Case Scenario 2: Plasco

question 55

Essay

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). How can a small player like Zig be such a successful competitor against a large,established firm like Plasco?

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Definitions:

Productive Work Force

A group of employees who are efficiently achieving their tasks and contributing positively to the organization's goals.

Job Specialization

The process of focusing one's occupational concentration on a specific area of expertise, allowing for increased efficiency and skill development in that area.

Performance-based Reward

A compensation system where employees are paid based on their performance levels, achieving specific goals, or meeting certain benchmarks.

Labor Costs

The total expenditure incurred by employers for the wages, benefits, and other compensations for their employees.