Case Scenario 2: Plasco

question 76

True/False

Case Scenario 2: Plasco.
Plasco is a $3 billion U.S.-based manufacturer of flexible plastic products like trash cans, reheatable and freezable food containers, and a broad range of other plastic storage containers designed for home and office use. Historically, Plasco has been the category killer for most of its products and has devoted tremendous resources to new product development on an ongoing basis-this research intensity has allowed the company to release, on average, a new product every day over the past 5 years. Despite its past strength and high brand awareness, Plasco's profitability has been eroded by dramatic increases in the cost of plastic resin, the primary input into its plastic products. Moreover, the retail channel has experienced rapid consolidation resulting in a shift in the balance of power from branded manufacturers like Plasco, to strong retailers like Walmart, who in turn have been unwilling to help Plasco absorb the higher resin costs. Enhancing Walmart's power is the fact that it can always turn to alternative high-volume sources of consumer plastic products like Sterlite. Further hampering Plasco's recovery is the emergence of feisty little foreign competitors like Zig Industries, a $250 million Israeli firm that has begun to take part of Plasco's market share in plastic toolboxes. Ironically, Plasco was the first company to offer plastic toolboxes some 20 years ago. This innovation changed the market dramatically and Plasco's first mover strategy rewarded it with a rapidly growing new segment and a dominant market position. Today, Plasco's toolboxes are viewed as rather boring, while Zig's products are ingeniously designed to catch the customer's eye in the aisle (better merchandising the product)and capture their interest (and pocketbook)with many new and novel features. Zig is also able to provide this new line of toolboxes at between 10 percent to 15 percent less than Plasco.
-(Refer to Case Scenario 2). Although Plasco was the first mover in plastic toolboxes several years ago,its competitor Zig has gained market share by building brand loyalty to its boxes,which are viewed as more attractive and have novel features. The characteristics of this market are most similar to a standard-cycle market.

---

Definitions:

Geocentric

Geocentric pertains to considering the earth as the center, in historical contexts relating to the model of the universe or in modern times, applying a global and inclusive perspective in business strategies.

Expatriates

Individuals living outside their native country, often for professional reasons, to work in foreign offices or plants of their company.

Foreign Assignments

Work roles or projects assigned to employees which require them to live and work in a country different from their own.

American Employees

Workers employed in the United States, representing a diverse workforce subject to the labor laws and cultural practices of the country.