the quality of product will latter will increase the number of customer and decrease the wastage.

Besing should invest in 1st and 3rd proposal. First proposal was to renovate paperboard

machine. Third was to add roll wrapping equipment at

the Waynesville location